The Evolving Luxury Hospitality Market: What’s the Key to its Growth?
When we look at how the luxury market has evolved in the last 5 years, ‘digital’ is one of the first things that comes to everyone’s mind. This is also the case for the travel and hospitality sectors. Ahead of our next TREND event, we look to analyse the behaviour of today’s luxury hospitality consumers, and how this industry is reacting.
The Critical Combination: Travel & Millennials
It is well known that travel and experiences are amongst the top priorities for generation Y (a.k.a Millennials). This combination provides luxury companies with a great opportunity to develop their brand’s DNA; considering how it is perceived by customers and how involved it gets with local businesses.
Here are the top 4 characteristics of today’s new luxury hospitality consumer:
- Working to live, instead of living to work. They are aspirational and place a high value on their leisure time, holidays and work/life balance. They earn less than the previous generation did at the same age. The focus of millennials on purpose and values in choosing their career and lifestyle suggests that they may be less likely to opt for high-earning jobs and expensive products, which becomes a bigger challenge for the luxury sector.
- Less loyal than previous generations.Millennials are not driven by brand loyalty anymore. The increased exposure to more sources of information as a result of digital technology allows this generation to benefit from a greater range of influences and get to know smaller brands – which often offer same or higher value for money than well-known brands.
- The slowness movement. Our craving for the pre-electricity lifestyle of simple pleasures, farm-to-table food, homemade meals, handcrafted items, comfort and contentment is a side effect of lives that are too fast, too busy and too connected. This movement started a few years ago and shows no signs of slowing down. This opens up an opportunity for travel & hospitality businesses to really embrace local commerce and sustainability.
- The Chinese traveller. When considering the combination of travel and Millennials in the luxury market, it is essential for companies to acknowledge the Chinese consumer. Overall, Chinese consumers are the travel sector’s biggest spenders and they remain strategically important for luxury brands. China is still driving much of the volume growth in travel retail, and this will continue to grow with the next generation of luxury shoppers. There are currently over 400 million Millennials in China, which is more than the working populations of the US and Europe combined. These consumers are different from their parents, who were willing to be told what to purchase by the big Western brand companies. They were keen to make large ‘show-off’ purchases from the big name labels in order to display their new-found wealth. Today’s young Chinese luxury consumers have more confidence, prefer more subtle and sophisticated styles, and like to buy ‘cool’ brands. Source: Deloitte Global Powers of Luxury Goods 2017 report
The Action Plan in 6 steps:
As a luxury hospitality or travel brand, moving on is the only viable option if you don’t want to risk falling behind. The paradigm shift in lifetime loyalty culture is shaking the old glories of this industry, and today, brands move forwards emphasising their brand culture first and foremost. However, as we’ve seen recently, luxury still offers a vast range of business opportunities. According to Bain & Company, the global luxury consumer market grew 4% in 2016, reaching an estimated US$1.06trillion (€1.08trillion) in retail services value. There are a few action points that can effectively help you position your company at the forefront of new hospitality trends.
1 – From experiential to transformational travel – We’ve been hearing within travel & hospitality about the evolution of the experience economy into the transformation economy. “We’re now going beyond the experience economy to what people are calling the ‘transformation economy,’ where an experience changes us in some way during a particular moment in time,” Joe Pine and James Gilmore co-authored ‘Welcome to the Experience Economy‘ in Harvard Business Review in 1998, which they followed up in 1999 with the bestselling book, ‘The Experience Economy.’. “When you can easily design the experience to be so significant for a particular person, and provide the exact experience that they need at a particular moment in time, then it becomes easier to deliver a life-transforming experience.” That aspiration can range anywhere from desiring to be a more creative person to being a better parent, so travel brands have an opportunity to support that evolution in innumerable ways.
“The transformation economy isn’t pitted against the experience economy, it is the natural evolution of it, born out of the increasing desire of the consumer to satisfy the highest tier of Maslow’s Hierarchy of Needs: self-actualization”
says Claudia Roth, founder and managing director of the London-based Soul Luxury consultancy firm.“In the transformation economy, consumers are seeking more than mere experience. They crave something meaningful to which they can connect on the most personal level, and in doing so, undergo an actual sense of transformation.”
2 – From standardisation to personalisation – expansion through globalisation necessitated a one-size-fits-all approach. However, changing luxury shopper behaviour demands a more personalised response. According to leading firms specialising in data analytics and artificial intelligence, the future of consumerism is personalised, customised and on-demand due to the vast amounts of available personal data, which leads us to the following point.
3 – DATA IS KEY: This may seem obvious, but we cannot reinforce enough the importance of using data and analysing it correctly. Data-driven marketing is key to speak to the individual luxury consumer in real-time. Some brands should re-think of how the company is using its CRM, marketing and data analytics capabilities so that they work together effectively. In luxury hospitality, this refers to using data, content, customer relationship management (CRM), product development and existing social networks for growth. This cost-effective, customer-centric and micro-approach optimisations to business and brand growth are still rare in high-end hospitality but can create much more value than expected. Hotel brands are looking to fashion and retail for inspiration to develop content strategies to communicate their brand culture as much as their products and services.
4 – The role of Artificial Intelligence. The ability for travel brands to continually customise their products to match the individual consumer’s specific needs by using AI platforms provides constant communication between the buyer, the supplier and the advisor. The success of that matchmaking is fundamental to increasing customer loyalty in luxury hospitality. How these brands achieve this engagement is even more crucial. The human element has never been more important in the luxury marketplace. A good example of ‘humanisation’ in the hospitality industry is; Disney and Carnival, for instance, they are at the forefront of personalised guest experiences with their MagicBand and Ocean Medallion platforms respectively, using wearables and highly sophisticated beacon technology to provide customised services.
5 – Owning your online presence. This refers to your business’ online exposure and how this becomes essential to directly help you with booking efforts. Any sort of digital marketing; SEO, SEM, Social media are important to creating a strong online presence that positions your brand above the rest. Luxury travellers’ first source of information is always online. They look for inspiration on Instagram, experiences at destinations on the hotel’s own website, travel blogs for practical information to plan their perfect trip. Therefore, having a structured content strategy can massively help your brand stand out. Community management cannot be missed in order to keep your customers happy and manage your brand reputation.
6 – Mobile: We have mentioned the importance of mobile in luxury retail before, but the growth in mobile’s travel and hospitality has been exponential in the recent years. Mobile bookings will exceed desktop bookings to consumers’ dependency on smartphones. Even if the booking hasn’t been done online, it is very likely that at some point before or during the trip, the consumer will interact with your brand through mobile. Having a mobile optimised website is therefore absolutely key in creating a smooth path-to-purchase and to improve the consumer’s perception of your brand. Your booking engine should also be mobile-optimized so that guests can complete their bookings in one session. If potential travellers are unable to complete bookings on your site, you run the risk of them booking somewhere else. On another note, something worth mentioning as well is the ‘Instagrammability’ of the destination; apparently the most important factor for millennials on choosing holiday destinations. A recent study revealed that two-fifths (40.1%) of millennials choose a travel spot based on how ‘Instagrammable’ it is.
We are hosting the next TREND event on the evolution of the luxury hospitality market on Tuesday 25th of July. Ana Andjelic has been confirmed as the keynote speaker and we will give further updates in the coming weeks. Follow #TRENDbyVERB to find out about it. www.trendevents.co.uk
The post The Evolving Luxury Hospitality Market: What’s the Key to its Growth? appeared first on Verb Brands.