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In a boon for the travel industry, a surprising new study shows that the luxury travel demographic is currently six times larger than marketers are targeting. Luxury travelers are traveling more and spending more as demand for high-end experiences continues unabated. However, high earners are not the only ones willing to pay it.
According to a study by The Olinger Group, “Luxury travel marketers typically target people with annual incomes of $250K and above. Our research indicates that travelers with incomes of $100,000 and above are the most likely buyers of luxury travel. They exhibit the same behaviors as higher income earners. And the same attitudes and expectations.”
CEO Jude Olinger shared the study’s biggest surprise was finding that the luxury traveler’s pocketbook is bigger than marketers in the industry previously realized. “Being a luxury traveler is more about having a luxury mindset than how much money you make. So when the luxury travel industry goes after the top 5% of earners, the pie is six times bigger.”
Luxury is defined as “indulging in something that provides pleasure, satisfaction, or ease.” The Olinger Group found that while the wealthy may live a life of luxury year-round, the non-wealthy are more willing to pay for luxury vacations.
Luxury travelers with lower incomes ($100,000 or more) may have less spending power than luxury travelers with higher incomes. However, regardless of income, they spend more and take more vacations than all non-luxury travelers.
John with Financial Freedom Countdown shares, “As an early retiree, I love to travel, so I make sure vacations are part of my budget. A safari to South Africa has been on my bucket list for years and was an unforgettable experience. Travel is expensive, seeing animals in their natural habitats.” I will always treasure the precious memories.
Seventy-eight percent of those surveyed said that travel is more important to them now than before the pandemic and that they are willing to pay for it. This is especially true for travelers aged 18 to 34 and 35 to 54, who are eager to explore after years of being locked away.
Olinger predicts that demand for luxury travel will remain strong through 2023. “Our data shows that luxury travelers will spend 25% to 33% more over the next 12 months – depending on income.”
Next summer, luxury travelers will spend an average of $5,000 per person on each trip, according to Flywire.
Especially the hotel industry is experiencing unprecedented price hikes. Despite high inflation and fears of recession, demand for hotels is higher than ever.
Hilton CEO Chris Nassetta predicted the hotel chain would have “the biggest summer we’ve ever seen this summer in our 103-year history.”
By 2022, JW Marriott, Ritz-Carlton and St. Luxury hotels like the Regis have seen rates increase nearly 30% in the first quarter of 2022 compared to 2019. As the demand continues to rise, so do the rates.
As travelers’ budgets increase, so do their expectations. They’re not just looking for unique experiences, they want to eliminate any hassles along the way.
Olinger says, “They’re looking for guidance and unique offers and services. Social media is one way to get that guidance, especially among high-income people who use luxury travel consultants to plan and book their trips.”
Casandra Karpiak shared this about a recent family vacation with Savoteur. “It was the first time I used a luxury travel planning company and I was hooked. It was such an incredible experience and completely stress-free because the company took care of every detail, down to the minute.”
“Everything was planned for us, including hotels, restaurant reservations, private tours and where to park our rental car, so we didn’t have to worry about long walks to the car at the end of the day! Best part was the insider knowledge of each place we visited, which allowed us to make the most of our time.”
Despite economic concerns, the biggest motivating factor for spending money on luxury travel is the desire for memory-making experiences, the Olinger study found. “Luxury travelers value and prioritize these experiences, so they’re willing to spend regardless of what’s happening in the economy right now.”
Sanjana, along with The Female Professional, traveled to Finland for a once-in-a-lifetime chance to see the Northern Lights. He shares, “I’m always looking for unique experiences that you can’t find anywhere else. The Kakslautanen resort in Finland, known not only for its glass igloos but also Santa’s Village, has one of those! I went during the holidays. The whole experience included reindeer and snowmobiling in the arctic forest. It was unforgettable!” “
Luxury travelers also place more emphasis on family vacations and take more trips than non-luxury travelers, according to the Allinger Group. The study shows that luxury travelers take more family vacations than non-luxury travelers and that a higher percentage of them are closer to their families than luxury travelers.
“My family and I recently went to St. Maarten for our December holiday vacation,” says Monica Fish. Although there are certainly less expensive beach vacations, St. Maarten has a well-established high standard in hospitality. They make the visit a real pleasure.”
Fish continues, “Even during the busiest week of the year, we didn’t experience lines, waits, or sold-out tours and restaurants. Picking up our rental car with Starlight at the airport felt like a VIP experience. It allowed us to spend more. More time as a family and making even more memories.” , including sharing a good meal with our children for the first time.”
Olinger also says that travel consultants are “seeing tremendous demand for multigenerational luxury vacations from their clients last year. They couldn’t book trips to Italy and Greece as quickly. Some of it was Covid-related, but most of it was impulse.” Now I want to make memories with my family.”
Olinger says that between the first and fourth quarters of 2022, they saw spending and the number of vacations rise dramatically. “Luxury travelers are out in the world, and that shows no signs of slowing down anytime soon.”
