Images of five-star hotel stays and private jet charters populate luxury travel advertising and website pages, often shaping travel agent perceptions about this lucrative niche. But how accurate is this persona and how is it possibly misleading travel agents looking to go deeper into the affluent traveler segment?
The just-released “MMGY 2017 Portrait of American Traveler” survey reported a number of surprising results that contradict the typical understanding of who a luxury traveler is and how they travel, including this revelation: only about one in three affluent travelers are willing to pay for what most would call “luxury travel” accommodations and transportation.
Thirty percent of affluent traveler respondents said they would pay “full price on a vacation” to guarantee the “quality and service I deserve,” versus 77 percent of luxury travelers, according to researcher and global travel marketing firm MMGY.
Luxury travelers and affluent travelers are different
“Travel agents need to see the distinctions between ‘affluent travelers’ and ‘luxury travelers,’” said Steve Cohen, MMGY vice president of insights. “There are significant differences in what they spend their vacation dollars on and how they are motivated to travel.”
Respondents to the MMGY survey indicated that their households earned $217,000 (affluent traveler) and $224,000 (luxury traveler) on average. But from there, these two segments begin to diverge.
For example, one out of ten affluent travelers have not taken a single vacation in the past 12 months, according to MMGY. “We see that many of these affluent travelers are workaholics, and they are spending money on other things, like new homes,” Cohen said.
Luxury travelers, according to MMGY’s definition, represent 11 percent of all American travelers. In the last 12 months, these 6.7 million households took 40 million vacations and spent $67.5 billion on leisure travel.
Also, in the coming year, luxury travelers intend to spend about $10,500 on leisure travel, up about 4 percent from the previous 12 months, they told MMGY; while their affluent traveler cousins intend to spend only about $6,200.
One of the chief motivations for households to spend more on luxury is that “the memories I get from my vacations make the trip worth it,” MMGY’s survey results show. Ninety-two percent of luxury travel respondents said this, compared to 67 percent of affluent travelers.
“Nostalgia is a very real thing for many luxury travelers,” said Lucas Cobb, MMGY vice president of integrated planning. Two in five luxury traveler respondents said that memories of their childhood vacations influenced their current vacation purchases, versus about one in five affluent travelers.
What will they pay for?
Just because they have large sources of discretionary income does not mean they will spend it on limousines and high-end accommodations. For luxury travelers, 80 percent said they were willing to pay for “true luxury” lodging, but only 20 percent of affluent travelers were willing to do the same.
For many affluent travelers, a hotel “is a jumping off point, just a place to sleep. It is not a place to be pampered,” said Cohen, adding that affluent travelers focus more on the experiences they will see and feel on vacation, than creature comforts.
He recommends that a travel agent working with a potential high-income household use probing qualifying questions to establish what kind of travel a new client would be open to purchasing. “During that discovery process, it’s important to find out how do they like to travel, where have they stayed recently, why did they choose that property?” he said.
As you build your preferred supplier base to sell to this segment, make sure you vet them carefully, to deliver on the luxury experience your clients expect, Cohen said. “If their expectations aren’t met, not only will the traveler be disappointed with the supplier, they’ll be disappointed with the agent who built those expectations.”
Still, while both luxury and affluent travelers may have money, both segments can also be stimulated by special offers and promotions, the MMGY survey revealed. According to the survey, 76 percent of affluent travelers look to travel service providers’ social media feeds for these offers, versus 65 percent of luxury travelers.
Make doing business simple and on their terms
In order to retain a luxury traveler client, an agent needs to provide a higher level of “baseline treatment,” Cohen said. “They want to feel special.”
According to the MMGY survey, two out of three luxury travelers want the purchasing experience “to be as pleasant as the experience of the product/service itself.” Only one in three affluent travelers affirmed that statement.
This means the functionality of your website should be easy to follow, and the way these clients choose to communicate with you should fit their preferences, Cohen advised. “The luxury traveler wants to define the contact channel. Let them tell you.”
Cohen also recommends that travel agents looking to pursue this segment ensure their marketing uses text and images that invoke the nostalgia of childhood vacations from a time when their target market was young.
“These travelers are building family traditions from the bottom up, and creating their own traditions now that they are parents,” he said.
He recommends that agents include more pictures of places without people in them, as well. “You want to say ‘Picture yourself in this place. This empty chair by the pool is your chair.’”
Insider information is expected
To win the business of true affluent travelers, travel agents should do their best to portray their knowledge and expertise, and their access to “inside information” about a destination. According to MMGY, 71 percent of affluent travelers ranked “insider/information/access” as the kind of content they expect from social media feeds.
Nearly all luxury and affluent travelers have a Facebook account, while 58 percent of luxury travelers are on Twitter versus only 37 percent of their affluent peers. A third of luxury travelers told MMGY that their vacation destination choices were based at least in part on what they saw on social media; only 7 percent off affluent travelers said the same.
They said when visiting destination web sites and social media platforms, they were influenced the most by professionally taken photos (70 percent), followed by authentic images taken by travelers (56 percent), and “insider information” (55 percent).
Also, luxury travelers have a higher desire (51 percent) to share their travel experiences through social media than their affluent peers (29 percent) and the average traveler (38 percent).