Jamie Biesiada
A few years ago, I would say I couldn't leave Costco without spending $200. Nowadays, I've upped that figure to $300.
Kid snacks are definitely a factor that wasn't four years ago, before my daughter was born. There's nothing worse than a hangry preschooler, and those individual bags of Pirate's Booty make life so much easier. But also at play are the generally higher prices we're all contending with at the checkout line, on our utility bills and, of course, on our travels.
Our collective wallets might be shedding a few tears, but for travel advisors, higher prices mean higher commissions; and clients -- at least in the luxury space -- seem willing to pay.
Travel Experts in Raleigh, N.C., recently polled its advisors and found that clients are spending more on travel than in the past. It helped contribute to a very good year for many advisors: Business for Travel Experts affiliates typically increased from 20% to 30%, even up to 40% year over year for some.
It begs the question: Is there a ceiling for client spending?
There has to be, said McLean Robbins, founder of Lily Pond Luxury in Annapolis, Md., a Travel Experts affiliate, "although I am not sure when we will hit it, because it seems to me that every time I think I've hit it, a new crop of clients pops up that appears to have no limit on what they will spend," she added.
Robbins, a journalist by trade, founded her agency 10 years ago. She works largely with high- and ultrahigh-net-worth clients, many of whom have been with her throughout her tenure as an agency owner. That client stickiness and the trust she's engendered are part of the reasons she believes they're more likely to forge ahead with travel despite higher prices.
"We have such client trust that when we say the prices are just up 30% from the last time you went to Italy, and $3,000 is the new floor for five-star on the Amalfi Coast in high season, they're not balking at those numbers in the way that, maybe, a new client would," Robbins said.
Prices in general are up post-pandemic, Robbins said. Five-star rooms used to be $1,000 a night. Now, the floor for true five-star properties is closer to $2,500 to $3,000 per night. That might have meant a suite in the past, she said; now it's the rate for a base room.
Robbins said she believes the industry might be reaching an ADR ceiling in that respect. She has seen some examples of entry-level rooms at five-star properties going for $5,000 a night. At that price point, she guessed some clients would simply shift properties.
But for now, clients aren't balking at increased prices too much. They might shift the way they're traveling a bit, perhaps opting for a villa for a multigen vacation that is more economical on a per-room basis, Robbins said. Or they might opt for a couple's trip instead of bringing the kids, so they only have to buy two first-class tickets instead of six.
"They'll get themselves there, but they'll self-select it down in a way that's comfortable for them," she said.
However they opt to travel, they're still spending (big, in many cases), which is good for advisors' bottom lines.
Now, could someone do something about the price of Pirate's Booty?