January 23, 2015
Affluent consumers will continue to spend on luxury travel experiences in 2015 despite the fact that the number of those who identified as undecided about their travel plans has doubled since 2013, according to a new report from Unity Marketing.
Luxury consumers plan to take an average of three vacations this year, spending approximately $8,000 on each trip. Some subtle changes they will make this year include using less travel professionals and carefully scrutinizing travel rewards programs as they schedule these vacations.
"As I look at the data, I think the most compelling story is how travel rewards are less motivating to the affluents this year than back in 2013," said Pam Danziger, president of Unity Marketing, Stephens, PA. "The difference is substantial and statistically-significant.
"In light of the fact that affluents are also looking to spread their travel budgets as broadly as they can, scrimping and saving here and there in order to indulge on what is most important, like staying in five-star hotels, I would have thought rewards might have even risen in importance. But that is not the case," she said.
While affluent individuals are expected to continue traveling this year, they are increasingly looking to budget in areas that are less meaningful to them, such as transportation. They will be more inclined to spend money when they arrive at their destination, for example on hotels or restaurants.
The Waldorf Astoria in New York City
Travelers will be more DIY in 2015, using less travel professionals to book their vacations and spending more time researching and planning on their own. This will allow them to find the best deals, as well as to wait longer before committing to various aspects of their trip.
Consumers surveyed increasingly reported that they will wait until the last minute to finalize their travel plans. Some of the benefits of waiting include the opportunity to research promotional offers and surf the Internet and social media for reviews and recommendations, as well as the ability to delay plans until right before the trip in case of global unrest or terrorism.
The Peninsula Hotel in Paris
"This year the share of affluents who are undecided about their travel plans more than doubled from Unity Marketing's 2013 luxury travel study," Ms. Danziger said. "Consumer uncertainty and lack of confidence is never a good sign for marketers, and that is the environment that travel marketers face this year."
One significant change this year is that individuals will be less influenced by rewards programs when choosing travel providers. Many of those surveyed reported that they are unsure what program they will use or that they do not into to use any program at all.
Sahara Star Hotel in Mumbai
Additionally, consumers have been shown to be less loyal to the travel rewards programs they do use and more inclined to search for better deals and more motivating rewards from other programs. This may be difficult to travel marketers, who will now need to retool their programs to make them more appealing to affluent consumers.
"I interpret these findings as signaling the same-old rewards and point programs just aren't hitting the mark," Ms. Danziger said. "They just aren't rewarding enough anymore.
'Too much trouble to redeem, too much hassle to manage, too hard to understand and too difficult to get just what you want without a lot of other stuff that doesn't really matter," she said
Decisions made by affluent travelers are often influenced by a number of diverse factors. For instance, when luxury consumers are deciding where to stay as they travel, reviews posted online have more influence than similar appraisals delivered in magazines, newspapers or television, according to a separate report from Unity Marketing.
Similarly, advertisements for travel experiences that run in print or on television make less impact than reviews. Since online reviews from other customers pull more weight than even word of mouth from friends and family, hospitality brands need to find ways to give their guests a voice online (see story).
Travelers are also using different platforms to research and plan their vacations. In 2014, fifty-two percent of luxury travelers said they were likely to book a trip on a smartphone within the next year, compared to the average 29 percent across all segments of travelers, according to a report by Expedia Media Solutions and comScore.
Even with the proliferation of mobile usage, travel brands can’t discount other forms of digital marketing, including desktop Web sites and placement on publications. This is especially true for luxury consumers, who use the most number of types of resources to make their plans (see story).
Travel brands should focus attention on developing new strategies to market to the luxury traveler in 2015 as tastes and preferences are rapidly changing. Reward programs in particular need to be revisited.
"Overall travel rewards programs are less rewarding to affluents in 2015 than in 2013," Ms. Danziger said. "Since travel marketers rely heavily on rewards programs to market their services, this is an important call to action.
"It points to the need for travel providers to focus their marketing and rewards programs toward rewards that are more meaningful and motivating to affluent travelers. Saving money is always welcome, but just offering rewards in the form of discounts and savings may no longer be the ticket to building a loyal and high-spending customer base."
Kay Sorin, editorial assistant on Luxury Daily, New York