Luxury Hotels – A view from around the world

The escalating recession is causing serious problems for many hotels and for luxury hotels in particular. However, many properties remain optimistic. Hotels in certain global markets, especially those catering to leisure travelers, are less affected. And the popularity and growth of the luxury hotel segment in recent years suggests that a strong rebound may not be farfetched.

Market Metrix and The Leading Hotels of the World recently completed a study of the luxury hotel market, including guests and hotel managers from around the world. Here are some interesting highlights.

#1 All geographies are not created equal

Overall, 42% of respondents said they've canceled or changed a trip to reduce costs, but results vary widely by country. In the United States, 51% of respondents have canceled or changed trips to reduce costs, but in Europe no more than 23% of consumers in any country said they've canceled or changed a trip. According to hotel managers, the regions that will be hardest hit by the recession include the US, UK, Ireland, and Japan; and least affected will be Switzerland, Middle East, Austria, and Scandinavia.

#2 Many luxury travelers intend to travel through the recession

More than half of respondents worldwide (56%) indicate that the global economic situation has had no impact on their intent to travel in 2009. Travel plans are either unchanged or will increase in 2009 for this group. In fact, for a small percentage (15%), the current state of the economy may be an incentive to travel more and take advantage of lower rates.

But the business traveler is more affected; 44% of business travelers say they’ll travel less in 2009 compared to only 30% of leisure travelers who say they’ll reduce their travel in the coming year.

The overwhelming majority of leisure travelers (90%) say leisure travel is important to them and may delay or cancel other leisure activities before canceling or delaying travel in 2009.

#3 Luxury guests are more likely to read customer reviews

Half of all luxury guests are inspired to choose a travel destination from friends’ recommendations and web searches. Nearly 80% of respondents said they have read user-generated reviews online, and 33% have posted a review after their stay. This is compared to an industry average of 25% who read reviews before booking and 10% who post a review online following their stay.

#4 Luxury guests are fastest growing segment in online booking

For booking hotel reservations, all segments have increased their use of the internet but luxury hotel guests have shown the biggest jump in usage over the past 2 years.

#5 The luxury guest is changing

The profile of the luxury traveler is slightly younger, more often male (up 5%), with higher incomes (up 5%), and averaging fewer nights per year.

Feeling “pampered” is less important to luxury hotel guests. In 2007 the guest experience that was most sought after among luxury hotel guests was to feel “Pampered.” But in 2008, feeling pampered was not a priority for luxury guests and instead, feeling “Excited” and “Inspired” were the most sought after experiences at luxury hotels.

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