The luxury traveler will lead rally for the travel industry revival

Luxury traveler survey 2021
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Every year, my company publishes a study on the state of the travel industry in the USA. This year, our survey of luxury travelers and travel advisors revealed a net positive outlook for the luxury travel industry in 2021. Slightly more consumers feel optimistic about their leisure travel plans than pessimistic, and luxury travel advisors see their business returning, albeit slowly, in 2021. 

African safaris
African safaris, conducted over vast expanses and with a possibility of social distancing, will attract luxury travelers. Photograph by a chomolla from pexels.

70% of affluent consumers have reported having taken a trip since lockdowns began in March of last year. Our research shows pent-up demand is generating keen interest in safaris, European vacations, and far-flung destinations — if not in the immediate term, then in the near future. Luxury travelers are also following the science on vaccines, testing, and therapeutics.

‘The Pulse of the Industry’ is a survey of owners and senior executives from top travel management firms in the United States, who are members of our proprietary research panel. For the first time, the survey includes responses from 428 luxury travel consumers, who are active clients of 10 of the leading travel management firms. 

Taken as a whole, the responses comprise a comprehensive behavioral portrait of the American luxury traveler right now, as well as a view of the industry as it enters a precarious phase of recovery.

More bulls than bears among luxury travelers: Those with an optimistic outlook feel that sentiment more intensely than the pessimists.

  1. Optimism is on a sharp curve up
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  • 48% said they feel somewhat or very positive about their leisure travel outlook in 2021
  • 44% said they feel somewhat or very negative. 
  • 14% identified as “very positive” and indicated they would be traveling in 2021.
  • 4% said they felt “very negative” and do not plan to travel at all. 
  • 53% of luxury travelers said that they had already booked a trip for 2021.
  • Another 41% said they are likely to book a trip. 
  • 2021 travelers are planning trips for the second half of the year than the first. 
  • Two-thirds of respondents signalled their intention to book a trip for 2022 or beyond. 

This optimism was before any vaccines were approved or administered, and the results bode well for a year of recovery that will start slowly but pick-up steam in the second half. Most of the travel advisors surveyed said their clients expect to be traveling in 2021.

2. Domestic or International?

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  • 96% of travel advisors anticipate that luxury travellers will undertake domestic trips.
  • 63% anticipate they will travel internationally. 

Travelers who have booked a trip in 2021

Many of these forward bookings are likely to be placeholder reservations, made in the hope that travel will resume, not a guarantee the trip will happen.

3. Mood of the luxury traveler

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  • 65% of travelers are optimistic that the trip will take place.
  • 25% are pessimistic of the trip taking place.

3. Portrait of the luxury traveler

The luxury traveller will seek out offbeat experiences in europe
The luxury traveler will seek out offbeat experiences in europe. Photograph spencer davis for pexels.

To understand the luxury consumer, we partnered with 10 U.S. luxury travel advisory firms. Participation was limited to customers who had booked at least one trip with an advisor in 2019. The respondents represent a slice of the luxury travel market that is older, wealthier and travels more frequently than the average travel consumer. 

The pandemic did not completely squelch their passion for travel. 

4. Business or Leisure?

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  • 70% of respondents said they had traveled since lockdowns began last March.
  • 52% of luxury travelers have traveled for pleasure.
  • 10% have traveled for urgent personal reasons
  • 9% have traveled for business. 

Those who traveled stuck to the nearby and familiar.

5. Where did people go in 2020?

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  • 31% have taken a domestic trip that did not require a flight. 
  • 30% have taken a domestic trip with a flight.
  • 21% visited friends and family.
  • 18% stayed in a vacation home that they own. 

Respondents were also cognizant of the risks of traveling now, both to themselves and others. When asked how their overall attitudes about leisure travel had changed, the bulk said they were “more cautious,” more conscientious about mask-wearing and cleanliness, and more selective about where they visit and stay

2021 Trends: Where to next

Turning to the future, 58% of travelers said their 2021 trips are do-overs of trips they had to cancel last year. Just under half said they were planning trips that included flights (domestic and international).

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An october report by mckinsey & company predicted that in most markets, domestic tourism would return to pre-crisis levels at least a year earlier than outbound travel. Photograph by  vlad chețan from pexels.

Many destination marketers, including NYC & Company and San Francisco Travel, have already pivoted their advertising efforts toward local and driving-distance audiences. 

When asked what destination they were most likely to visit in 2021, the responses leaned heavily toward North American and European destinations. Florida and Italy were the most common answers, followed by Europe, Mexico, Colorado, Hawaii, France, California, the United Kingdom, and Greece.

Asia with its heritage and culture will receive luxury travelers as vaccines are rolled out. Photo by visionpic. Net from pexels.
Asia, with its heritage and culture, will receive luxury travelers as vaccines are rolled out worldwide. Photo by VisionPic .net from Pexels.

More than half of the travel advisors surveyed (53%) said they are currently assisting clients with long-haul trips, including Africa, Asia, and South America. We predict that long-pent-up wanderlust among luxury travelers is making farther-flung locales seem even more appealing than before. Our research shows a striking amount of interest in safaris for later this year and beyond. That reflects a desire for unique travel experiences in remote, wide-open locales, where it is easier to maintain social distancing and limit exposure to the virus.

As the pandemic disrupted normal travel behaviours in 2020, many found alternatives. Advisors said that they are currently seeing interest in driving and road trips (41%); “staycations,” defined as less than 100 miles from home (41%); exploring domestic destinations (39%); private aviation (39%); and villas and other residential-style accommodations at a hotel or resort. While most of those trends would continue through 2021, not all would have staying power in the longer term. 

6. Which behavior would continue beyond 2021? Beyond the pandemic

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  • 43% of Yacht rentals. 
  • 39% Private aviation. 
  • 39% Residential-style hotel accommodations. 
  • 35% Vacation rentals such as villas and Airbnb.  

7. The consumers’ viewpoint: What do luxury travelers have to say?

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  • 58% of luxury travelers are willing to continue trying different styles of travel in 2021.
  • 58% of these are renting a private home or villa.
  • 58% traveling with a “pod” of friends or family. 
  •  50% are hiring private aviation. 
  • 45% are visiting a place for more than two weeks.

Travel advisors in a tight spot

Unsurprisingly, the coronavirus and the subsequent travel restrictions have been dire for travel advisors. 

The steep fall in revenues and business

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  • 94% said their 2020 revenues were down over the previous year.
  • A vast majority reporting decreases by 70% or worse. 
  • 76% said they had reduced the hours and/or pay off their employees.
  • 55% resorted to layoffs and/or furloughs. 

On the flip side, 41% reported increasing their number of independent contractor (IC) advisors, which suggests that full-time employees were replaced by (or converted to) freelancers. “As a host agency we only have ICs, and the demand is growing,” said Vanessa McGovern, Co-Founder and Chief Sales Officer, Gifted Travel Network. “We are seeing inquiries every day from ‘desk agents’ and former employees from brick-and-mortars expressing interest in hosting with us.” 

With one in three advisors saying that maintaining staffing levels is their biggest challenge in 2021the appeal of non-salaried IC’s will continue to grow, and the trend of shifting to an IC workforce is destined to continue

By 37% to 25%, more advisors said their 2021 headcounts would remain below pre-pandemic levels. “We’d like to recruit displaced talent and build a more experienced team vs. taking on advisors who are new to the industry,” said Julia Pirrung, Founder and CEO, Jetset World Travel, Inc.

The respondents largely see 2021 as a recovery year. But most don’t expect a full recovery until 2022 or later.

The revival dateline

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  • 76% of travel advisors expect to increase their revenues over 2020. 
  • Only 12% estimate revenues returning to 2019 levels.
  • 51% expect a full recovery in 2022.
  • 35% expect a full recovery in 2023 or beyond. 

Advisors prove their value

Increasingly travelers are depending on experienced travel advisors for information and guidance. Photograph by element5 digital from pexels.
Increasingly, travelers are depending on experienced travel advisors for information and guidance. Photograph by element5 digital from pexels.

One thing is for certain: In a year marked by cancellations and rescheduling, confusing regulations and innumerable questions, travel advisors showed their clients how valuable they can be. 

More travelers in the survey said they are satisfied with the information they are getting from their travel advisors (64%) than from airlines (59%), hotels (45%), or other suppliers. 

32% of respondents said they are now more likely to use a travel advisor because of the pandemic (67% said their attitude hasn’t changed). 

“The constant changes in rules and restrictions are worrisome and frustrating,” said one client. “This reality makes using a travel professional more important than ever.”

What it will take to restore confidence

The survey asked both consumers and travel advisors what developments would spur them to book more travel in 2021. Their responses suggest that both groups are guided by science and swayed less by “hygiene theatre” and financial incentives. It also suggested that vaccine distribution is critical to the industry’s revival.

Availability of a safe and effective vaccine was the top answer selected by both advisors (96%) and consumers (83%). The overwhelming response to this development — now a reality, but still largely abstract while the survey was in the field — suggests that the travel industry may want to consider a vaccine requirement as a condition for welcoming guests.

Personally, I can imagine a world where you must prove you have been vaccinated before boarding a cruise ship or a commercial flight, and whilethat might dampen the numbers while the vaccine is being distributed, it will inspire enormous confidence. 

And it is not that far-fetched: after all, travelers are already used to getting inoculated for diseases like yellow fever and typhoid to visit certain countries.

High-rated factors that will inspire people to travel

What will motivate people to travel?
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  • Accurate, rapid-result testing for COVID-19 at airports, hotels, etc: 71% advisors and 42% travelers
  • Safe and effective treatments: 61% advisors and 49% travelers. 
  • Removal of quarantine requirements at the destination: 61% advisors and 44% travelers. 
  • A sustained decrease in COVID-19 infection rates at the destination: 39% advisors and 47% travelers.

The responses were similar for hotels. The factors would-be guests consider the most important:

What hotels need to do to motivate travelers?
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  • Cleaning and safety protocols: 67%
  • Mask requirements: 57%
  • Flexible cancellation policies: 50%
  • Air-filtration and ventilation systems: 46%. 
  • Contactless check-in: 0%
  • Temperature screenings: 19%
  • Guests get tested for COVID-19 before checking in: 24%.
Another non-factor: financial incentives. 

Very few consumers in the survey said that “great deals,” low airfares, or reduced hotel rates would spur them to book. Similarly, only 2% of travel advisors said discounts or other incentives would move the needle for their clients, and only 6% thought an improvement in clients’ financial situation would make a difference.  

My long-held view is that discounting is a fool’s game in the luxury travel business. The wealthy are too cautious to be swayed by a lower airfare or a discounted hotel room. They value their health and well-being more than their bank balance. That said, they do love a perceived ‘deal’ or “benefit” with added value such as an extra night or complimentary breakfast!

Cruise has long road ahead
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The travel industry wants a ‘safe harbor’ law so that a ship cannot get turned away from the port if there is a case reported on board. Photography by mauricio mascaro from pexels.

Cruise ships will not see full passenger loads for quite some time, according to the study, absent a vaccine or treatment breakthrough.

The pandemic hits the cruise industry hard

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  • 81% or more than four out of five luxury travelers said they are unwilling to book a cruise in 2021 
  • 21% or more thanone in five said they don’t see themselves booking a cruise. 
  • 14% said they had already booked cruises for 2021.

Although those may be placeholder reservations that the cruise lines are likely to reschedule. Asked for comments, respondents signalled more acceptance for small-ship cruises and river cruises.

Travel advisors are not expecting cruise business to come back in the immediate future, with only 10% thinking it would recover this year. Nearly half (45%) said recovery would happen in 2022, 35% predicted 2023 or beyond. The industry will need to convince both passengers and regulators that it can prevent and control outbreaks onboard, and to my mind, the only way they will get back to normal is by requiring every passenger and crew member to be vaccinated.

In many cases, a cruise ship visits several ports on an itinerary, so it is dependent on rules and regulations issued by many different health authorities. The industry and governments must adopt international protocols before cruising can start back up again — such as a ‘safe harbor’ law so that a ship cannot get turned away from the port if there is a case reported on board. 

The vaccines hold the key

We do believe that luxury consumers are ready to get back on the road this year. However, long-haul travel will take longer to recover, and it is only in the second half of the year that we will see international movement. To what extent depends on how effectively the vaccines are rolled out. As with so much since March 2020, there are many unknown factors. We can be sure when the time is right for luxury travelers they will be back. They believe it is their right.

Click here for your personal copy of the survey.

(Note: Both our surveys were conducted in mid-November and early December 2020. Both Pfizer and Moderna announced the initial success of their vaccine trials while the survey was in the field, so the findings do not fully reflect the impact of the vaccines’ approval and distribution.)

Peter J. Bates is President, Strategic Vision.