The Evolution Of Luxury: Exploring A Shift In The Luxury Travel Market

By Brenda Sandoval Valdes Associate Partner, LINKS WorldGroup
June 10, 2018

As millennials are growing older, the luxury travel market is trying to keep up with and understand a tech-savvy demographic of buyers with extremely different demands and desires than the generation before. As this demographic reaches an age where they possess immense buying power, they have become the primary targets for marketers who are still trying to define what it is that this generation desires.

Millennials, now in the age range of 22-37, are a $200 billion market of buyers. This figure officially makes them the largest generational segment in the luxury market. According to a report published by Les Roches, “There are currently over 330 million luxury consumers worldwide, a number that has tripled in the past decade and is expected to reach over 500 million by 2030. U.S. and European consumers dominate the luxury market, although China and Russia have emerged as potential future leaders with fast-growing travel and luxury consumers of their own on the rise”

Today’s luxury spender differs greatly from the Baby Boomers. For millennials, social media is an intrinsic part of their every day lives and this has greatly impacted the way they choose brands, products, and experiences. This is a generation of buyers who are more inclined to spend their money on experiences rather than things. The word “luxury” has been shifting from a snobby and exclusive connotation into a term that defines customer focused service, unique experiences, aspirational adventures, and quality.

The generation of Baby Boomers often defined and showcased luxury through designer logos and flashy items, while many of today’s millennials display their hard-earned paychecks through social media stories and digitally stored memories. Do not be confused- this generation still spends on luxury travel, they are just redefining what that term means. Consumers now rank quality as a more important attribute than exclusivity, making hotels and resorts ensure every offering and encounter for a hotel guest is exceptional, customizable, and truly authentic.

The Impact Of Social Media On The Definition Of Luxury And How Consumers Show It Off

Nothing has changed the marketing landscape as greatly and swiftly as social media has. The effects of the instant-gratification, information age in which we now live have resulted in marketing and public relations tactics completely shifting focuses and implementing entirely new positions, divisions, and sectors to keep up with the trends. Tech-savvy marketers understand that now everyone is an influencer and brand ambassador, making word-of-mouth marketing more important and impactful than ever before.

While this may seem daunting, it also opens a world of opportunity for brands and marketers to reach consumers in quick, in-depth, and cost-effective manners. The birth of social media allows brands to share every bit of new offerings, events, and happenings without having to purchase an extremely expensive print advertisement or hope for a mention within the media. Before, carefully staged and designed print advertisements and television spots had to try and showcase a brand’s complete message and identity in a single image or short commercial, while today’s marketers can publicize every offering imaginable through limitless posts and photos.

This, however, has also resulted in millennial consumers redefining what they want from brands that they consume. By seeing every detail of an experience or travel destination, consumers are allowed the opportunity to hyper-target destinations and hotels based on a myriad of offerings that they want to experience. This demographic is well informed and savvy. They do not want gimmicks; they want seamless experiences and high-quality, transformative experiences.

By allowing consumers to see and experience every detail and offering a property has to share, from a personalized, five-star customer experience to an artisanal poolside cocktail, consumers are now seeking and exploring top-of-the-line and standout experiences as part of their travel journey. Conspicuous consumption has shifted, with millennials desiring rare experiences over tangible goods. Online profiles, Facebook and Instagram likes, and social media interaction is now the newest form of emotional currency, and millennials strive to enhance their online profiles with every vacation and outing they take.

This is also creating a widening definition of what “luxury travel” really is and that makes it a challenge for luxury hospitality brands to define a term that has been over-used. Luxury has now expanded to mean many different things to many different people. The period of identifying luxury through thread count sheets, Michelin stars, and gilded finishes has evolved into a time where there are fewer definable constants for the industry, making it imperative for hotels to have an evolved into personalized experiences and being able to deliver whatever it is that a client is seeking.

Being Tech Savvy Is Now A Necessity

Additionally, millennials desire fast-paced and efficient technology in everything they do. This includes travel, and convenience is key for these consumers. This generation is always connected through their smartphones, tablets, and laptops, and they expect the brands that they invest in to be as connected as they are. From mobile apps to digital check ins and outs of rooms, the more tech-savvy a hotel is, the happier the millennial is with their experience. Major hotel brands understand this and are already partnering with leading technology companies to create tech-savvy rooms and embrace the trend rather than fall behind. Hilton is already planning to roll out a mobile phone controlled room in 2018, according to Skift.

Like the evolution of social media and its effects on marketing, this may cause fear for hotel companies, but it also offers platforms to engage with consumers and understand them through in-depth analytics pulled from mobile applications. By utilizing algorithms and artificial intelligence to continuously understand feedback, patterns, and new interests of consumers, hotels can build loyalty by marketing individually to users in personalized ways. Ironically, technology has allowed for consumers to receive more personalized and customized offerings and engagements with brands.

Transformational Travel

The Global Wellness Summit recently named transformative wellness travel as another major trend for 2018. In all travel, millennials are seeking experiences that change them from the inside out. According to the Transformational Travel Council, the term’s definition is “Transformational travel (or TT) is any travel experience that empowers people to make meaningful, lasting changes in their life. ... Traveling with intention, openness, and mindfulness. Engaging in challenging physical and/or cultural experiences.” Industry leaders all agree that it is the next massive trend in the industry and is the evolution of experiential travel. “

Skift reports that, "Large brands are not the only players looking to entice luxury travelers in search of transformation. Boutique travel companies are also getting on board. From high-end yoga retreats and luxury glamping experiences in remote wilderness settings, luxury travelers are being presented with increasingly personalized travel experiences created with the sole aim of guiding them on their journey toward personal fulfillment."
Hotels and resorts offering high-end experiences that take travelers on an emotional experience and showcase local cultures, people, and journeys seamlessly become ideal social media content that consumers will post and share with their networks, further promoting the hotel’s brand. Moreover, this content resonates more deeply with viewers, who believe their trusted friends and social networks over controlled media, paid advertisements, and marketing collateral.

Creating stories for the traveler to share and enjoy are key. Personalized experiences are more coveted over pre-packaged mass experiences do not resonate with Generation Y and are quickly becoming outdated. Today’s millennials are smart consumers and they crave authenticity and transformative experiences. These moments that inspire and transform their perceptions are how they define “luxury.”

Positive Luxury: Brands With Ethics

Millennials desire and support companies who have positive social missions and visions that align with their own. Companies that create emotional connections with consumers create long-term brand loyalty. Consumers want to invest their hard-earned money back into companies who take Corporate Social Responsibility seriously.

With extreme transparency for consumers a result of the worldwide web, the buyers of Generation Y are significantly more aware and conscientious of ethical practices and company missions. They also can differentiate when a company truly supports their statements and when they are just pandering to promote their bottom line. Authenticity is key, with experts enforcing that companies need to genuinely believe in, embrace, and implement their stated intentions.

One of the largest trends we are seeing is a focus on sustainability and company carbon footprints. According to Luxe Digital, “The younger affluent generations are indeed more conscious of the environmental and social impact of their purchase decisions and are more likely to buy from a brand that resonates with their own personal values. High-end brands that want to retain their status in the luxury market need to evolve to keep up with this growing trend towards ethical and sustainable luxury.”

A study from Nielsen showed that 73 percent of Millennial respondents were willing to spend more on a product if it comes from a sustainable or socially conscious brand.

Terms like “farm-to-table,” “locally sourced,” and “craft” have become major buzzwords within the culinary world, and many smart hotels are now also embracing this trend by ensuring that their own food and beverage offerings effectively reduce their carbon footprint while appealing to consumers. Sustainable luxury is quickly becoming a necessity, and the success of such hotels as the 1 Hotels brand and Cayuga Collection in Costa Rica is proving this theory.