Younger travelers an emerging force in luxury spending

Travelers who use agents to book their trips continue to be the biggest spenders, according to Travel Weekly's annual Consumer Trends survey. But the latest report and other recent research show a surprising shift in who it is that's doing the luxury spending.

According to this year's Consumer Trends survey, those who used the services of travel agents in the past 12 months spent, on average, $10,843 a year, compared with $4,939 among those who didn't use an agent. That is about the same as last year.

The big difference is that spending by travelers over age 55, the group that traditionally leads all ages in average travel spend, declined significantly, from $8,430 to $5,840. And the proportion of those age 55 and over who spent less than $1,000 increased from 6% last year to 23% in this year's survey.

Industry experts said some of the decrease could be attributed to boomers paying off their kids' college tabs, taking more "staycations" and socking away as much of their disposable income as possible just before retirement.

They also noted that other research indicates that millennials are fast becoming the top connoisseurs of luxury travel.

Steve Cohen, vice president of insights for MMGY, said the marketing firm's 2105 Portrait of American Travelers found that millennials and Gen-Xers reported they planned to spend 10% more on travel this year, compared with boomers and matures, who planned to spend 1% more.

"Millennials continue to lead the resurgence in travel," Cohen said. "They're the ones who would rather spend their money on experiences than stuff."

They are also the ones who most often said luxury travel is a deserved reward for hard work, he said. Forty-nine percent of millennials said that, compared with 39% of Gen-Xers, 38% of baby boomers and 35% of matures.

At Virtuoso, David Kolner, senior vice president for global member partnerships, said the consortium's most recent Luxury Trends study showed similar trends.

"On boomers, we actually didn't see any reduction in spending from there," he said. "But what we did see was a little bit of a plateau just before retirement. We kind of term this the boomer plateau."

That plateau, Kolner said, refers to those between ages 50 and 60, when "we saw it drop off a bit, then climb back up after retirement. ... There is a different mindset about money."

Many boomers, he said, have a financial crunch of sorts, paying off debts like college and saving money before retirement.

After that, vacation spending goes back up, according to Kolner.

But like other recent research, he said, Virtuoso's survey showed younger travelers leading the pack in spending.

The highest spending per day, he said, is coming from that oft-forgotten group, the Gen-Xers, with the second highest coming from millennials. Overall spending, he said, still comes from the boomers and matures.

"They have the most money and the most time," Kolner said. "Boomers are great because they buy everything. They are actually very balanced travelers, equally cruise, equally hotels, equally experience ... more than any other generation."

Gen-Xers, he said, spend the most on hotels, while matures are most likely to cruise.

"The millennials are building their career and don't have as much time," Kolner said. "But they are also much more splurge-worthy. They would rather save and spend up for two fabulous nights at the Four Seasons than six OK nights at the Hilton."

Another interesting trend, he said, is that millennials are using professional travel advisers as they search out experiences and products that they can really only get through agents that have relationships with tour operators and other suppliers.

"They do cruise, and they do stay in hotels," Kolner said. "But, really, they prefer to spend the most money on destinations and experiences. ... They are really going after that thing that you can't find on Google."

Millennials are also great clients, he said.

"When we first looked at millennials, they were the worst. They were one and done, and compared to matures, loyalty was half."

But when they dug deeper into those millennials who spend more than $4,000 a year on travel, millennials became the most loyal.

So, between retiring boomers and millennials, agents don't have much to worry about when it comes to demand, Kolner said.  The big question, he said, is, "Are we going to have enough agents?"

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