In February of this year we gave high praise to Nancy Cockerell, who led the team that did the research on international travel spend for International Luxury Travel Market (ILTM) in 2007 and arrived at the $200 billion tally for luxury which we found quite credible.
We also talked about democratization of luxury, affordable luxury, massclusivity, and persuaded her to lend her voice to the subject in a future Lux 360 column.
Well, here it is, under the title, Has Luxury Become Too Affordable? We are most pleased to have her as a contributor. (special advisory - Note Nancy’s description of the ‘Chav’ effect, in which luxury goods brands like Burberry’s are trying to reduce sales of their products to the ‘wrong people’)
Has luxury travel become too affordable?
“The democratization of luxury travel is here to stay”, Dana Thomas wrote in her best-selling 2007 book, How Luxury Lost its Luster. But what about luxury travel?
The 2007 ILTM Industry Report, released last December at the ILTM in
Cannes, showed that one of the main difficulties in trying to assess
the size and value of the luxury travel market was that there is no
agreed definition of luxury travel. The term clearly means different
things to different people. Moreover, the concept varies from one
source country and age group to another, as well as being a moving
target, since the market is becoming increasingly segmented.
The blurring of the definition has been exacerbated by the fact that
staying at a luxury hotel or resort, and even traveling by private jet,
has become more and more affordable – accessible to a wider segment of
the population, and notably to increasingly aspirational and indulgent
consumers who would not normally be characterized as luxury, or
high-end travelers.
This in turn has contributed to the word ‘luxury’ losing its exclusive
image, as Dana Thomas confirms, and is one of the many reasons why the
industry now talks of several different levels of luxury – such as the
‘premium’, ‘ultra-luxury’ or ‘über-luxury’ segments.
There are increasing signs that traditional luxury travelers – people looking for a unique, authentic experience, with personalization, privacy, spiritual well-being and even simplicity as the overarching goals – are starting to resent the excessive conspicuous consumption, or demonstrable extravagance, being flaunted by some of today’s nouveaux riches and less mature luxury travel markets, or even non-luxury travelers who simply want to look as though they are in the same wealth bracket.
This resentment has already been evident for some time in the luxury retail sector. In the UK, for example, Burberry and other brands are trying to reduce sales of their branded goods to the ‘wrong people’. There are widespread photos of the so-called ‘Chavs’ – a derogatory UK slang term referring to a ‘subcultural stereotype’ fixated on fashion, such as (usually fake) designer clothing – kitted out from head to toe in their Burberrys, but mixing the style with elements of working-class British street fashion, such as trainers, tracksuit bottoms and polo shirts.
Now, rumor has it – although no-one dares to voice the fact too loudly – luxury travel clients and buyer groups are trying to ensure that they only travel to places where the ‘right’ people go.
According to Julian Rolfe, project manager at Vegas, the youth division in the UK of Synovate: “The prospect of going somewhere the Chavs go on holiday is too awful to contemplate for the affluent middle and upper classes.
“You could say the more affluent are seeking a road less ‘chavelled’.”
We began our recent report on ‘Family Travel Rising’ with the following:
“All the evidence -- whether you are looking at the Amex-Harrison Group study we reviewed in our last issue, or the Ipsos Mendelsohn Affluence Report completed in September, -- shows Family First when it comes to disposable dollars.
We believe family focus is going to be front of mind for a long time to come, long after the punishing economic climate has subsided. Provider brands will be hard pressed to provide much more than kiddie or junior, or young adult activities. Smart travel agents will have to rise to higher levels of creativity and performance on the family front to sustain customer loyalty and earn the benefits of word of mouth in the neighborhood.”
And last week we caught our favorite global traveler-editor-writer-commentator during a quiet moment at home in England, the home of The Gostelow Report. She shared these thoughts:
• The hotel industry has been very slow to realize that this big expansion in family travel was going to happen. We’ve had “connecting rooms and you can put the kids next door”. They moved on to two swimming pools rather than one. One was kid friendly and one was not. But we really haven’t had anything more than that.
• We are seeing more and more bigger family groups. Operators are having a real challenge coping with such groups because it’s not a group per se, but they form their own groups. They want to be private. They want their own thing. .They tend to do their own excursions. They suddenly want a bus to take them all out. So it’s a real, real challenge. And so far the hotel industry has not realized this is happening. Now, it’s not only families. We’re also seeing more and more groups of friends traveling. And the hotel industry is not incentivizing enough – say a pair of DINKs come- Double-Income-No-Kids. There’s no incentive to them at the moment to bring along two other friends or even four other friends. And there’s big potential on the marketing side there.
Everybody knows her, but her bio is worth repeating.
Mary Gostelow, president of Gostelow Travel: Hottest Hospitality News Worldwide, is an inveterate traveler on the road more than 300 days a year. She owns and publishes the definitive Gostelow Reports, monthly market intelligence briefings to the top levels of the hospitality industry. She is the editor of KIWI's online Wow! Magazine, and also sends out a monthly update to top travel professionals worldwide.
At the same time, she is contributing editor to such publications as Elite Traveler, enRoute, Hotels and Le Magazine.
But Lux 360 Found a Brighter -and we think, Sensible Side-
From Harvey Chipkin’s report in the British online Hotel Report-a paid service from William Reed Business Media- http://www.wr-bi.co.uk/ - Reproduced here with publisher permission
At the first industry wide meeting following the fall financial meltdown and the recent presidential election, the consensus seemed to be that, yes, the industry faces a historically challenging situation that will last for awhile. But there was also a feeling that lodging is in a better position than other industries – and, happily, a few silver linings were perceived as well.
We’ve all heard the bad news over and over: global liquidity drought, drops in rate and occupancy, a dismal outlook for employment, and a possibly extended recession. But some leaders managed to find ways to take – if not a positive view -- at least a more nuanced one. Following are a few comments about why weeping and gnashing may not be the only appropriate attitudes.
Steve Joyce, who recently became CEO of Choice Hotels International, said he has been “the only optimistic person in the room at a number of events over the last few weeks.” I strongly believe,” said Joyce, “that there is a paralysis factor and that you can’t base projections on two weeks of hysteria.”
“Forecasts in this environment,” he continued, “are entertaining but not much use.”
Other ‘smart marketer’ insights from Joyce, Mark Lomanno of Smith Travel Research; Peter Yesawich, CEO of The Y Partnership; Michael Kaufman, Chairman of National Restaurant Association; Patrick Ford, CEO of Lodging Econometrics; and Roger Thomas, Steve Wynn’s design guru for many years.
Nat Ives, in Ad Age Online Sept 6, cites new data from Ipsos MMR which assures that well-off readers read print publications just as much now as they did 5 years ago.
Also, survey respondents making more than $100,000 annually said their average hours online had grown to 22.1 each week from 10.7, while the time they said they spent watching TV sunk to 18.6 hours from 23.7 in the 2003 survey. Read the full Ives story at http://adage.com/mediaworks/article?article_id=130685. Lux 360 attended the client briefing this week and will provide additional perspective in our Sept. 30 issue, interviewing Ipsos MMR President Bob Shullman.
Issues & Insights 
