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Check Into The Future Of Luxury Travel

Leisure travellers are becoming more explorative. Latest destinations include the Arctic Circle, lakes within Italy, interiors of Spain, etc

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Globally consumers are increasingly spending their disposable income on experiences rather than material goods. Their desire for life experiences is spurring a growth in luxury travel that is outpacing the rest of the travel industry.

A recent Amadeus report ‘Shaping the Future of Luxury Travel’ shows that between 2011 and 2015, business and first-class travel increased by a CAGR of 4.5 per cent as compared to 4.2 per cent for overall travel. While this is a global figure, even in India there has been a significant increase in business and first-class travel. There are a couple of reasons for that: First, most business and first-class travel is official travel. So it can be expensed out from the cost of doing business. Second reason is that globally in certain sectors, primarily flights to Europe and the US, there is over capacity and airlines are giving amazing discounts. The differentiation in price between unrestricted economy and business class is very limited. People are willing to spend 20-30 per cent more to travel in business class.

The same thing is also happening with accommodation. There are certain cities where the hotel rates are extremely reasonable because of over capacity.

The same also holds true for ground transportation. Companies like Uber are giving great deals. The price gap between a regular taxi and an Uber are decreasing. So a lot of people are migrating to Uber.

As per the report, India’s luxury travel market has grown at a CAGR of 12.8 per cent, which is higher than any other BRIC nation and highest among the 25 countries that have been explored in the report.

If we were to concentrate only on air travel, what is becoming an absolute necessity is getting Internet on board. When people take long haul flights they want to remain connected. Typically on flights from the US, people sleep one way and work the other way. Being connected is very important.

Second is the ease of convenience of timings. People would like to reach a particular city in the morning, work the whole day and leave in the evening. You can sleep on the plane, both going and coming back.

Today the idea of comfort has changed. Ten years back, a business-class seat was also not a flat bed. It was a 60 per cent recliner. But now it has become an absolute must to have a 180-degree flat bed in business class. Personalisation of suites in first-class travel is the new trend. Singapore Airlines was the pioneer, then a lot of other airlines followed. Jet Airways has an excellent product. Etihad has taken it to a whole new level with residences.

Another aspect is private aviation. Earlier in India it was really limited as the infrastructure was not there. Actual serviceable aircraft were very limited. But now a lot of people are treating a private jet as a tool to conduct business rather than a luxury. If they want to conduct meetings in multiple cities on the same day, travelling by private jet makes sense. Also charter rates have come down, making travel by private jet more economical. Infrastructure is still a problem but it is improving. Over the next 5-7 years, private jet business will grow in double digit figures.

People are looking for experiential travel even if they are going for a business trip. Senior management wants to live in a hotel that provides them different experiences. So hotels need to look for entertainment options such as theatre, stand-up comedy, etc.

Most of the time when you are travelling for business you are travelling alone. So then you need to connect with other people around you. How do you do that? That’s what hoteliers are looking at. Ways to help you connect with others.

Leisure travellers are becoming more explorative. Latest destinations include the Arctic Circle, lakes within Italy, interiors of Spain, etc. They are big on adventure holidays, whether it is wild life safaris in Africa or sky diving in New Zealand. People are also looking at doing more history and culture related holidays. So you have food tours and photography tours. Places like Croatia and Ukraine are becoming popular. Culinary tours are on the rise. People sometimes book a table at a particular restaurant a year in advance. For a leisure traveller, which restaurant they will dine at, what show they will watch, everything is planned much in advance. Even business travellers, who are foodies, ensure that they get to eat at a favourite restaurant, if they are in that city. They book in advance.

Tier 2 cities have graduated to what was previously considered off beat locations such as Korea. Tier 3 is just starting with international travel so they are still visiting places like Bangkok.

We have a middle-class of 300 million people and all of them are potential travellers. However, right now only around 10 per cent or 30 million are travelling. So there is a huge potential.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Ankur Bhatia

The author is Executive Director, Bird Group

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