As economies shift, a new luxury traveler emerges

By Arnie Weissmann

Luxury travelerDANA POINT, Calif. — A seismic shift in who is buying luxury and what they’re looking for has recently occurred, and marketers of high-end goods and services were recently put on notice that last year’s assumptions are decidedly wrong, and last month’s may be suspect.

Speaker after speaker at the American Express Publishing Luxury Summit, held here at the St. Regis Monarch Beach, underscored how an emerging class of relatively youthful, internationally minded, nouveau riche are roaming the world spending money and redefining service expectations.

“They look so casual, walking around a hotel in a swimsuit, but when they want service, they want it delivered flawlessly,” said John Vanderslice, global head of luxury and lifestyle brands for Hilton Worldwide. “They don’t want four people standing around them, waiting to pick up their handkerchief should they drop it. They want service on their terms.”

Starwood CEO Frits van Paasschen said the Ritz-Carlton ethos of “ladies and gentlemen serving ladies and gentlemen may be a credo for the ages, but it’s sure not for today.” Starwood’s St. Regis, W and Luxury Collection brands compete with Ritz-Carlton.

Being among the elite “used to mean being in the know,” van Paasschen said. “Today, it’s knowing what to know. Who decides that? I don’t think we’re the arbiters anymore.”

For the younger, wealthy consumer, what defines luxury is more diverse and personal, but the emerging luxury consumer exists side by side with more traditionally minded upper-upscale travelers. As a result, hoteliers like Starwood are offering different luxury experiences across several brands.

“Other categories have known this for a long time,” van Paasschen said. A “luxury car” may be as different as a Ferrari, Rolls-Royce or BMW. The luxury fashion-beverage house LVMH has 60 brands, from Louis Vuitton to Donna Karan and from Dom Perignon to Hennessy.

Hilton’s Vanderslice, who is responsible for the Waldorf-Astoria and Conrad brands, sees technology as the way to both differentiate his brands and ensure that they’re serving a variety of luxury travelers in exactly the way they want to be served.
AmExLuxSummit-vanPaasschen
“Luxury hotels have known how to deal with VIPs for a long time, and technology can democratize it so that every person in the hotel is a VIP,” he said. After making a reservation at his brands, he said, “you’ll get an email from a concierge who is ready to help, with a cellphone number and an email address.”

“But we’ve also launched an app, Conrad Concierge,” he said. “It’s a service delivery system, hooked into our back-end systems. Using it, guests can book a wake-up call five days in advance, as well as let the property know when they want their coffee delivered each morning, or make sure that the valet is ready to pick up their clothes for pressing right after they check in.”

The app is available in eight languages, which he said was important because picking up the phone and ordering room service can be daunting for someone who doesn’t know the local language.

He also asserted that automated check-in is about to take another leap: “Pretty soon, you’ll be able to check in at the airport when you land and get a keycard from a kiosk at the airport.”

When a hotel knows your preferences, technology also enables it to be shared across the world within a hospitality company, van Paasschen said. In a combination of high-tech/high-touch, Starwood identified its 30,000 best customers and assigned each of them an ambassador who will reach out to them after a reservation is made to find out the nature of the trip — board meeting, wedding or perhaps vacation — so the property can be prepared to provide appropriate service.

Two years ago, van Paasschen famously moved his executive team to Shanghai for a month, and at the time he spoke here, he had just returned from a similar month with his managers in Dubai.
 

“You remember ‘management by walking around’?” he said. “Now it’s ‘management by flying around.’”

Businesses can no longer set five-year plans and view growth as national vs. foreign, he said.
AmExLuxSummit-Panel
“No matter how smart you are, you can’t predict what’s coming next,” van Paasschen said. “Agility is the new smart. And managing all the complexity is more than a single person can do. As leaders, you have to accept that someone in the room other than you, and probably younger than you, is the expert.

“And don’t focus on headlines,” he admonished the audience. “Focus on trendlines.”

To give a sense of how quickly the world is changing, van Paasschen predicted that “more highways, airports, office buildings and hotels will be built in the next 12 years” than have been built in all of history until now.

He said Dubai currently has the second-most Starwood properties (after New York) and, indicating that he was not just looking east, he called Brazil “one of the most under-hoteled countries in the world.”

Much of what the two hoteliers focused on defined travelers from outside the U.S. CNBC wealth editor Robert Frank helped define the new American wealthy consumer, saying that “new new money comes from energy: fracking, oil and gas. And it’s coming from the heartland. They’re not buying Ferraris. Their idea of a luxury purchase is a $300,000 John Deere tractor for the men, and for the women, vacations and home improvement.”

An audience member asked how to find the frackers.

“Go to a conference in Kansas City,” Frank said. “But I’m not sure they’ll spend the same way others spend. They’re farmers, they’re nurses. They were growing wheat last year and now lease their fields for $3 million. These are quiet, Midwestern people.”

AmExLuxSummit-BransonAlso fueling American wealth is the stock market, he said, and currently 10% of Americans own 80% of its financial assets, and the top 1% owns more than half of all stock. Of those with household incomes of $250,000 or more, a third plan to spend more this year than last, and 60% will spend about the same. (See also “From the Window Seat.”)

Virgin’s Richard Branson was interviewed on stage. Branson, who has taken 500 deposits of $200,000 for a seat on Virgin Galactic, the suborbital spacecraft he’s developing, said the first flight carrying passengers will launch either in Q4 2013 or Q1 2014.

“In time, we’ll get the price down as the market expands,” he said.

While the first passengers are going simply for the experience, he said that ultimately the ships will be used for “point to point travel. We’d love to get you to Australia from America in a couple of hours. I think we will be that airline.”

Follow Arnie Weissmann on Twitter @awtravelweekly.
 

Photo of luxury traveler courtesy of Shutterstock.com
This article has been corrected to reflect that the summit took place in Dana Point, Calif. 

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