Luxury leaders try downscaling two new brands

Two icons of the ultra-high-end tour market are out to prove that luxury travel does not necessarily mean expensive travel.

Abercrombie & Kent and Butterfield & Robinson, two operators that have built their businesses and reputations on ultra-deluxe travel product -- with price tags to match ­-- have recently launched lower-priced lines for customers who don't necessarily need or want accommodations in the world's most opulent hotels while engaging in immersive, experiential vacations.

Rather than signaling a decline in the luxury market, the companies and the travel agents who sell them say that the launch of lower-priced lines is about reaching a new pool of travelers who place greater value on the parts of the trip that take place beyond the hotel room.

"We're not doing this because the business isn't there for us at the top end," said Butterfield & Robinson President Norman Howe. The traditional product, he said, "is very solid and growing. We see this really as a growth opportunity."

At the start of 2012, Butterfield & Robinson introduced a small collection of trips under the Bistro brand, a lower-priced version of the company's traditional offerings.

Similarly, starting Sept. 1, retailers were able to book Connections by A&K, a collection of 17 programs in 22 countries, priced at 30% less per diem than a typical Abercrombie & Kent small-group journey.

One of the main differences between both brands' signature trips and their lower-priced lines -- the area where they were able to make the most significant cuts -- is the nature of the properties.

Connections for A&K is for "clients who always say, 'I'm not going to be in the room; I want to see as much as I can,'" said Donna Devore, vice president of Harrison, N.Y.-based Protravel International.

Devore added that she, like Howe, does not believe the luxury market is suffering.

According to Howe, from a product development standpoint, more expensive properties do not necessarily always translate into an improved travel experience, something Butterfield & Robinson has been grappling with as it tries to build its portfolio of authentic and experiential walking and biking trips.

There will always be high-end customers who are committed to, and will always prefer to stay at, luxury chains such as Four Seasons or Oberoi.

But, he said, "The reality is, the more you end up using properties that have the kind of recognition that a lot of [high-end] properties and restaurants have, those are actually easier to find. Whereas the undiscovered gems, they lack the validation, but they can often be equally as good."

He added, "We were getting a little frustrated, and we were starting to feel constrained by [the traditional high-end] format."

Howe said the Bistro product is not just about the price point but about the ability to experiment with interesting and unique properties that, for example, are better suited to biking itineraries. These properties enable cyclists to ride from one property to the next without any transfers, as opposed to being restricted to five-star properties.

Authenticity over elegance

Butterfield & Robinson and Abercrombie & Kent are both trying to leverage one of their core competencies: executing a very rich and immersive travel experience on the ground.

"These are those who are looking for authenticity over elegance," said Keith Baron, senior vice president of strategic growth and development for A&K. He said the operator developed the Connections product by reducing costs in three main areas: accommodation, exclusive experiences and group size. Traditional A&K small-group journeys range from 10 to 18 people, but the company was able to contract better rates for the Connections itineraries, in part, because each departure will have a maximum of 24 to 28 passengers.

Baron added that the demographic Connections is targeting is not much different from that of traditional A&K customers. The key difference, he said, is that this demographic represents "a new market that is more value-conscious, that doesn't want to spend quite as much on every vacation."

Both companies mentioned families, especially large, multigenerational families, as a good fit for their lower-priced product lines.

The launch of Connections by A&K "speaks to two strong trends in luxury travel," said Kristi Jones, president and COO of Virtuoso. "The first is the expanding definition of luxury, which is now about authentic experiences as much as elegance and thread-count. The second trend realized in this launch is a generation of younger global travelers. A&K is looking to attract this new client, one who may not have been their previous target audience."

For retailers, the new product can also serve as a gateway to upscale brands that their clients might not have considered in the past.

"There are people who would like to buy A&K, but they think it's too expensive or it's too stuffy," said Melanie Pahl of Denver-based Distinct Destinations. Pahl said she could see herself selling Connections and then trying to move clients into the traditional A&K product on future bookings.

Of course, there is always the possibility that the reverse could happen -- that upper-tier clients might scale back to the lower-priced product. But Butterfield & Robinson's Howe said that if that happens, he would rather have his company capture that business than see it go to a competitor.

"I think there's a little bit of risk, for sure," Howe acknowledged. But from his perspective, the ultimate goal is to retain existing clients while at the same time attracting new ones.

"The challenge for all businesses is the acquisition of travelers," he said. "The hurdle to get someone on a trip, when the price point gets higher, the hurdle becomes harder. We definitely see this as a vehicle for reaching new people who wouldn't necessarily try us out."

From a sales point of view, Devore cautioned against pitting the lower-priced product against its higher-priced counterpart.

"I don't want the two brands competing, necessarily," Devore said. She added that she is looking forward to selling Connections because she is expecting the same ground support, the same quality of tour guides that she has come to expect from Abercrombie & Kent overall.

"I see it as being able to attract a new client to a premium brand," she said.

For news on tour operations, wholesalers and river cruising, follow Michelle Baran on Twitter @mbtravelweekly.