How is the definition of luxury changing?

The changing luxury guard and what this means for travel and the guest experience.

A new age of luxury consumers has arrived. What was once dominated by the 55+ community is now an audience that spans generations, values, incomes, and expectations of the luxury market (see below for the new luxury audience segments).

There are universal attributes of luxury hotels that are sought out by the entire audience. Take the quality of service, for example, and the ability for this to be delivered personally and even at times invisibly. The greatest design, or most expensive finishes, will never be valued as luxurious if the level of service is not on par. The value of the brand is also key to its standing within the luxury market. It is rare to see a brand launch and immediately reach that esteem without first proving itself or building a legacy and trust in much the same way a Michelin-star restaurant must earn its stripes.

Beyond service, time and exclusivity are the other luxuries these travelers expect. They demand a fluid experience that offers greater efficiency, connectivity, privacy and safety, from private transfers and entrances to VIP parking and fast-tracked access. This increasingly involves digital tools, which act to enhance the level of service and create a more interconnected and highly personalized experience.

The introduction of these varied luxury travelers into the market also comes with new expectations of luxury hotels. Though their needs vary, there is some overlap. The new luxury traveler is likely to be a conscious consumer who expects sustainability and social responsibility as prerequisites for their travel destinations. They now prioritize experiences over accommodations.

The New Luxury Audience Segments

The Financial Times and the Institute of Practitioners in Advertising (IPA) conducted a broad study of the luxury consumer to understand the reasons behind the industry’s massive growth since the pandemic. They segmented the luxury audience into seven distinct categories.

1. The Seasoned Connoisseur, who is retired, buys for investment, has more money to spend since the pandemic, and is interested in sustainability.

2. The New Guard, who is the youngest audience, seeks to buy experiences, enjoys discovering the new, and is passionate about sustainability.

3. The Luxury Loyalist, who is between 45-64, represents the highest earners, is loyal to brands, and believes sustainability is linked to quality.

4. The Convenience Seeker, whose purchasing has increased over the last two years, is less likely to discover new brands and seeks comfort in luxury purchases.

5. The Memory Maker, who seeks experiences over goods, chooses sustainable brands and believes luxury brands can stay relevant if they are more sustainable.

6. The Cost-Conscious Shopper, who has a high interest in luxury but is the least active, is of a broad age range and can find luxury intimidating or awkward.

7. The Gift Giver, who has a mature profile, buys luxury gifts and believes sustainability is a must for the luxury market.

There is no magic number hotels must spend on expensive finishes to attract luxury travelers. In other words, it is not indulgence that they seek but elevated essentialism and a feeling of authenticity. Though there are contradictions in their values—they might travel by business class, or even via private jet—they want to engage in acts of service on their trips that positively impact the environment and local community. What they want is to feel like they are a part of something bigger than themselves.

A recent report showed that when respondents were asked to choose from a list the word they most associated with luxury products, “distinctive” was the most popular answer. Luxury travelers seek to immerse themselves in spaces unlike any other, crafted uniquely to their destination’s location and identity. They seek a sense of integration and harbor a desire to understand the history of a place and its people when visiting. In a way, they are looking to transcend the role of tourist, wanting instead to be treated and understood as travelers and global citizens.