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What are the opportunities for Luxury Tourism from Europe?

Takes 17 minutes to read

Europe is a key source market for luxury tourism. It is also a fast-growing market. 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.

Figure 1: Hierarchy of luxury travel needs

hierarchy_of_luxury_travel_needs.png

Source: Amadeus

The hierarchy of luxury travel needs (Figure 1) illustrates the levels of luxury travel. The more a traveller is used to luxury, the higher up the pyramid their expectations are. European luxury travellers are generally at the level of expecting exclusive experiences. The VIP demands are limited to a small group, used to the highest level of luxury in their daily lives.

European luxury travellers are generally looking for such things as:

  • personalised service, preferably one-on-one
  • good quality beds with good quality bed linen
  • sophisticated design
  • reliable transport
  • comfortable seats when travelling, with plenty of legroom
  • food and wine of outstanding standards
  • exclusivity
  • positive and professional interaction with staff, such as greeting by the doormen.

Tips

  • The 2016 edition of ITB Berlin had a so-called ‘Luxury Lab’. You can take a look at their panel discussion on this topic.
  • Put your customer at the heart of the experience and express a passion for your job.
  • Provide accommodation with rooms of good size and quality, with luxurious touches.
  • Give your luxury tourism products an exclusive feeling. Offer customisation and add local aspects to provide a unique experience.

Safety

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 about drivers and testing of equipment. Poor cleanliness of rooms and missing smoke detectors are unacceptable.

Tips

  • Pay attention to health and safety measures, making sure to:
    • regularly check vehicles and equipment
    • place smoke detectors and fire extinguishers
    • have a first aid kit available
    • invest in good drivers
    • offer safe storage space for valuables.
  • If you can, refer to international certified and/or standardised systems and labels. This will make your guests feel more safe and secure.

Political stability

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

Tips

  • Keep (potential) customers updated on changes in the safety situation in your area, for example through your website and through your staff.
  • Share safety experiences of customers on your website. Let them write about how safe they felt, because people value the experience of other travellers.
  • If your region is ‘unsafe’, commercial tour operators will most probably not go there. Check your country’s current safety status on the website of your target country’s Ministry of Foreign Affairs, such as these of the Netherlands, Sweden and the United Kingdom.

Traveller profile

Amadeus divides the global travel market into six segments. For luxury tourism, three of these are of key interest.

  • Reward Hunters: They focus on self-indulgent travel, mixing luxury with self-improvement and personal health. They are motivated by working hard and seek rewards for this in luxury experiences.
  • Simplicity Searchers: They value ease and transparency in their travel planning and holidaymaking. To avoid having to do extensive research, they outsource their decision-making to trusted parties.
  • Obligation Meeters: Their travel choices are restricted by the need to meet a specific objective. This can be business travel, but also personal obligations such as religious festivals, weddings and family gatherings. They arrange other activities around their primary purpose.

Within these three segments, there are six luxury traveller ‘tribes’.

Source: Amadeus

Bluxury

At 31% of luxury travellers, this is the largest group. The main purpose of their trip is business. They have the seniority and salary to extend their trip with some luxury leisure travel. They are a combination of Obligation Meeters and Reward Hunters.

Example: Business obligations in Nairobi, then flying their family in to enjoy a luxury safari together.

Tip

  • Offer 24-hour or 48-hour services at your destination. Provide bluxury travellers with itineraries and city guides. Offer the possibility to book last-minute tickets to a concert or sports game, or a reservation in an exclusive and popular restaurant.

Cash-rich, time-poor

This is another important group, with 24% of luxury travellers. They are a mix of Obligation Meeters and Simplicity Searchers. They do not necessarily have an obligation during their travel, but they do have responsibilities that dictate when they can and cannot travel. Their plans often change last minute. Therefore this group likes to travel with flexible tickets. They often outsource their travel planning and are willing to pay for expertise. They prefer their leisure time to feel private.

Example: Busy businessmen and businesswomen that want to spend their precious free time in luxury, either pure relaxation or bucket list travel.

Tips

  • Provide flexibility. Give these travellers different options to choose from and be prepared to change plans at the last minute.
  • These travellers demand perfect planning. They dislike wasting time waiting for transport or standing in line. Do your utmost to help them get the maximum out of their holiday.
  • Include adventurous elements in your product offering. This segment is more likely than some others, to be interested in adventure tourism.

Special occasion

This group of 20% of luxury travellers mainly consists of Reward Hunters, but also Simplicity Searchers. They choose luxury travel for a special occasion, like a honeymoon, marriage proposal or a mother-daughter trip. They seek ‘wow factor’ experiences and consider luxury travel a treat. They are willing to compromise on comfort if it means they will get an incredible travel experience. For instance, they may lower their standards for luxurious facilities to go on an independent guided safari.

Example: Celebrating a special occasion with prestigious dining experiences, duo spa treatments or a helicopter flight at sunset. But also staying in a wilderness camp with basic standards, if you can guarantee an unforgettable experience.

Tips

  • Try to find out the special occasion your guest has for making this travel arrangement. Personalise your product by providing extras to enhance the special occasion. Think of making things extra romantic, providing bonding activities or arranging a photographer to capture the highlights of the trip.
  • Include adventurous elements in your product offering. This segment is more likely than some others to be interested in adventure tourism.

Strictly opulent

This group, making up 18% of luxury travellers, is closely linked with Reward Hunters. They are looking for the best and most glamorous travel experiences. They want to live life to the fullest and indulge in luxury. Sharing their luxury experiences on social media is very important to them. They consult luxury influencers to enhance their trips.

Example: Hiring a luxury yacht for a group of friends and sharing the experience on social media.

Tips

  • Travellers in this segment like to travel with their ‘tribe’; usually a large group of family and/or friends. Make sure you have accommodation that can host large groups. They prefer a well-equipped kitchen, spacious dining, multiple bedrooms and good outdoor space.
  • Offer itineraries that include outdoor activities, close encounters with local culture and discoveries of the local wine and beer scene .
  • Offer original, off the beaten track, unusual experiences. Budget is generally not an issue; you can attract luxury travellers by offering originality and exclusivity. They like the feeling that it is ‘made for me’.

Always luxury

At 4% of luxury travellers, this is a relatively small group of mainly Simplicity Searchers. Money is not an issue for these travellers. Luxury is part of their everyday life, leading to VIP demands on holiday. They travel in first class or by private jet and pay other parties to make decisions for them. This group is not very interesting for luxury tourism providers from developing countries. The segment is small and these travellers demand a degree of luxury that is hard to meet.

Example: Flying in their favourite Michelin-starred chef to prepare a meal in a Bedouin tent in the middle of the Sahara.

Independent and affluent

This is the smallest group, with 3% of luxury travellers. These travellers are a blend of Reward Hunters and Simplicity Searchers. They choose luxury travel when they want to pamper themselves or try something new. They do not have many scheduled obligations. They either travel alone or with a select few friends. Therefore they often look for opportunities to meet new people on their travels. These luxury travellers want authentic, unique experiences, rather than an off-the-shelf trip.

Example: A luxury yoga retreat in the Amazon or a cookery weekend in Vietnam.

Tips

  • Emphasise the authenticity of your experiences.
  • Develop itineraries with a special theme.
  • Promote your products as an experience, rather than simply activities.
  • Include adventurous elements in your product offering. This segment is more likely than some others to be interested in adventure tourism.
  • Provide access to a local contact (concierge) that can guide your luxury guest to local experiences.

2 . Which European markets offer opportunities for luxury tourism?

Luxury travel segment is growing fast

An increasing number of people are willing to spend a lot of money on quality. The market for luxury travel from Europe is expected to grow quickly in the next 10 years, faster than the overall travel market (see Table 2). This makes Europe a promising market for your luxury tourism products.

Table 1: Compound Annual Growth Rate (CAGR) in overall and luxury travel, forecast 2015–2025

 

Overall travel

Luxury travel

North America

4.4%

6.3%

Western Europe

3.8%

6.4%

Emerging Europe

5.2%

8.4%

Southeast Asia

7.0%

8.0%

South America

4.1%

3.0%

Oceania

3.8%

4.1%

Source: Amadeus

The luxury travel market is predicted to grow much faster than the overall travel market. Growth rates in (especially the emerging countries of) Europe are among the highest in the world.

The most popular types of luxury holidays are tours (29%), followed by city trips, beach holidays and cruises. MICE trips make up for 26% of the world luxury travel segment. See our study about MICE tourism for more information about this.

Main European source markets for luxury tourism

According to research by ITB Berlin and IPK International, in 2015 most luxury trips from Europe originated from the United Kingdom (1.5 million). France and Germany were the second and third largest source markets for luxury tourism from Europe. Scandinavia is also an interesting European source market, but the number of luxury trips undertaken from these countries has declined a little between 2013 and 2016.

For statistics on European source markets, see What is the demand for tourism services in developing countries?

Most popular luxury tourism destinations

In 2015, the most popular luxury travel destination by far was the United States of America.

The most popular developing country destinations for luxury travel were:

  • China
  • Mexico.

The most promising emerging developing country destinations for luxury travel are:

  • Argentina
  • Brazil
  • Paraguay
  • Uruguay
  • Southeast Asian countries.

Tips

  • Increasing consumer awareness is critical to creating demand. Join forces with other tourism stakeholders in your country/region. You need to create an image as a luxury tourism destination. Develop a joint, integrated marketing plan for destination branding.
  • Collaborating with stakeholders is also necessary, as luxury travel is geared towards an end-to-end luxury experience. Luxury travellers expect comfort and luxury from the moment they get into their taxi to the airport, until they arrive back home from their travels.
  • Research the product offering, quality and price of competing luxury tourism markets.
  • Define your destination’s unique aspects. In your marketing, emphasise those elements that travellers cannot find in competing countries.

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

This is the one key trend shaping the future of luxury travel. In mature markets (like western Europe), luxury has evolved to become increasingly related to 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 do not 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.

Tips

  • Develop unique experiences that European luxury travellers cannot find elsewhere. Combine them with the highest level of comfort and individual services.
  • Emphasise this uniqueness in your marketing.
  • Try to strike an emotional chord with consumers. This will give you a competitive advantage over luxury tourism suppliers that rely on the quality of their material offering.

Personalisation

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. They want to get the most out of their holidays. Personalisation has become a key factor. However, they still need your expertise to tailor their holiday for them.

Tips

  • Surprise your guests by personalising their holiday. Ask them about meal preferences, or discover on social media what kind of food they like to eat. Find out their favourite drink and surprise them by serving it to them at their arrival.
  • Be flexible in your offering, with tailor-made products and services. Allow your customers to build their own package with plenty of options to choose from.
  • Search the internet for the newest tips on personalisation of travel experiences. For example this blogpost by BookingSuite, or the many posts about this subject from Amadeus.
  • Offer tailor-made itineraries for small groups or individuals. This often has a higher yield than group business. Also remember that specialism is more difficult for your competitors to copy.

Sustainable and organic

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 sustainable and environmentally friendly practices at their accommodation.

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

Tips

  • Incorporate sustainable and environmentally friendly practices, like:
    • working with local products
    • responsible waste management
    • water-saving taps and showers
    • using solar power.
  • Accommodation providers can encourage their guests to act responsibly. For inspiration, see the Green Hotel Attributes at Environmentally Friendly Hotels.
  • Consider your organic options. For instance, using organic products or offering visits to organic wineries and farms.
  • If you offer organic products/services, clearly promote this. You can submit your details to organic tourism websites like Organic Holidays and Organic Travel.

Increasing use of online research

Luxury travellers do much more online research than other travellers from Europe. But they use it predominantly for information purposes. Half of all luxury travellers book their holiday through a travel agent, which is a much higher share than for other travellers. To gather information and share experiences they use:

  • peer review sites, like TripAdvisor, and the Luxury Travel Expert
  • social media, like Instagram, Facebook, Flickr, Twitter and YouTube
  • online travel agents (OTAs), like Expedia, Priceline or Booking.com.

You have to show European luxury travellers the experience you can provide. 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.

Tips

  • Maintain a strong internet presence and online marketing strategy, including social media. Photos and videos let travellers explore your destination and product from home. They can bring your story to life.
  • Use current customers as ambassadors for your company and area. Encourage them to share their experiences, photos and videos on social media. They can also write blogs and reviews.

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

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

For general tourism requirements, see With which requirements should my services comply to attract European tourists?

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 standards support safe adventure practices: 21101, 21102 and 21103. Additionally, some countries have their own voluntary standards, such as BS 8848 in the United Kingdom.

Tips

  • Study the ISO standards on adventure tourism. Use them to enhance your safety performance.
  • Check for possible voluntary standards in your target markets. 

5 . What competition will I be facing on the European market for luxury tourism products?

Competition in the luxury tourism market does not differ from that in the tourism market in general. It mainly lies in the service and experience you can offer. For more information, see What competition will you be facing on the European outbound tourism market?

6 . Which channels can you use to put your luxury tourism products on the European market?

For an overview of the trade structure for tourism, see Which channels can you use to attract European tourists?

Focus on 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 find them via trade associations, events and databases.

Some examples are:

Emergence of homeworkers

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. They are particularly important in marketing luxury tourism products.

Tips

  • Approach independent travel counsellors. Get in touch with national umbrella organisations for independent travel counsellors. Try to identify the persons responsible for your destination or your specific segment.

Generating direct sales

Although European luxury travellers mainly use tour operators, 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 they do so 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 and portals or via blogs.

Such websites and portals include:

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, three factors influence the price of a long-haul trip.

  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 range 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.

Tips

For more information, see our study about European tourism market channels and segments.

Please review our market information disclaimer.