Luxury Travel is Making a Slow Rebound
Ovation's EVP Michael Steiner talks to Barbara DeLollis of USA Today sharing insight into luxury travel. Even for business, luxury travel continues its comeback from the depths of the recession, the industry is finding.
But an erratic economy is making for a slow and spotty return that remains below the highflying days before the financial collapse of 2008.
The investment bankers, Wall Street lawyers and other elite business travelers served by high-end travel service Ovation Travel, for instance, are buying just 3% more first-class airline tickets this year than they were last year, according to Ovation senior executive Michael Steiner.
"It's the same as last year, which for some people is a good sign," he says. It could be worse. Despite continued economic uncertainties, he says, Ovation's corporate clients have eased up on the restrictive ticket policies they imposed in 2009.
Where Ovation and luxury hotel chains Ritz-Carlton and Four Seasons have seen significant growth in business is in business meetings and special events.
Group Bookings Up
Ovation's bookings jumped 15% this year over last year, and clients are back to booking four- and five-star hotels for their corporate retreats and other gatherings, Steiner says.
"During the recession, forget it. There was nothing going on," he says.
During the last three to four months, Marriott International's Ritz-Carlton has seen the pace of group business bookings for 2013 improve "in the low single digits" over last year's levels, says Chris Gabaldon, the chain's chief marketing officer.
Some groups are booking events during off-peak times, he says, which suggests they're trying to make their dollars stretch further -- or, better for hotels, seeking to secure events further in advance.
And while companies had been booking smaller meetings instead of the splashy, high-profile national meetings before the recession, Gabaldon says, they're starting to enter a cycle in which the bigger meetings that are booked further in advance are starting to return.
The overall state of travel at Ritz-Carlton will not reach levels seen in the peak year of 2007, he says, but "next year, we will be really close." Early next year, the chain is on track to reach its revenue per available room rates seen in 2007.
Leisure is Most Stable
Luxury-travel agency network Virtuoso, which covers about 340 agencies in 20 countries, specializes primariy in leisure travel.
It says its agents are booking 51% more business this year than 2009. Broken down by category, hotel bookings jumped the most (82%), followed by rental cars (70%), airlines (68%), tours and on-site arrangements (51% apiece) and, finally, cruises (30%).
Ritz-Carlton's experience is the same. "The strongest segment by far has been leisure," Gabaldon says. "The consumer is buying more premium rooms every year over the previous year.
This year, they'll buy more club rooms and suites vs. last year, and more ocean-view rooms at a higher rate than last year in season.
"One thing they haven't been willing to give up on was a family-oriented vacation," he says.
For New Year's Eve 2013, Virtuoso-affiliated travel agent Meg North of Brownell Travel says she's researching options for a client who requested unique experiences.
Among the options she's come up with: a St. Petersburg, Russia, trip to attend the Czar's Ball, a trip to Australia to ring in the new year at the newly redone Park Hyatt Sydney or a stay at the InterContinental Hong Kong overlooking colorful Kowloon Harbor.
Money is No Object
Shelby Donley, who bought an existing travel agency in 2008, says her business has grown thanks to customers who will spend $20,000 to $50,000 on a week's vacation.
Some customers, however, have been blinking at hotel prices in European capitals, where $1,000 a night may buy only an entry-level room during peak season, she says.
"Rates have grown so much, so fast. It's the one thing that the American market's having a hard time adjusting to," says Donley, owner of Phoenix-based Camelback Odyssey Travel.
Kimberly Wilson Wetty of another high-end service, Valerie Wilson Travel, recently arranged a week-long family trip for 18 people to the Casa de Campo resort in the Dominican Republic. With flights, several villas, a private chef, private golf lessons and an excursion with an amazing catamaran, she says the family spent $500,000.
Of course, there's ultrawealthy -- and then just the merely wealthy.
"The ultrawealthy never stopped traveling," Wetty says. "The ones who spent maybe $15,000 to $20,000 on a week's vacation? They are back."
But money can be a concern for the merely wealthy.
One indication: Last month, luxury-tour operator Abercrombie & Kent launched a division, Connections by Abercrombie & Kent, that will sell exotic tours at around 30% less than its 50-year-old parent.