How Hoteliers Can Tap Into the Increasing Demand for Luxury Travel

Luxury travel

BOSTON, MA–More people than ever are seeking–and spending more on–luxury travel. And they’re changing what the term “luxury” means–they’re likely to look for experiences instead of pampering and to add luxury elements to their trips. Those are among the insights from the L.E.K. 2017 Luxury Travel Study. The survey of 1,972 U.S. travelers aged 17 and older, conducted online by global management consulting firm L.E.K. Consulting shows that across-the-board pampering is no longer everyone’s ideal and “luxury” now has different definitions for different people.

Most travelers will now spring for some luxury, some of the time. While fewer than 10 percent of survey respondents consider themselves luxury travelers, nearly 85 percent say they indulge in travel luxuries at least once in a while. What’s more, people are spending more on luxury travel than on other indulgences. Across all luxury categories tested, travel is now the top outlet for indulgence—nearly half (49 percent) of U.S. travelers indicate that they are likely to splurge on travel. That’s ahead of such categories as dining out (43 percent) or food and wine at home (36 percent). Traditional luxury categories like apparel and accessories (30 percent) and jewelry (20 percent) trail travel by a considerable margin.

The definition of luxury has changed. Across the travel spectrum, luxury has traditionally been defined by product quality. Many of those defining characteristics now center on experience quality, which often have as much to do with personalized service as with the characteristics of the core product.


The survey also measured the growing impact of millennial travelers (aged 18-34), who are leading the way in the luxury travel transformation. More than three in five (61 percent) of millennials surveyed say that they either choose full or selective luxury travel, compared with 48 percent of gen x-ers and 35 percent of boomers. These trendsetting millennials are more likely than older travelers to look for experiences and adventure, to indulge in luxuries on occasion, and to add luxury elements to an otherwise non-luxury trip. For example, the consulting firm notes, today’s “luxury traveler” is just as likely to be a millennial in search of an eco-vacation who is willing to sleep in a bunk bed, but spend significant dollars on a supplemental adventure trek, compared to a wealthy globetrotter seeking comprehensive amenities and services.

The consulting firm suggests that the travel industry will need to respond to this trend by broaden its traditional definition of luxury offerings and create menus of a-la-carte items on which travelers can choose to splurge. “While luxury travel once meant first-class transportation and plush accommodations, today’s luxury travelers are just as likely to seek out life experiences,” says L.E.K. Consulting Managing Director Dan McKone. “And instead of being solely affluent, they’re as likely to be mainstreamers who pick and choose the luxury elements they want to add to their trips.”

L.E.K. Consulting suggests that hotels offer a choice of luxuries. “Providers must develop ways for more mainstream clientele to toggle into luxury elements,” says L.E.K. Consulting Managing Director Alan Lewis. “There’s a ‘Goldilocks’ or ‘just right’ level of luxury for each individual. In practice, that might mean ‘Uber when you need it’ in place of a town car for the day. It also means embracing the age of the upgrade, overlaying better/best options on top of modest bases. The more experiential the element—for example, dining or activities—the more appealing it’s likely to be.”

In addition, the firm also suggests that hotels keep brands front and center. The priorities of what a luxury brand needs to communicate are evolving, and are less focused on opulence and more on convenience. Today, luxury increasingly means removing frictions and offering exclusive experiences. Hotels must also help millennial travelers identify and capture prestige moments, the firm says. These travelers want to log their exceptional experiences in the moment, and share them with their social networks to enhance their personal brands. Successful travel brands will help them do it.

“By getting to know each segment of the bigger, more diverse luxury travel market, and tailoring offerings for each segment, the industry will be better able to change with the times and capture the new luxury travel opportunity,” McKone says.