The great reset: how covid changed the course of the luxury travel sector
For research development, PACE Dimensions conducts interviews with industry leaders to share insights into the latest sectors and market trends. This article draws on a recent interview with Fflur Roberts, head of luxury goods at Euromonitor. She discusses changing trends and emerging opportunities for luxury hospitality brands.
Huge shifts in consumer attitudes and behaviours are impacting the luxury sector. In many cases these are trends that intensified during the heat of the Covid-19 pandemic when, according to Fflur Roberts – head of luxury goods at global market research company Euromonitor – people stopped and “Issues were addressed that should have been given attention a long time ago.”
Movements gathering weight impacting the travel and hospitality industry
This approach of thinking more was directly related to a pause in 24/7 life. Roberts explains, “Covid created a movement in time where people realised they didn’t have to live a life where they were constantly in a state of being always-on, and as a result, we have slowed down and have come out as better people for it. We collectively took stock of what really matters.” The key movements happening over the last few years include a huge focus on wellbeing and self-care, inclusivity and equality with greater attention on accepting ourselves for who we truly are, and the explosion into the mainstream of Black Lives Matter. As Roberts points out, all these elements were in place before Covid, and the pandemic created a pause in our busy routines that allowed them to come the forefront.
Roberts outlines, “Consumers are now extremely vocal about the kind of companies they will invest their time, money and interest in. It is important to be seen to be responsible. Value is now significantly more important than volume in the luxury sector – consumers are happy to do and experience less, as long as those experiences are truly worth it in all manner of ways. Businesses have therefore been forced to ‘build back better’ and now we see companies being held more accountable for their action and business models.”
Being better: the impact of the great reset on luxury travel
It is important to note that in the world of luxury, people have choices. And so new consumer values really do come into play. Luxury consumers will choose which airline, which hotel, and which type of holiday because the price – and other factors – are not the barriers to the decision. When it comes to the ‘great reset’ of Covid, as Roberts terms these shifts, there are significant impacts for the travel and hospitality industry. “Today, luxury consumers are taking less holidays, but they are spending more, staying longer and want to experience something ‘better’ in all senses of the word,” She explains.
This is reflected in all areas of buying travel. Consumers want to see big corporates be held accountable, and to no longer make money without putting back into society. Honesty and transparency are important, including in the finer details. For example, Roberts highlights how consumers see through ‘nonsense’ and green washing. “It’s as simple as the images shown in marketing materials,” Roberts points out. “The “perfect family” beach shot doesn’t reflect reality for most people and is out of date. Consumers need products and services that reflect their lives, and their values.”
New markets, opportunities and trends in luxury travel
Covid drove lifestyle changes for many, including a shift to more rural living away from cities as people embraced flexible and hybrid working. As international travel has returned, this has given consumers the option of spending far longer in a different country, working from there alongside seeing more and immersing themselves in another culture. For luxury travellers this has opened up new opportunities for travel businesses. Roberts outlines, “New services are opening up, and for the higher income consumers we see an increased need for exclusive-use luxury properties complete with chefs, personal trainers, nannies, dog walkers and more in place so the individual can resume all aspects of their usual life in a new location. There are opportunities here for the travel and hospitality industry across many market segments.”
Across all areas of the travel industry, safety has become a heightened priority. Roberts highlights, “There remains some fear and anxiety around travel and brands need to continue to instill trust. Accelerated investments in digital is giving businesses the chance to be more consumer centric, and to make the travel experience more seamless. This even applies to the extent of creating virtual experiences when the real-life option is not possible or without risk, and even as part of being able to experience aspects of a holiday when booking and before even travelling. Digital experiences and the metaverse are a really interesting option for the luxury travel and hospitality industry.”
Embracing tech savvy consumers: what this means for luxury travel and hospitality brands
Roberts highlights examples of artists already embracing entirely digital concerts, allowing friends and family groups from around the world to attend together, mimicking being in one place at the same time. She adds, “For younger people and the digital savvy this is almost normal, and it is encroaching on all our lives. On the back of Covid all market segments have been forced online and have embraced a digital world. Whatsapp, Zoom and more are now part of day to day life for all ages. Brands now have the opportunity to engage a wide range of people via online channels, whether their target customers are 16, 60 or over 80 years old. The metaverse is not yet mainstream, but there are some really interesting concepts in the early stages and brands are dipping their toes in the water. It will take some time to filter out of early-adopter groups, but it is most certainly a trend to watch.”
Health is wealth: the role of wellbeing in the recovery of the luxury travel sector
Travel and tourism remain a core need for the luxury sector. People always want to travel, explore new territories and new experiences. In areas of the world such as western Europe, domestic travel has boomed during the pandemic and created new opportunities for the industry. Plus, Roberts is hugely interested in the concept of ‘wealth is health’, or perhaps more accurately, ‘health is wealth’. “Health and wellbeing are huge in the world of luxury,” Roberts highlights. “When money is not an issue, then investing in technology and new services available around the world to protect and maintain health is a big market. In the luxury sector it is no longer about the aesthetics side of looking young, but looking and being healthy. Following the pandemic, being and looking healthy is highly coveted badge of honour.”
The desire to have a healthy lifestyle is now much more important than celebrating your busy 24/7 lifestyle. according to Roberts. She explains, “24/7 living is stressful and has a major impact on wellbeing. After the experience of the pandemic, particularly young people are prioritising factors such as sleep, diet, nutrition and exercise and rest. Because the world stopped, people are much more acutely aware of the importance of a balanced and healthy lifestyle. There is heightened awareness of the role of sleep in supporting immunity, and how damaging burn-out can be. Long Covid is a real concern to many people. There are huge opportunities in the luxury travel and hospitality industry here, with people prepared to spend to visit some of the most renowned clinics in the world to access their services as part of their holidays, and to help them to create healthy sleep patterns and habits.”
The power of choice in luxury travel and hospitality
Looking ahead, sustainability remains a huge decision-making driver for the luxury traveller. As Roberts repeatedly points out, the wealthy have huge choices over how they spend their money. And highlighting a level of sustainability is becoming a statement of wealth. “From what car you drive, the fashion brands you choose, and the holidays you take, sustainability is part of a luxury consumer’s personal brand,” outlines Roberts. “Huge amounts of innovation are happening and possible in this area and it’s a very exciting time in this regard. The fusion of technology and climate action is creating opportunities for the luxury travellers. The higher income you have, the more options there are to be sustainable.”
This is a trend seen in sectors outside of travel too. Roberts cites Euromonitor’s tracking of trends such as pre-loved and designer fashion rentals, where significant increases in usage of these services are seen, the higher the income level. Of course, there are challenges for the luxury consumer, who also craves safety and privacy. Therefore, options such as private charter flights meet one need but are significantly less sustainable and so jar with values. In these instances, the choices available to high net worth individuals is key here. Put simply, Roberts states that while a private charter flight may not be the most sustainable option, credible carbon offsetting is not cost prohibitive and so is a viable option for such travellers.
Other factors also come into play, that can lead to more sustainable travel options. For example, in the world of wealth not everyone has to race back to work or travel on a limited time frame. This means slow travel – for example luxury rail – is a key area to watch in terms of growth. The value and appeal of slow travel options has therefore increased. Moving forwards, sustainable travel that prioritises safety and wellbeing, including that of the communities who are employed by a luxury travel and hospitality brand, are huge deciding factors for high end consumers when it comes to where they spend their money and invest. For the industry, this means addressing their own moment of truth to ensure that their values match up to those of luxury consumers after this ‘great reset.’
To delve into trends across different sectors of the travel and hospitality industry, PACE interviews effective business leaders who share their insights and expertise on the opportunities and issues facing their sector. For further information on PACE Dimensions research capabilities please click here.