The luxury travel market is growing faster any other. But why? And how can travel startups jump on the bandwagon? Today we're going to take a closer look at this market, and outline why there's plenty of room and opportunities for new startups.
This is a great opening question. When you think about it, half of this question is actually "Why do we want to travel?". Fortunately, that's something we know the answer to. Travel is the result of our innate curiosity. As humans it's only natural that we want to see, learn about and experience new things. The modern day travel industry, and the fact that it's constantly growing, is just an extension of that most human of conditions.
But why then, do we seek to travel in luxury? Isn't the whole point of travel that we go somewhere to have an experience as authentic as possible? Well, fundamentally, yes. But it's been a gradually evolving trend to travel half way across the world to enjoy all of the comforts of home somewhere else. While we may look down on this and think it's both a waste of money and betrayal of the authenticity travellers have always sought out, it's just the way things are.
And it's not necessarily a bad thing. The whole point of luxury travel is that you can have the best of both worlds. The stunning backdrop of a buzzing Marrakesh along with a cocktail and a massage. Or the waves lapping against the shore in the Caribbean while you look out from a private infinity pool. What's not to love?!
From the descriptions above, it's no great surprise that luxury travel has long been exclusive to the rich. In any walk of life, luxury doesn't come cheap. Whether you're getting off first class for a spa weekend and European city break, or taking an all inclusive trip in the sun, luxury comes at a price.
This is even more so the case as the industry has begun to transform. No longer are home comforts accepted as luxury. The bare minimum continually increases alongside customer expectations. This has led to more and more things being taken for granted, from daily hotel room cleaning to complimentary champagne upon arrival and a turning down service. As expectations have developed, luxury providers have had to follow suit and offer new ways of making customers say "wow".
One key point here is that luxury travel is subjective. Many travellers will be impressed with receiving fresh towels each day. Others might expect Michelin star food every evening. Perhaps this is one reason why it's hard to define exactly what luxury travel is, which therefore makes it difficult to properly measure growth and performance in this sector. Having said that...
So what are we left with? Well, according to a recent Amadeus report, there has been a 4.5% compound annual growth rate, versus 4.2% for overall travel, for luxury travel between 2011 and 2015. It may not sounds it, but that's a big difference. Luxury travel appears to be on the rise. So why might this be?...
One trend is that global consumers are increasingly spending their disposable income on experiences, not material things. This is one obvious way in which growth has been brought about in luxury travel, outpacing the rest of the industry.
This is impacting upon the industry in two ways. First, it's raising standards across the board. Travellers expect more than they ever have before. Decent hotels are now expected to have a spa included. Luxury agencies are expected to provide a high class door to door service. Second, this growth is making the idea of luxury less exclusive than it has ever been. This, clearly, isn't a bad thing. But some travellers want the very best. They want exclusive. This is creating further markets for travellers who want something 'un-google-able', something truly unique and exclusive.
Rob Sinclair-Barnes, strategic marketing director at Amadeus IT Group, said, “Luxury means different things to different people and this is especially true today. As emergent middle classes seek the material aspect of luxury travel, more mature markets are craving a new, evolved kind of luxury.
"This is why offering luxury customers a relevant personal and exclusive experience will become even more crucial than it is today – it will be a differentiating factor between old and new luxury”.
“We’re living in an age where civilians can travel to outer space on Virgin Galactic… where you can rent a private island on Airbnb for 0 a night. It’s become clear that mass luxury is no longer a new thing, yet it creates this contradiction: how can you offer ‘luxury’ in the traditional sense and ‘mass’ at the same time?” - Emily Segal, artist, consultant and co-founder of K-Hole, from her speech “Learning from the MA-1 – the future of luxury branding” at TEDxVaduz, 2014
Well, we have already seen that what is considered luxury today will continually shift to become the mainstream tomorrow. Because of this, the luxury travel industry will become increasingly curated, real-time and experience-led. People are starting to expect more, and importantly, are beginning to realise that whatever their needs or desires, there's a good chance they will be catered for.
“Understanding your business’s role in delivering an end-to-end luxury experience for a traveller is key to improving collaboration, and reinforcing an industry-wide push for consistent luxury service. Exploring the latest technologies and innovations for making the industry work better as a whole is key to achieving a new level of luxury that has never existed before” - Rob Sinclair-Barnes, strategic marketing director at Amadeus IT Group.
So we've hit on the fact that subjectivity is everything in luxury travel. One man's luxury might be something that a different man turns his nose up at. At he same time, ever increasing standards across luxury travel mean that people in search of true exclusivity also need somewhere to shop. These two trends clearly create an opportunity for travel entrepreneurs. On the one hand you have a vast population of potential travellers seeking luxury experiences in every niche you could imagine. While on the other, truly exclusive, bespoke trips are becoming more and more popular. If you can't find a niche to exploit across that huge spectrum, you're probably in the wrong industry!
At Travelshift we have developed a tried and tested, bespoke marketplace software to help you quickly establish yourself in any kind of travel industry you like. It's been trialled successfully at an international level, having become the go-to solution for Iceland's largest travel services website. It's also being used in Norway and New Zealand for similar projects.
Why not let us help you build a luxury travel marketplace from the ground up? We've got the experience and a proven software solution. All you need is a few contacts to help you get started and the enthusiasm to succeed.