Luxury travel and hospitality providers are facing growing resistance to higher prices; however, it’s not clear whether high-net-worth customers are curtailing their spending.
A survey of travel consultants who specialize in high-end travel found “most advisors are reporting healthy revenues, strong forward bookings, and continued appetite from high-net-worth clients. But underneath that rosy picture are signs of subtle but important shifts.”
When it comes to dipping into their wallets, the percentage of clients willing to spend more for exclusive and bespoke experiences dropped from 89% in 2024 to 73% this year.
What’s more, 59% of travel advisors say customers are waiting longer to make final decisions.
The report attributes the hesitancy to “growing caution in the face of rising costs.”
The Pulse of the Industry survey from Strategic Vision concludes, “Clients remain price-conscious and more deliberate in their choices — opting for different hotels, tweaking itineraries, and sometimes choosing different destinations when pricing doesn’t align with expectations.”
The survey comes as Virtuoso Travel Week gets underway Saturday in Las Vegas.
The annual conference brings together travel advisors who are part of the Virtuoso Travel network – they sell around $30 billion in travel per year – and executives of travel suppliers, including managers of five-star hotels and top executives of hotel groups, cruise lines, expedition companies, destination promotion boards, and local companies that often organise that after-hours access and VIP treatment.
The report says, “Growth is bringing its challenges. Advisors are juggling high demand with limited staffing and rising client expectations.”
Strategic Vision President Peter Bates says, “Luxury travelers are still willing to spend — but they’re asking more of their advisors. They want meaning, they want value, and they want it delivered seamlessly. That’s not a challenge: It’s an opportunity to elevate what we do.”
According to the survey, 51% of advisors cited high prices as their biggest obstacle, with 68% of respondents saying clients changed hotels due to pricing.
More than half of advisors (55%) say clients have changed destinations entirely based on cost.
Still, demand is strong with 63% saying bookings are ahead of last year.
So, what’s making the wealthy get out their black cards?
Interest in trips for rest and relaxation has decreased by 10 points, from 43% to 33%.
At the same time, 84% of advisors say there is a higher interest in celebration travel planned around birthdays, anniversaries, and destination weddings.
Spending time with family (76%) and discovering new places (73%) ranked highly.
Buzzy travel categories, such as transformative experiences, are rated just 45%, which is still a significant number.
Bates says, “The buzzwords may evolve – from experiential to slow to transformational – but ultimately what we’re selling is the same: travel that fulfills a personal need. Your messaging should speak to emotional drivers — family bonding, cultural immersion, personal milestones — rather than generic luxury cues.”
However, rates that can often exceed $1,000 for entry-level hotel rooms are causing pause.
The advisors also say service isn’t keeping up with prices. According to Strategic Vision, “Clients are more willing to change plans based on perceived ROI and service quality — especially when pricing doesn’t align with expectations.”
Nearly a quarter (24%) of advisors said “inadequate service delivery from suppliers” was a top challenge.
Despite increases in prices on land and the water, 75% of advisors say they are seeing more interest in expedition cruises, with 57% pointing to river cruises as a hot segment.
With paying more seeming a given, the advisors say having that perfect or near-perfect experience is more important than ever. Almost one-third of respondents (31%) said overtourism was an obstacle to selling popular destinations.
Travel suppliers can take heart that they are not alone when the wealthy push back on pricing.
A current survey by Private Jet Card Comparisons of private aviation flyers shows 59% of respondents citing increased prices as the top reason for considering a change of flight providers.
That’s down from 65% last year.
However, 25% say they have been frustrated by flight delays, cancelations, or changes with 17% saying aircraft cabins were in poor condition, and 16% pointing to declining customer service.
Still, there are hints that despite increased prices and service issues, HNWs are still going to spend.
Private jet flying, as tracked by ARGUS and WingX, has rebounded after two years of slight declines and is approaching the record levels seen in 2022.
Over 95% of HNWs who started flying during or after Covid are sticking with it and of those responding who were flying privately before the pandemic, while the majority say they are flying privately a similar amount, those who have increased use of private aviation are outstripping those who have cut back by a greater than four-to-one margin.
What’s more, 91% of private flyers list traveling for pleasure as a lifestyle interest or passion. Watches and jewelry – considered hard luxury – rated with just 24% of those surveyed.
This article was originally published on forbes.com.
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