What are the opportunities for luxury tourism from Europe?

Europe is a key source market for luxury tourism. It is also growing quickly, as Europeans increasingly choose experiences over possessions. This is fuelling the market for luxury tourism. Tour operators need to offer high levels of service, accommodation and food. If you can combine this with unforgettable experiences and a personal touch, you have great opportunities on the market for luxury tourism from Europe.

1. Product description

There is no strict definition of luxury tourism. Most importantly, it includes the delivery of superior services and products in a convenient and engaging way. What travellers see as “superior”, “convenient” and “engaging” is subjective, and therefore hard to define.

European luxury travellers are generally looking for such things as:

• personalised service, preferably one on one
• good-quality beds with good-quality bed linen
• reliable transport
• comfortable seats when travelling, with plenty of legroom
• good-quality food and wine
• exclusivity
• positive and professional interaction with staff.

Health and safety measures

Health and safety are important to European travellers, especially luxury travellers. They often inquire about the safety of their destination and expect your company to keep them safe. Personal safety and the safety of their personal belongings are very important to them. Especially safe driving can be a concern. They want to know what the qualifications of their drivers are, and how and when the equipment is tested. Unclean rooms and a lack of (or faulty) smoke detectors are unacceptable.

Political stability

Safety is important to European travellers, especially because some developing countries are politically unstable. Most commercial tour operators do not offer holidays to countries that their Ministry of Foreign Affairs has declared unsafe. This has previously led to a drop in tourism arrivals in countries such as Mali, Egypt and Kenya.

Personalisation

Personalisation has become a key factor in luxury travel. European long-haul luxury travellers generally seek a combination of relaxation and entertainment. They like to create their own unique holiday and demand flexible itineraries to get the most out of their holidays. However, they still need your expertise to tailor their holiday for them.

Traveller profile

Leisure luxury

Leisure luxury travellers come in all shapes and sizes. Some are used to luxury in their daily lives, others save up for a special holiday. No matter their background, they like personalisation that gives them the feeling their experience is “made for me”. They appreciate originality and exclusivity.

Traditionally, luxury travellers are looking for the best and most glamorous travel experiences. They want to live life to the fullest and indulge in luxury. Travellers in this segment often like to travel with family and/or friends. For example, they may hire a luxury yacht for a group of friends. For this type of traveller, sharing their luxury experiences on social media is very important. They consult luxury influencers to enhance their trips.

However, nowadays, many luxury travellers do not wish to put their spending on display. They want authentic, unique experiences that may be relatively expensive due to their exclusivity, rather than high-end luxury. Some choose luxury travel when they want to pamper themselves or try something new, such as a luxury yoga retreat in the Amazon or a cookery weekend in Vietnam. They may travel alone, with family or with a select group of friends.

Those that saved up and/or travel for a special occasion, like a honeymoon, a marriage proposal or a mother-daughter trip, generally seek “wow factor” experiences. They are willing to compromise on comfort if it means they get an incredible travel experience, such as staying in a wilderness camp with basic standards to go on an independent guided safari.

Travellers that demand the highest level of luxury on holiday are a small segment. They are used to this standard in their daily lives and, for example, travel in first class or by private jet. This small group is not very interesting for you, as these travellers demand a degree of luxury that is hard to meet.

Business luxury

Business travellers represent around a quarter of luxury trips, making them a sizeable minority. Although the main purpose of their trip is business, these travellers often have the seniority and salary to extend their trip with some luxury leisure travel. For example: after fulfilling business obligations in Nairobi, they fly their family in to enjoy a luxury safari together.

When busy professionals do travel strictly for leisure luxury purposes, they require flexibility. Due to their business obligations their plans often change last minute. They are willing to pay for expertise to manage this, so they often outsource their travel planning. These busy travellers require excellent planning. They don’t want to waste time waiting for transport or standing in line.

2. Which European markets offer opportunities for luxury tourism?

Luxury travel segment is growing fast

With around 54 million trips in 2016, the luxury travel market accounts for 7% of international travel. However, due to its relatively high prices (in this case defined as over €500 per night) it makes up for 20% of travel spending. This makes luxury travel an especially interesting segment.

The luxury travel market is booming. Between 2014 and 2016 luxury travel grew twice as fast as international travel in general, growing by 18%. Around three quarters of these trips were for leisure purposes, such as touring holidays.

Main European source markets for luxury tourism

The leading European source markets for luxury tourism are the United Kingdom, France and Germany. These are also the main markets for trips to developing countries, making them especially promising for you.

For more information, see our study about European demand for tourism in developing countries.

3. What trends offer opportunities on the European market for luxury tourism?

Shift in values from the material to the experiential

The one key trend driving the future of luxury travel is a shift in values, away from the material. In mature markets (like western Europe), luxury has evolved to become increasingly based on experiences rather than things. Instead of saving up to buy luxurious possessions, people choose to spend their money on experiences.

Luxury travellers often look for exclusive one-off experiences. They don’t want travel products that they consider to be pre-packaged and inauthentic. In the coming years, luxury travel will be about having access to the most incredible experiences that money can buy.

Increasing attention to inner wellness

Wellness tourism is a growing segment within global tourism, accounting for 6.5% of the market. Travellers are increasing their spending on wellness considerably. Wellness tourism revenues grew more than twice as fast as for overall tourism, by 14% between 2013 and 2015. They are projected to grow another 38% by 2020.

Demand is now expanding to include an increasing focus on inner (emotional, intellectual and spiritual) wellbeing, as well as physical wellness. This is also true for luxury travellers. In a recent Skift study, around three quarters of luxury travellers indicate that improving their physical and emotional wellbeing is more of a focus for them today than it was three years ago.

Sustainable travel and organic food

Sustainable travel is a niche within the luxury travel market. Only a small number of European luxury travellers actively demand sustainable travel options. However, European luxury travellers do expect their accommodation to have installed sustainable and environmentally friendly practices.

The organic label is most important when it comes to food. European luxury travellers often demand high-quality food. They see organic labelling as positive for their health and as a quality label.

Increasing use of online research

European luxury travellers increasingly research and plan their trip online. To gather information and share experiences they use:

• peer review sites, like TripAdvisor and Zoover
• travel forums, like Lonely Planet’s Thorn Tree forum
• social media, like Instagram, Facebook, Twitter and YouTube
• (online) travel agencies, like Black Tomato.

Online research is a trend that has increased exponentially over the past years. Although growth has peaked, the use of internet to research tourism will continue to increase. It is predicted to remain the most important research channel for years to come.

You have to show European luxury travellers the experience you can offer them. Visual media like photos and videos are useful tools for this. Sharing pictures of their experiences on social media is very popular among luxury tourists. This makes social media especially relevant to luxury tourism.

For more information, see our study about European tourism market trends.

4. What requirements should your luxury travel product comply with to be allowed on the European market?

For general tourism requirements, see our study on what requirements your services should comply with to attract European tour operators.

There are some voluntary safety standards for where luxury tourism overlaps with adventure tourism.

Voluntary adventure tourism safety standards

Luxury tourism has some overlap with adventure tourism. For more adventurous experiences, three ISO (International Organization for Standardization) standards support safe adventure practices: 21101, 21102 and 21103. Some countries also have their own voluntary standards, such as BS 8848 in the United Kingdom.

5. What competition do you face on the European market for luxury tourism products?

China and Mexico are popular developing country destinations for luxury travel. Other emerging luxury travel destinations are mainly located in Latin America and Southeast Asia.

Competition in the luxury tourism market does not differ from the tourism market in general. It mainly lies in the service and experience you can offer.

6. Which channels can you use to market your luxury tourism products in Europe?

Selecting smaller specialised tour operators

European tour operators specialised in luxury tourism or your destination offer the best opportunities. They know their customers very well. This way, they can offer tailor-made tours and the personal service that especially luxury travellers are looking for.

You can identify relevant tour operators via trade associations, events and databases, such as:

• International Luxury Travel Market – luxury tourism trade event, held on several dates across the year, on different continents
• ITB – annual tourism trade event with a luxury travel segment, March, Berlin
• loop luxury fair – luxury tourism trade event, held twice a year, Frankfurt and Tirol
• Luxury Travel Fair – annual luxury tourism trade event, November, London
• World Travel Market – annual tourism trade event, November, London.

Emergence of homeworkers

Travel agents are a relatively popular booking channel for luxury travellers, who appreciate a personal touch. A growing number of travel agents work from home. These independent travel counsellors organise tailor-made holidays for individual customers. They mainly work in the United Kingdom, Germany and the Netherlands, but are present in all European countries.

Generating direct sales

Although European luxury travellers mainly book through professionals, they do sometimes book their holidays directly with service providers at the destination. They do so mostly when they have recommendations from friends and family, or when they have done business with local service providers before. To increase your chances of direct sales, you can promote your product on (luxury) tourism websites/portals or via blogs, such as:

• Condé Nast
• Luxury Travel Magazine
• The Luxe Travel

7. What are the end-market prices for luxury tourism products?

Travellers have many destinations and types of holiday to choose from. This makes tourism a relatively price-sensitive and competitive industry. However, for the luxury segment, price is not the deciding factor.

Generally, the price of a long-haul trip consists of three dimensions:

1. The exchange rate between the currencies of the country of origin and the destination country.
2. The costs of transport to and from the destination country.
3. The price of goods and services the traveller consumes in the destination country.

European tour operators are not open about the purchasing prices of their tourism products. According to industry experts, their margins vary between 10–25%, for the luxury tourism segment, this can be even higher. Prices of holiday packages vary widely as they depend on a lot of factors, such as:

• availability
• destination
• modes of transport
• period of travel
• number of travellers
• length of stay
• type of accommodation
• included activities
• level of service and exclusivity.

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