Premium travel re-defined

Millennials are changing the way modern day luxury travel is viewed and supplied, with ‘personalisation’, ‘authenticity’, and ‘digitally-savvy’ the buzzwords.


There’s a different face to luxury or ‘premium’ travel.

Gone are the old perceptions of what ‘luxury’ constitutes, as a new type of traveller has emerged, demanding that his or her needs and expectations of what a premium travel experience entails, are met.

This ‘old and new luxury’ taps into the generational differences between the travellers of today and the travellers of the past. It’s something picked up on by Anthony Berklich, founder of Inspired Citizen. He was speaking at WTM Africa in Cape Town in 2017, looking specifically at the millennial traveller.

“Parents of millennials perceive luxury in a somewhat old-school way. Butlers in tuxedos, stuffy hotel furnishings, being greeted by ‘sir’ and ‘madam’,” said Berklich.

But, according to him, millennial travellers go in search of a more ‘authentic’ experience – something that offers them a bit more meaning.

“The narrative, the story behind it, is what they are buying into,” he said.

According to Berklich, millennials “seek unique and special, exclusive experiences and items that make them different and create a separation between them and the masses and, most importantly, allow them to express themselves. They are a little narcissistic and will spend money to feel special.”

No surprise, then, to see some suppliers tailoring their offerings to meet these millennial demands.

That’s also because the numbers back it up.

According to ITB-IPK’s World Travel Monitor 2018 survey, half of all luxury trips are made by millennials. Indicatively, outbound trips by millennials (aged 18-38) grew by 15% in 2017 compared to the previous year, accounting for a market share of over 40% of all global outbound trips.

At the same time, due to better jobs and increasing income, the survey results indicated that millennials account for half of all international luxury trips – with expenditure over 750 euros per night. “Today, millennials are the most influential consumer in the premium travel space, having become both brand critics and ambassadors,” says John Watson, Regional Director of Africa for Preferred Hotels & Resorts. “They have played a significant role in technological changes through their use of mobile devices to book and share travel experiences, which includes how the travel industry has shifted to connect with them where they want to be found.”

As a result, the luxury segment is undergoing major changes due to the structural shifts in demand patterns by consumers. They are a completely different type of consumer with distinguishing features, such as desire for experience, tech-savvy, and high morals.

In their report, ‘Millennials. The generation reshaping travel and shopping habits’, Roland Berger and Global Blue published a joint interview, where Sebastien Mancau and Laurent Delmas discussed major trends and shifts in luxury travel that were caused by the emergence of millennials as a major luxury consumer.

“In few sectors have millennials had more impact than in travel and tourism. Their expectations and behaviour are significantly different from their parents’ and older generations’. Their whole travel journey has changed, from the initial inspiration phase to the actual travel and holiday experience,” said Mancau. “The importance of social media as influencer on the choice of holiday for example, the quest for authentic holiday experiences and off-beaten track adventures, the demand for personalized services, their awareness of security threats… changes are happening along the entire value chain.”

But, let’s not get too side-tracked or too fixated on millennials. There are other luxury travellers out there, and to ignore them would be short-sighted.

Further to that, Berklich’s points regarding the millennial generation is not a suggestion that suppliers in the premium travel space need to remain focused on this generation. Sure, this generation will have a big role to play in the global travel space going forward, but there are other players in this market and other trends that remain constant, regardless of generation.

“We have entered a new era of luxury travel,” says the executive summary in Amadeus’s ‘Shaping the Future of Luxury Travel – Future Traveller Tribes 2030’ report. “As newly affluent citizens pop up in different regions of the world, and the travel industry expands to meet their demands, how can travel brands cater for more luxury customers while somehow maintaining a sense of exclusivity?”

The report goes on to say that “as emergent middle classes seek the material aspect of luxury travel, more mature markets are craving a new, evolved kind of luxury. This is why offering luxury customers a relevant, personal and exclusive experience will become even more crucial than it is today – it will be a differentiating factor between old and new luxury.”


The Amadeus report point suggests a link back to the personalisation and authenticity that the millennial generation craves, but can this be applied to all market segments?

Perhaps, let’s flip it around and get the perspective of the suppliers, starting with those in the hotel space?

“Premium travellers want comfort and personalized service, privacy, spacious rooms, amenities in the room, an office away from the office, and fast and reliable internet connectivity,” says Neelma Maru, Director of Sales & Marketing at Mövenpick Hotel & Residences Nairobi in Kenya.

“The premium guest is well-travelled and knows and appreciates exceptional service and product,” says Mark Wernich, General Manager of the Taj Cape Town. “This market expects their hotel to anticipate their needs, thereby eliminating the need for asking for assistance. From larger requirements, such as award-winning restaurants and bars where one can entertain clients and colleagues and spas to unwind during a busy itinerary, to smaller details such as international plug points in all room, safes that can accommodate large laptops, and a complimentary shoeshine service.”

But all of this doesn’t come cheap, and there can be no denying that there’s been a general tightening of belts, post- 2008 global economic downturn. What has this meant for the luxury space?

“Although travellers today are feeling the economic pinch and are looking at ways to cut back on their spending, when it comes to luxury items they are still choosing quality and are prepared to pay more for premium and affordable luxury products,” says Zoleka Skweyiya, Sun International Group Manager for Communications & Customer Insights. “Regardless of whether someone is visiting us for a meal, to spend a night in our hotels, or to be entertained at the casino or a show, they want to physically connect with other people. A digital platform is unable to offer this social element that people will always need, which is why we believe the hospitality industry will always be relevant.”

Sure, it will remain relevant, but let’s get back to a focus on spend, because, if it’s too expensive, no amount of personalisation or authenticity is going to change the situation. Or is it a situation of: regardless of the state of the economy, those with the means will always have the means, so getting too fixated on a sluggish economy is missing the point?

“While the industry was in decline following the 2008 financial crisis, the hotel development pipeline started to recover and is now robust, showing significant growth for the premium travel sector,” says Watson. “This year, we will welcome at least 23 brand new- build luxury hotels (to the Preferred Hotels & Resorts member portfolio), illustrating the confidence that hotel asset owners and developers have in the spending behaviours of luxury travel consumers and the demand for premium hotel products in both popular and emerging markets.”

Yes, but are we talking both leisure and business travel markets here?

“The corporate travel segment did go through a tough phase in the years following the economic downturn (in 2008), with shrinking travel budgets and severe cuts in five-star hotel spending. However, purchasing trends in recent years indicate an almost complete recovery, which signals a new cycle,” says Watson.


The bottom line is that what constitutes ‘luxury’ is a very personal thing, with no one rule applying to each and every traveller across the board.

“Luxury travel is subjective,” says the Amadeus report. “For one traveller, it could be a private multimillion-dollar cruise around the Arctic on a famous yacht. For another, it could be the reassurance of having their dietary requirements automatically catered for throughout their entire holiday and a bespoke designer wardrobe waiting for them in their hotel room – without them having to ask. For some, it could be having their favourite Michelin-starred chef flown in to prepare a meal in a Bedouin tent in the middle of the Sahara. Curating something that appeals to them on a specific, personal level that goes above a traveller’s ‘norms’ is key to the next chapter of luxury travel.”

All of which means that suppliers have to work harder to earn the business of luxury travellers who place a premium on personalisation.

There’s no doubt that ‘personalisation’ has become one of the buzzwords in travel customer experience. That’s down to the expectations of more demanding travellers and the volume of data available to suppliers, who, according to Skift, “have all the information and tools they need to make their products and communications more meaningful than ever before.”

Today, travel executives realize, building more relevant and personalized customer experiences is critical, because it helps differentiate their brands in an increasingly competitive market.

“It’s becoming harder and harder to stand out,” said Loni Stark, Senior Director of Strategy and Product Marketing at Adobe, in an interview with “Many brands are setting the bar higher by engaging with customers on a personal level with content and messaging that is personalized, relevant, and more likely to garner engagement.”

Despite this, many travel brands still struggle to meet the personalization demands of consumers. Consider that in Skift and Adobe’s 2018 Digital Transformation Report, only 36% of travel executives rated their company’s current personalization efforts as a four or five on a scale of one to five. The challenge is further illustrated by the results of a survey published at Adobe’s North American 2018 Summit, in which consumers were asked to rate various digital experiences based on what they expect versus what impresses them. The survey confirmed that younger travellers view personalized experiences as an expectation when choosing their favourite travel brands.

“Millennials in the 25 to 34-year-old demographic are less likely to be impressed versus having an expectation around travel experiences,” said Julie Hoffmann, Adobe’s Head of Industry Strategy for Travel. “These global travellers are setting the bar as they move into the primary travel demographic over the next 10 years.”


So, we’re back to talking about millennials.

No getting away from them, is there?

But that shouldn’t be a surprise, considering what an increasingly important role they are playing in the shaping of travel products at the moment.

So, what does this mean for the airline industry, one of the other major links in the travel value chain?

According to communications satellite owner and operator, SES, “millennials are having an enormous impact on the way the airline industry thinks about connectivity. Millennials’ expectation for immediate and seamless high-speed internet connectivity has expanded to travel, and passengers now expect inflight connectivity as part of a premium flying experience.”

The SES report goes on to explore what it believes to be an opportunity in the inflight connectivity space, driven primarily by the widespread proliferation of wireless devices, an increase in air passenger traffic, and new consumer expectations about what air travel should look like.

That opportunity lies in the ability of airlines to generate impressive revenues in the IFC space, making it not only a ‘must’ for their customers, but an attractive economic proposition for the airlines themselves.

According to SES, “88% of passengers say IFC improves their flight experience, and with annual air traffic expected to double to 7.8 million passengers by 2036, the market opportunity is clear. Between 2018 and 2020, annual revenue from IFC is expected to rise from $1 billion to $2.4 billion.”

“Companies seeking to expand revenue streams are moving into the IFC space, realizing that adapting to this market shift is essential in the age of digital transformation and disruption. The number of commercial planes offering IFC is expected to rise from 7,400 in 2017 to 23,000 by 2027,” says the SES report.

But, it’s clearly about more than the bottom line.

That’s because, with increased IFC offerings, airlines can not only generate new revenue streams, but also gather more data from passengers to improve customer service and the user experience, which brings us back again to personalisation.


Perhaps the best example of this is Joon, Air France’s low-cost subsidiary, which launched in 2017.

The airline has flight attendants dressed in ‘funky’ clothing and has crafted its in-flight entertainment and connectivity (IFEC) with the millennial traveller in mind.

Most importantly, all seats are equipped with USB ports to allow in-flight charging of personal electronic devices (PEDs). While this is by no means unique, it does point to an understanding that in-flight internet and wireless content streaming – both of which are being offered by Joon – go hand-in-hand with in-seat power. In-seat power is vital, as millennials are likely to have boarded the plane having already spent significant time on their device on their way to the airport, at the airport, and in the departure lounge.

Level, the low-cost arm of the International Airlines Group (IAG), has also put technology at the forefront of its marketing strategy. Its on-board payment solution, Pair and Play, allows passengers to pay for food, drinks, wi-fi, amenity kits and duty-free goods by pairing their mobile devices to the seatback in-flight entertainment system. According to Level, its passengers are largely millennials flying long-haul for the first time and being able to pay from their own device is a way for them to have more control of their own experience.

Delta Air Lines has noticed younger consumers tend to prefer ‘experiences’ rather than tactile goods, although it favours the term “Emerging High- Value Customers” (eHVCs) over “millennials”. The American carrier sees eHVCs as being much more likely to purchase premium products that will enhance their travel experience and has embarked upon a strategy to attract these high-yield future consumers at an early stage. This is why it has placed so much emphasis on the provision of IFC (more than 1,000 planes are now equipped; many with Gogo’s high-speed 2Ku offering) as a way to take business from competitors who offer slow, unreliable wi-fi, or no wi-fi at all.

JetBlue Airways would doubtless agree about the importance of good-quality in-flight internet. Its Fly-Fi service has proven extremely popular and has been credited with boosting the airline’s Net Promoter Score, which is a loyalty metric that measures a customer’s willingness to not only return for another purchase, but also make a recommendation to their family, friends or colleagues. Of course, JetBlue offers customers Fly-Fi for free, and very few airlines are doing that for a variety of reasons.

Airlines are also having to adapt to the way in which millennials engage with content. American Airlines’ decision to forego seatback screens in favour of wireless inflight entertainment (W-IFE) on its Boeing 737 MAX aircraft in mid-2017 raised questions from some about the future of traditional embedded systems. However, many carriers are installing W-IFE alongside seatback screens, especially on their long-haul aircraft. Philippine Airlines, for example, re-introduced embedded IFE systems onto its A330 aircraft in 2017, alongside ONAIR play, its W-IFE solution. One reason for this trend is to allow for ‘second-screening’, a habit most prevalent amongst millennials where people commonly use their PEDs while watching another screen.


According to Amadeus, over the next 10 years, the growth rate in outbound luxury trips is projected at 6.2%, almost a third greater than overall travel (4.8%).

“This could be a symptom of how polarised travel is becoming to reflect the wealth patterns of the world’s citizens,” says the ‘Shaping the Future of Luxury Travel – Future Traveller Tribes 2030’ report.

“At the other end of the spectrum, we are seeing the introduction of ultra-budget products, such as the launch of new cabin classes below economy from Delta, United and American Airlines. Luxury and budget markets will become increasingly extreme to cater for tomorrow’s ‘ultra’ market. Luxury long-haul travel will grow faster than any other form of travel, and will overtake border travel (travel between countries that share a border) shortly after 2025. This is shown through Tourism Economics data that forecasts the distance of the next decade’s luxury outbound trips, based on current trends and growth rates.”

That’s probably encouraging for the suppliers in the premium space, although what’s obvious is that these suppliers will have to better understand their premium customers – particularly the millennial segment – if they are to win a sizeable slice of the action.