2016 FUTURE OF LUXURY TRAVEL REPORT...

FUTURE OF LUXURY TRAVEL REPORT

RESONANCE

2016

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IntroductionTravel as TransformationArt is the New FoodWell, Well, WellHospitality’s Asian TurnTogethering is EverythingUnreal Real EstateWarm is the New CoolAthletic PursuitsTrip. Advisers.Higher FlyersConclusionEndnotes

CONTENTS

Resonance has been studying the destinations, aspirations and preferences of the wealthiest American travelers for nearly a decade. In this 2016 Future of Luxury Travel Report, we’ve identi�ed 10 high-level trends that re�ect experiences and habits that are shaping the travel experience at the high end in the U.S. and around the world. We hope you �nd the reading both enlightening and informative, wherever in the world you might be.

To learn more about Resonance and our research reports – and our consulting and marketing services – please visit resonanceco.com.

Sincerely,

Dianna CarrVice-President, Editor-in-Chief

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The world gets ever smaller. But the rich, and those who serve them, think ever bigger. For elite travelers, the world is a plumper, tastier oyster than ever before, a playground with no real borders or barriers, except those created by the increasing fear of being in the wrong place at the wrong time.

As the number of wealthy travelers has grown, the travel ante has been upped to a breathtaking altitude: 30,000 feet is commonplace. When Four Seasons introduced its fully branded private jet tours of the world in 2015, it might have seemed that we’d reached Peak Experience. But of course, we hadn’t. Today, a half-dozen companies offer ever more intensely experiential tours on spectacularly tricked-out private planes. Suborbital space tourism is next on the elite’s travel bucket list.

In the U.S., the wealthiest 1% of travelers have household incomes of $400K+ and/or net worth of $8 million+; the top 5% have incomes of $200K+

and/or net worth of $2 million+. To prepare this report, we conducted an online survey with 1,667 U.S. travelers in the top 5% of U.S. households, with 724 travelers falling in the top 1%.

We found that the wealthiest 5% take an average of 14.3 trips per year (about half for business and half for leisure) compared to just 4.8 by U.S. travelers in general. With an average of 2.9 people per household, and an average expenditure of $3,115 per person per vacation, that adds up to spending of approximately $390 billion per year on leisure travel alone. Which makes wealthy U.S. travelers one of the most lucrative travel market segments in the world and an important driver of luxury travel demand and trends across the globe.

The wealthy are eclectic, opinionated and have individual passions – from triathlons to contemporary art. So while a wealthy Asian traveler might want her familiar fare for breakfast, the rich, as a

INTRODUCTION

I N T R O D U C T I O N

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demographic, are more alike from one country to another than not. President Radha Arora of Rosewood Hotels & Resorts told Resonance that his company doesn’t cater speci�cally to an af�uent American or Asian traveler, but to “a discerning world traveler.” Edie Rodriguez, CEO of Crystal Cruises, concurs. She told Skift that the demographic is united by a desire for what she calls “ECO,” which has nothing to do with the environment – or nationality – and everything to do with “Exclusivity, Customization and Options.”1

Indeed, buzzwords abound at the top of the wealthy travel world – not just exclusivity, customization and options, but also “experience,” the incredibly overused “curated” and “bespoke.” “Wellness” has come to encompass a dizzying array of pursuits. So prevalent is this vocabulary that a careful reading shows these terms applied to everything from cupcake connoisseurship to the Monaco Boat Show.

Regardless of the language used to describe the tastes and travels of the wealthy, they have an outsized impact on the travel and tourism industry as a whole. Tourism Economics forecasts that the global

travel and tourism industry will grow at an average rate of 4.8% per year between 2015 and 2025, but luxury travel is expected to grow an average of 6.2% per year – almost a third greater than travel overall. In fact, in its 2015 Luxury Goods Worldwide Market Study, Bain & Company found that spending on luxury hospitality grew 7% between 2014 and 2015 – the fastest-growing category in the entire luxury goods and services industry.

But in addition to being the fastest-growing segment within one of the world’s fastest-growing industries, luxury travel is also one of the most interesting segments to follow as the travel adventures and preferences of the wealthy are inevitably indicative of future trends and preferences for travelers in general.

In this 2016 Future of Luxury Travel Report, we’ve identi�ed 10 high-level trends that re�ect experiences, desires and shifts that are shaping the travel experience at the high end in the U.S. and around the world. In the following pages, you’ll �nd stories about the new importance of art, the effects of the rise of Togethering, the evolution of vacation homes, the impact of Asian ownership in hospitality and much more. Turn the page. The future’s here.

The travel adventures of the wealthy are inevitably indicative of future trends and preferences for travelers in general.

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“ People today want to accomplish some kind of transformative experience while they’re taking a vacation.”

DAVE HOWERTON, HART HOWERTON

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TR AVEL AS TR ANSFORMATION

Experiences can only be deemed “transformative” if they have the power to change you. But for the highly evolved species that is the luxury traveler, who has seen and done much, can transformation only come from an out of this world experience?

For America’s most sophisticated and worldly travelers, a vacation is an opportunity to send their minds off to explore new intellectual and experiential landscapes. The wealthiest 1% of American travelers say that “learning new things” is the third most important thing they do on vacations, after only dining and sightseeing. While virtually all modern travelers are keen to learn on vacation, wealthy travelers have a far wider range of learning adventures to choose from. And the trips that teach us the most are the ones that change us.

“People today want to accomplish some kind of transformative experience while they're taking a

vacation,” luxury hotel and resort architect Dave Howerton of Hart Howerton told Resonance. “That can be learning something in a different culture or experiencing something in a different sort of physical or community setting that you take home with you.”

But what exactly does “transformation” mean, and how do we get there from here? Melissa Biggs Bradley, a former Town and Country travel editor who founded the boutique travel agency Indagare, describes a recent trip to Japan as a “transformational” experience: “It makes you re-examine many of life’s daily rituals, and permanently shifts the way you view the world.”2

That’s a tall order, but festival-style events like Further Future might be a ticket: The Wall Street Journal describes the festival, which is designed to promote “Mindful Optimism” as a mix of titans of tech, TED-style talks and Burning Man’s hardest partiers – a “Burning Man open for business.”3 MTV

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co-founder and iHeartMedia CEO Bob Pittman tells his employees that “If life is about looking for epiphanies and insights, there is no better place than communities like this.”4 This year’s Vision Speaker Series attracted execs who touched on the future of everything from data and arti�cial intelligence to experiences, brain health and cannabis. Festival accommodations? Comfortable. They can include Airstream trailers at $5,000 for the weekend and Lunar Palace luxury domes complete with concierge service for $7,500.5

While many travelers seek places and programming that let them go deeper into interests spanning cooking to archaeology, literature to art, wealthy travelers chase epiphanies and clarity not only in deserts, but on mountains (a favorite location) or a�oat: there’s the Aspen Ideas Festival, the invitation-only TED, and of course Davos, all highly coveted, high-ticket items delivering life-changing

inspiration and intellectual stimulation to the elite of business and culture.

Crystal Cruises brings lecturers and savants on board so you can “discover your personal best”; the Summit Series – a private symposium on land and sea created by the wealthy Millennial owners of Powder Mountain – was designed to create “transformative opportunities and in�nite possibility.” Summit describes itself as a developer that builds communities and places that catalyze entrepreneurship, creative achievement and global change to create a more joyful world.6

The hospitality business has also jumped on the transformative train – or, in the case of Four Seasons, the jet. For some $119,000 per ticket, 52 passengers are �own in the Four Seasons Jet – along with 21 hotel-trained crew and staff, a travel coordinator, concierge, executive chef, physician

Dining

Sightseeing

Learning new things

Visiting cultural attractions

Engaging with nature

Fun attractions

Attending cultural events & performances

Shopping

Health & �tness

Nightlife

ACTIVITIES ON VACATION: TOP 1%

WOULD LIKE TO TRY REGULARLY/OCCASIONALLY

Base: All respondents (n=723)A8. While on vacation what activities do you enjoy regularly, enjoy occasionally, would like to try, or do not enjoy?

Would like to try Regularly Occasionally Higher than top 5% Lower than top 5%

94%

91%

90%

90%

85%

85%

85%

83%

78%

75%

76%

62%

53%

45%

40%

37%

37%

41%

38%

23%

5%

6%

8%

5%

7%

10%

10%

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13%

7%

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Aspen Ideas Festival

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and photographer – to the world: destinations ranging from Istanbul to Ephesus or Mumbai to Agra. Depending on where they land, passengers choose from a variety of experiential excursions. Tanzanian safari; horseback riding on the Mauritius islands; behind-the-scenes at the Sydney Opera House; or exploring mangrove swamps, rainforests and sandstone mountains in Malaysia as part of UNESCO’s Global Geopark network are a few of many options. Luxury travel company Abercrombie & Kent has its own global jet tour, which guests enjoy in the presence of founder Geoffrey Kent himself.

If travelers don’t get to a higher personal plane, memories and bragging rights will have to do. “Luxury consumers are continuing to indulge in their experiences. It’s not buying a new handbag or pair of shoes,” Pam Danziger, president and founder of Unity Marketing told The Globe and Mail. “The focus on one-of-a-kind, behind-the-scenes experiences

really matters to people.”7 In the Resonance 2016 U.S. Luxury Travel Report, participating in a “once in a lifetime” activity is enjoyed regularly or occasionally by 69% of 1 percenters, significantly more than other travelers.

At Peninsula Hotels’ Academy Programme in Hong Kong, helicopters lift off from a rooftop pad to carry guests to a private picnic lunch on a UNESCO-listed beach. Oenophiles at the Bangkok property can ride an elephant through a vineyard. Youngsters staying in Chicago can be transformed into a princess for a day – complete with a pumpkin-carriage ride, tiara fitting and glass slipper.8

Clearly, these strategies are working. Ritz-Carlton, Four Seasons and Peninsula are considered among the top-ranked hotel brands by the top 5% of travelers in terms of overall brand opinion in the Resonance 2016 U.S. Luxury Travel Report.

8Peninsula Hotel Academy Program

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It’s said that seeing the earth from space changes your perception forever – the very de�nition of transformational! – and if Elon Musk and Richard Branson have their way, more and more of us will have the opportunity to experience it. Musk, a real-life Tony Stark (eccentric genius billionaire playboy and superhero Iron Man) says that manned missions to Mars will be possible by the mid-2020s.9 Branson, head of Virgin – which rolled out the world’s �rst “Spaceline” with Virgin Galactic – has been testing �ights since 2004. The cost to �y to space with Virgin is some $250,000 per ticket, and more than 700 people have signed up so far.10

When they arrive in the outer limits, they’ll have a place to stay, if all goes well with Bigelow Aerospace and the International Space Station’s line of astro-hotels. In April this year, mission controllers at Houston used a robotic arm to attach the �rst in�atable pod to the ISS.11 “We believe crews traveling to the moon, Mars, asteroids or other destinations could use them as habitable structures or as labs or work areas,” NASA’s Rajib Dasgupta

told The Telegraph. The test marks the �rst step towards a future where large numbers of the in�atable pods could be joined together to form large habitations or astro-hotels for tourists in space. They could even be the structures that create the �rst Moon or Mars colonies.12

On the other end of the spectrum, some wealthy travelers are opting for the transformative powers of less, retreating to the Omega Institute in upstate New York or the Kripalu Center for Yoga and Health in Massachusetts – both places where life-changing experience passes through austerity rather than the hyper-stimulation of the senses.13 In fact, some of the new wellness experiences are based on denial rather than grati�cation. You’ll also read later in this report that just being in the presence of art can trigger the transformative.

Of course, the bragging rights aren’t quite the same. But the idea of transformation is that it’s a personal experience, not just an opportunity for a gravity-free sel�e. At least, that’s the theory.

Ritz-Carlton, Four Seasons and Peninsula are among the top ranked hotel brands by the top five percent of travelers in terms of overall brand opinion in the Resonance 2016 U.S. Luxury Travel Report.



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Food was once a quintessential expression of local, a placemaking tool, a destination-maker, and a refuge for connoisseurs and the curious. Today, art is the new food. And travelers, wealthy and otherwise, are developing a taste for it.

More than ever before, art has become a reason to travel and is making destinations of unexpected places. Resonance research from the 2016 U.S. Luxury Travel Report shows that the top 1% and 5% of travelers would rather visit an art festival than the symphony, opera or ballet – and are signi�cantly fonder of art festivals and events than other U.S. travelers.

Not very long ago, a destination’s chef and its restaurant’s reputation were the clearest signal of what separated the luxurious from the ordinary – they told the cognoscenti that here was a place where superb quality, breathtaking imagination and

attention to detail were at home. For travelers, that began to evolve in about 2006.

That year, travelers checked into the historic home of the new 21c Museum Hotel in Louisville, Kentucky, and came face to face with the most eclectic collection of contemporary art to be found within hundreds of miles of the home of the Kentucky Derby.

The founders of 21c, Laura Lee Brown and Steve Wilson, had modest goals: they set out to help revive their hometown by restoring tobacco and bourbon warehouses, juxtaposing the architectural past with modern art everyone could access. In the process, they pioneered a blend of accommodation and art that has since inspired city builders, cultural institutions and hospitality providers in many parts of the world.

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ART IS THE NEW FOOD

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Today, art is everywhere in hospitality. Every Omni hotel blends each city’s culture through its choices in local art, like at the Omni Dallas, where more than 7,000 original artworks by local artisans are on display.14 The Andaz West Hollywood art collection – on the Curbed list of best hotel art collections in the country15 – pays homage to the city’s rich rock-and roll history; guests can even purchase paintings and installations by local artists.16

It should be noted that this isn’t art that’s easy to ignore. Even the world’s most traditionally luxurious hotels are bringing provocative pieces and installations to plush surroundings – from Le Bristol and Le Meurice in Paris to 45 Park Lane in London, Le Sirenuse in Positano and Das Stue in Berlin.17 “Great art not only transforms the room you’re in but can also transport you to somewhere new and open your mind,” Robert Diament, director of Carl Freedman Gallery in Shoreditch, London, told the Evening Standard. “It’s really obvious to say but the really special thing about art is that it is unique –

and it’s that rarity that makes it even more special. So for a hotel to own a particular work can be very powerful – it can add to the atmosphere but it also becomes a destination to visit if you want to see a particular art-work.”

21c founders Brown and Wilson helped art become a destination-maker, and contributed to the profound democratization of art that was underway in cultural institutions everywhere a decade ago. Today, art has gone from a relatively rare�ed to an everyday experience: not hidden away in museums to be visited occasionally, but in public spaces, like hotels, that make it a true member of the community – something people are comfortable rallying around, traveling for, learning about, and, in the case of 21c and other hotels, sleeping with. (Consider also the new, neighborhood-embracing expansion of the San Francisco MOMA – Charles Schwab, chair of the SFMOMA board, described it as “a museum for the age of sharing.”)18


Going to see plays or musicals 80% 84% 72%

Local neighborhood/community events 72% 74% 70%

Food & wine festival 69% 75% 57%

Art festival 65% 70% 56%

SPECIFIC ACTIVITIES ON VACATION

% Top-2-Box (Regularly/Occasionally)TOP 5%

(N=1,659)TOP 1%(N=719)

TOP US TRAVELERS (N=3,379)

Statistically significantly higher than top 5% Statistically significantly higher than US travelers

Base: Enjoy regularly, enjoy occasionally or would like to try in A8A9. Now more specifically, which of the following activities do you enjoy regularly, enjoy occasionally or would like to try?


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Like food in the last decade, art now makes tourism destinations of cities and neighborhoods. Since 2006, 21c has opened hotels in Cincinnati, Bentonville and Durham, and has plans for Kansas City and Minneapolis – all so-called second-tier cities in need of a rejuvenating jolt. The mix of historical landmark, along with up-and-coming international and local talent, is helping fuel creative as well as economic rebirth as neglected cities become bona �de places to be for art-inclined travelers. Major centers like Miami attract the experts and the interested: in 2002, in�uential collectors helped bring Art Basel to the city; in 2009, the idea of turning a neighborhood into a canvas for street art was born, and today, the Wynwood Walls is TripAdvisor’s #4 of 318 things to do in Miami.

Art also makes destinations of nowhere: there’s Marfa, Texas, of course,19 and now, 10 miles south of Las Vegas, Nevada, there’s Swiss artist Ugo Rondinone’s Seven Magic Mountains, a large-scale site-speci�c public art installation that will make a

This isn’t art that’s easy to ignore. Even the world’s most traditional luxury hotels are bringing provocative pieces and installations to plush surroundings.

21c Museum Hotel, Louisville, Kentucky

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lonely corner of the desert a destination for the next two years.

Regardless of demographic, the more people see art, the more they want to know about it. Art can be purely decorative for many, but it’s also a rich, demanding subject, and the opportunities for learning are literally endless. Alice Grey Stites, the curator at 21c, told Skift:

“Art has the possibility to illuminate how people live in the next city or halfway around the world, and it gives us new perspective on our environments, our social life, identity, relationships with other cultures. When that is part of your experience at hotels or restaurants, it makes it incredibly memorable and tends to whet one’s curiosity and appetite to learn more and come back. That’s why learning is really the new luxury. It makes us feel like there’s more ahead of us, more to discover, more to experience and more opportunities. It makes people feel young.”20

While many travelers are taking baby steps into the art world, some wealthy travelers are taking private jets to Art Basel. In a study of private jet clusters, the 2016 Knight Frank Wealth Report showed private jet traffic to Art Basel Miami in December grew 28% between 2012 and 2014, and draws 20% non-American travelers; other main events on the calendar include Art Basel in Switzerland, up 12%, with 90% non-American flyers; the Frieze fair in the UK, up 20%. Other reasons wealthy travelers take to their jets are Oktoberfest in Germany, the Kentucky Derby in May, Aspen Ideas Festival in June, and the Monaco Yacht Show and Grand Prix, in September and May respectively.

The growth in attendance and attraction of festivals makes art as social as it is serious for wealthy collectors. But even as people explore and gain expertise in everything from foraging to wine, connoisseurship in art is hard-earned.21 A group of aficionados can be at the same festival and have

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very different agendas. Some spend wild amounts of money chasing trends, others are decorating, many are showing off and everyone’s partying with one another, their gallerists and advisers. But just a few make the understanding and collection of art a lifetime pursuit. Those for whom collecting is also connoisseurship – an investment in the spiritual, emotional and intellectual – are in the minority, just as they are among those who collect wine or watches or any other rare, coveted, but also showy and brag-worthy collectible.

New York collector Eric Schimmel told Resonance that he’s devoted to a dozen artists; his approach is academic, rigorous and investment-focused as well as emotional. “Everyone is different,” he says. “There are very serious collectors who have foundations or sit on museum advisory boards – or open their own museums. These are people who have made art a major component of their lives. Then there are billionaires who will fill offices with art because they can get tax deductions. And I have friends who decorate their homes with cool artwork, but they’re not serious collectors.”

Schimmel is likely an exception in the hyper-sensitive art world, where headlines like “Does a Sotheby’s Stock Dip Signal Trouble for the Wider Economy?”22 can create volatility for unfocused, trend-susceptible newbies. Today, as wealth grows and the wealthy fan across the globe, new-monied young people and international collectors have entered the market: Knight Frank quotes an ARTnews report stating that in 2015, the world’s top 200 art collectors came from 36 countries – compared with 17 in 1990 – and many of these were from emerging markets like China and Brazil.23 Schimmel concurs: “globalization is changing things, and interest is much more worldwide.”

The generational shift in collectors is also driving change: the U.S. Trust Insights on Wealth and

Worth said that older buyers collect “as a lifestyle, as an extension of their autobiography; whereas younger collectors tend to be much more commercially driven.”24

Which makes the festival scene that much more important. The festivals are art’s commercial marketplace. Schimmel likes them because they bring a world of work to his doorstep but they’re eminently social – and while his New York hometown is the world’s premier art market, he’ll go to London for Frieze and Basel to see other collectors, keep in touch with dealers from as far away as Colombia and Africa, and visit galleries of artists working on themes that interest him. And while Schimmel gathers intelligence on artists from a wide range of sources, inexperienced collectors rely almost exclusively on advisers, whose roles are also changing. New York-based Nilani Trent told NPR that she once hoped clients would fall in love with work on gallery tours; now they respond to the buzz at events like Art Basel.

“I think instead of talking about the aesthetics of a specific work, we really talk about the market,” she says. “And I think for someone that doesn't have a high level of connoisseurship, but is probably pretty savvy on finance and wealth, talking about the market is a very obvious go-to.”25

If younger collectors speak the language of money, they’re also fluent in tech. Schimmel says that even if he doesn’t go to festivals, he knows exactly what’s going on. “I may not be at Basel, but I can see everything that’s going to be shown. I don’t have to be in front of the piece,” he says. “Technology allows you to keep up with everything. It also allows artists to have much more global impact, and technology, along with the festivals, can help generate interest in new markets, places like China. Technology is powerful.”

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Once, there was a world without wellness; now it’s ubiquitous. Today, “wellbeing,” a word that includes health, comfort and happiness, is the next addition to the vocabulary of health – and to the aspirations of luxury travelers.

The wealthy have always been healthier than other demographics. Resonance research shows the 1% are also much more interested in �tness than all other travelers, including their near-peers in the top 5%. The top 1% of travelers want far more of the activities that once constituted the basic de�nition of “wellness” – meditation, yoga and spa treatments – than any other travelers.

But wellness is evolving, and so are the interests of elite travelers. The very word wellness has profoundly matured. Not long ago, the word was amorphous: what did being “well” even mean? Why wasn’t “healthy” adequate? And how did wellness

take over the world? “When I think of even �ve years ago and using language about wellness, people would cock their head to one side and be unsure of what I was talking about,” former spa manager turned wellness consultant Anni Hood told New York magazine. “The boom we’re seeing, it’s just the tip of the iceberg.”26 According to Spa�nder, wellness is a $3.4 trillion global industry today. If that’s just the tip of the iceberg, the stuff underneath the water will be impressive indeed. From an ill-de�ned idea in the late ‘90s and early aughts, “wellness” now seems self-explanatory. It makes one better – not just newly relaxed or freshly buffed, but improved, healed or rejuvenated. From the inside out. It’s easy to imagine the glow.

In an experiential economy, “wellness” speaks to every demographic. Millennials now care less for handbags, and Boomers care more for longevity;

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WELL, WELL, WELL

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children, the aging and the obese can all bene�t from the new, expanded de�nition of wellness. “We once called all of this pampering,” says Marisa Meltzer in New York magazine. “Now we justify it as self-care, necessary time spent for our health – physical, spiritual, emotional. Even the time involved in all of this is itself a kind of luxury.”27

Part of that time involves getting to places where wellness can be profoundly experienced. Spa�nder’s 2016 Trends Report remarked that for the �rst time since it started tracking the industry, �ve of 10 trends were associated with wellness travel. The variety of activities that have now been bundled into wellness travel includes surf and SUP camps, indigenous rebirth ceremonies, destinations that combine “adrenaline and zen,” a variety of festivals, from Wanderlust to Further Future, and a wave of healthy new cruises. There’s Canyon Ranch at sea, voluntourism, esoteric strains of yoga, cooking classes, meditation and ropes adventures. All are now being spun as wellness – lounging and lunging,

the mindful and the muscular. Wellness can be conspicuous non-consumption (think fasting and juicing) and inconspicuous having a little work done, with perhaps some spiritual healing on the side. “‘Wellness,’” says Lynn Zinser of The New York Times, “can be... stretched to include eating poke bowls and kale salads by day and enjoying inebriating substances while the music pulsates late into the night. The wellness part of that being that, well, people were enjoying themselves.”28

“Wellness today is about celebration, not deprivation,” says Amy McDonald, founder of Under a Tree, an international consultancy of hospitality, health and adult care specialists that has worked in hospitality wellness and spas for two decades. “It’s joyful, engaging and lively, proactive and collaborative. Going to NYC and seeing the sights and eating in a different restaurant in every borough to experience a variety of cultures is wellness. Cirque du Soleil’s ability to take people out of their mindsets is part of wellness.”

Statistically significantly higher than top 5%. Statistically significantly higher than US travelers.

Base: Enjoy regularly, enjoy occasionally or would like to try in A8A9. Now more specifically, which of the following activities do you enjoy regularly, enjoy occasionally or would like to try?

Health & Fitness

Working out 82% 81% 76%

Spa treatments 67% 76% 51%

Yoga 43% 49% 39%

Meditation 40% 45% 37%

Weight loss programs 32% 37% 32%

Medical treatments 31% 35% 29%

SPECIFIC ACTIVITIES ON VACATION

% Top-2-Box (Regularly/Occasionally)TOP 5%

(N=1,659)TOP 1%(N=719)

TOP US TRAVELERS (N=3,379)

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We’re a long way from pampering.

McDonald said that wellness is now “the thread” that weaves together many of the pleasures of the travel experience – food, activities and programming, local experience, rooms, eco- and voluntourism, treatments, fitness.

Resonance research for the 2016 U.S. Luxury Travel Report shows that virtually all travelers are interested in learning new things, and many wellness offerings have a built-in educational element. For luxury travelers, the gamut of wellness experiences checks many boxes. The possibilities are endless. Which is what makes this all so lucrative.

American hotels, ever sensitive to trends that might put more heads in beds, jumped quickly on the wellness opportunity. IHG’s EVEN Hotels debuted in Brooklyn in August 2016, the lifestyle hotel brand’s fourth property. EVEN was created to allow guests to “Eat Well, Rest Easy, Keep Active and Accomplish More”; the new Big Apple property meets guests with free filtered water, a natural light-filled Athletic Studio, two-storey living green wall, ergonomically-designed work spaces, and market-fresh menu items throughout the location.29

McDonald says that for many resorts and urban hospitality providers, keeping up with the ever-changing definitions and directions of wellness is a major preoccupation. “For some, wellness means having a juice bar; others think it means you need a nutritionist. I try to help them figure out how their

definition of wellness can be unique to them. What’s special about your destination? What is there about your location, the history, flora and fauna, that you can teach people? How can you immerse people in nature, even in an urban environment?”

Immersion is huge in wellness; travelers want to get to the source of ideas, movements, cultures and schools. “They want to go to the core,” McDonald says. Themed wellness retreats of about four days are satisfying the hunger for time-pressed seekers – they pack the essential elements of wellness into an easily consumed, brag-worthy package. A retreat might include interesting food, a fitness component, outdoor elements, a spa or treatment, maybe a cultural element – and a little downtime. “Before, people would get a blessing from an Apache elder. Now they want to go where he lives and see his community,” McDonald says. “Before, they would be given beads. Now they want to make them themselves. This is luxury.”

In Europe, the home of modern wellness, tourism represents nearly 60% of the entire retail sector,30 according to the Global Wellness Institute – and wellness tourism is expected to grow significantly faster than other forms of visitation – a 7.3% growth rate will continue through 2017. The institute sees European wellness providers evolving from amenity-driven exotic luxury retreats to wellness retreats where “calm, simplicity, wild nature, spirituality and profound self-seeking will be front and center… “new stages for self-transformation and ‘re-finding’ oneself in response to modern stresses.”

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Europe should properly be considered a trend leader in wellness, particularly as the industry there shakes itself from inertia. The continent is the heartland of intrinsic, holistic wellness, has a wealth of wellness rituals North America has never heard of, and several centuries of practicing them. According to the Global Wellness Institute’s Ten Predictions for the Future of Wellness, Travel, Spa and Beauty in Europe, Kurs and bathing cures, adapted for short-term stays, are growing; with new wellness properties in Eastern Europe, like Six Senses in Kazakhstan, as well as projects in Croatia, Estonia, Georgia, Latvia and many other far-�ung (from a North American perspective) locales. For luxury travelers, these destinations promise wonderfully exotic nature-sourced treatments, from microclimate doses of mineral water, sunlight, contrasting temperature and humidity, to exposure to phytoncides from forest bathing to “ancient (and antioxidant) ‘black smoke saunas.’” Then there are hot spring resort experiences that can

be packaged with the cultural richness of nearby cities. For McDonald, the potential of the waters, geothermal and otherwise, is the next frontier of wellness. “People want a natural, real experience. Water has become the key element of that. There’s a renaissance in water-based wellness and bathing everywhere in the world. We thought it was going to be big, but it’s gone way beyond our expectations.”

Learning experience? Once in a lifetime? Treatments? Fitness? Yes, yes, yes and yes.31 Can all this wellness spawn well-being, a true happiness? Perhaps, with the wellness travel sector set to exceed $600 billion in 2017, according to the Global Wellness Institute.32 That would be the ultimate in transformational experience, a universal �rst prize. So you can bet that as more and more people understand and consume wellness, and more marketers get in the game, happiness will be the next big promise.

“ Wellness today is about celebration, not deprivation. It’s joyful, engaging and lively, proactive and collaborative.”

AMY MCDONALD, UNDER A TREE HEALTH AND WELLNESS CONSULTING


22Rosewood Beijing

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0 4 | H O S P I TA L I T Y ’ S A S I A N T U R N

As Asian hospitality interests look overseas for growth and aggressively buy up western brands, they’re targeting wealthy travelers from around the world. But they’re also looking ahead to providing accommodation for the ever-growing numbers of Asian leisure and business travelers.

Asian hotel brands have their sights set westward. Certainly, with China becoming the largest outbound travel market in the world – 120 million international travelers who spent $194 billion in 2015 – the opportunity is enormous. But Asian hotels aren’t just looking for Asian travelers. They’re targeting wealthy travelers of every nationality and proclivity.

“Our guests are sophisticated global travelers, so we don’t cater speci�cally to a U.S. audience or a new Asian clientele,” Rosewood Hotels & Resorts’ President Radha Arora told Resonance. “Rather, we focus on designing our hotels to suit

the needs of discerning world travelers.” Competitor Peninsula agrees. “Our policy is to open iconic hotels in gateway cities, because that's where the international business and leisure clientele are,” Robert Cheng, vice-president of marketing for The Peninsula Hotels, told the South China Morning Post. “Now we're looking to the U.S. and Europe, with even South America and India on our list."33

Hong Kong-based Peninsula opened its �rst European hotel in 2014 in Paris, and plans a London location on Hyde Park Corner by 2021. The $700 million proposal – 190 rooms, 24-28 residential apartments and a 30-square-meter internal palazzo-style courtyard34 – is creating one of the most highly anticipated hotel openings, according to Forbes Travel Guide.35

Peninsula operates only 10 �ve-star hotels around the world – a fraction of those operated by western

04

HOSPITALITY’S ASIAN TURN

24


competitors like Four Seasons with 98 and the Ritz-Carlton’s 87. Yet Peninsula is just as highly regarded: when Resonance asked 1,667 U.S. luxury travelers to rate 20 hotel brands, Peninsula ranked among the top three, with an overall brand rating of 81%, tied with Four Seasons and only 1% lower than Ritz-Carlton. Peninsula receives high marks for trustworthiness and quality of service, while fourth place overall Mandarin Oriental is highly regarded by wealthy U.S. travelers as well, receiving top marks for style and design in our research.

Last year, Chinese firms bought $5.13 billion in U.S. real estate and hotels, a 68% jump from the $3.05 billion they spent a year earlier, according to data from the New York-based Rhodium Group, a firm that tracks Chinese investments in the U.S.36 “And hotels,” says Thilo Hanemann, economist for the Rhodium Group, “have become especially attractive to investors given the increase in Chinese tourists visiting the United States and Europe.”37

Hong Kong’s Swire Hotels opened EAST, Miami this year, its first property outside of China.38 “Miami will experience considerable room demand growth by 2023, as affluent Chinese tourists are attracted to its high-end shopping and entertainment offerings,” reports the InterContinental Hotels Group in its Future of Chinese Travel report.39 Shangri-La has opened hotels in Vancouver, Paris, Toronto, Istanbul, London and Qatar in recent years. Twenty additional developments as far afield as Ghana and Saudi Arabia are in the pipeline.40 Shangri-La is well aware of the importance of familiarity with the habits of outbound Chinese travelers. “They stay with us because we give them a sense of home," says Greg Dogan, CEO of Shangri-La Hotels and Resorts. “As guests, they look to their familiar brands when they travel the world.”41 Even wellness-focused Asian brands are growing: Singaporean Banyan Tree opened its second property in Mexico last year and plans to double its portfolio internationally over the next five years.42

But leisure travel isn’t the only reason for the Asian expansion. China overtook the U.S. as the number one business travel market in the world in 2015, finishing with $291 billion in total business travel spend, according to the Global Business Travel Association’s (GBTA) Business Travel Index Outlook – China 2016 H1.43 The report finds that by the end of 2016, China will soar even further ahead, with business travel spending forecast to grow 10.1% to $320.7 billion, compared to 1.9% growth, or $295.7 billion, for the U.S.44 “It marks a major inflection point and truly demonstrates the global nature of today’s economy,” says GBTA Executive Director and COO Michael W. McCormick.

As visitor numbers grow and brands expand, Asian investors are also making their mark by purchasing American icons.

The New York Palace Hotel in midtown Manhattan was bought by Asia’s most successful luxury hotel brand, Lotte Hotels & Resorts, for $800 million in May 2015; Lotte then announced plans to acquire 20 more properties overseas by 2020.45 “We think this is very meaningful in that we’re entering the North American market with New York’s historic hotel,” Lotte President and CEO Song Yong Dok said at the opening. “The New York Palace buyout is an opportunity for the group as a whole to expand its retail and confectionary businesses in the U.S.”46

Tourism developer and investment group Zhonghong Holdings recently acquired iconic high- end travel operator Abercrombie & Kent, which has been bringing a wealthy European and American clientele on safari and to exotic travel destinations since 1962 – a sign that investors are looking ahead to servicing Asian visitors of an adventurous bent.47

Last year, Beijing-based Anbang Insurance Group purchased New York’s landmark Waldorf Astoria hotel for a then-record $1.95 billion. Now, plans are in place to close the Waldorf in early 2017 for

25

Ritz-Carlton

Four Seasons

Peninsula

Mandarin Oriental

Aman


a top-to-bottom renovation that will convert more than three-quarters of the hotel’s 1,413 rooms into luxury condominiums.48 When Anbang’s attempt to purchase Starwood Hotels & Resorts earlier this year didn’t go as planned, the company changed targets. In March, it acquired Strategic Hotels & Resorts, along with 16 other U.S. luxury resorts and hotels, including Four Seasons Washington, D.C., the Westin St. Francis in San Francisco, and the Ritz-Carlton Laguna Niguel in Orange County, California.49

The deal marked a record transaction for Chinese buyers of American real estate.50 And while the hotels’ ambiance and identities aren’t expected to change as a result, the volume of purchases has unsettled many: everyone from regulators to President Obama have raised concerns over the sheer quantity of real estate purchases by Chinese investors. Obama broke an 80-year tradition by opting to not stay at the Waldorf after it was sold to

Anbang,51 and earlier this year the Committee on Foreign Investment in the United States reviewed 24 proposals for Chinese acquisitions of U.S. assets.52

While Anbang’s motive is “hunting for safer investments overseas” – according to the Washington Post’s Abha Bhattarai – the Hong Kong-based Rosewood Hotel Group is seeking to offer novelty to Chinese travelers.

“In Asia, there are already a lot of brands and very sophisticated travelers who always want something new. They are bored of staying in the same old Ritz-Carlton or Four Seasons,” Sonia Cheng, CEO of Rosewood Hotel Group told the Financial Times.53

The Rosewood Hotel Group (formerly New World Hospitality) purchased Rosewood Hotels & Resorts in 2011 for $800 million. It opened in Beijing in 2014, and is scheduled to open in the Chinese and southeast Asian locations of Guangzhou, Sanya, Hainan, Phnom Penh, Siem Reap, Luang Prabang,

82%

81%

81%

74%

72%

MEAN DON’T KNOW

Base: All respondents (n varies)A16b. On a ten point scale where 10 means “excellent” and 1 means “poor”, how would you rate [INSERT BRAND] overall?*Note: Sample sizes for the Top 1% who are familiar with the luxury hotel brands are too small to report.

OVERALL BRAND OPINION: TOP 5%

10 - Excellent 9 8

8% 8.6

12% 8.6

23% 8.3

23% 8.3

19% 8.5

33% 28% 21%

32% 30% 20%

22% 30% 29%

23% 28% 23%

33% 23% 16%

26


Bangkok, Phuket, Jakarta and Bali over the next four years.

As U.S. brands fall into Chinese ownership, the remaining independents are working to ensure they don’t lose the race for Chinese business and leisure travelers. Four Seasons uses a strategy for retaining Chinese guests that’s true to their service philosophy: Mandarin-speaking staff members are available 24 hours a day to assist guests, according to Scott Taber, senior vice president of rooms for Four Seasons. “Serving these customers can be as simple as having a local map or guest room collateral translated into Mandarin,” Taber says.54

Interestingly, Hilton was the �rst global hotel brand to introduce a customized hospitality experience for Chinese travelers with its Hilton Huanying welcome program. Simpli�ed Chinese upon arrival, 24-hour Mandarin interpretation services, Chinese menu items like congee, rice and noodles, and amenities like tea kettles, jasmine tea and slippers have served more than one million Chinese globetrotters since its beginnings in 2011.

China’s “tourism bonanza” has been compared by Bloomberg’s Enda Curran to the “unleashing of Japanese visitors on the world following the yen’s appreciation in the mid-1980s.”55 Except that unlike the Japanese, the Chinese outbound push “shows no signs of abating.” While Japan’s real estate and stock market bubbles burst, China’s travel bug is continually being fed by a vast rural population still to urbanize and a rapidly expanding middle class, according to analysis by French investment bank Natixis.56 And any dip in travel numbers will be short-lived. The Chinese government aims to move up to 81 million residents into urban zones by 2020, and by 2026, it hopes to move 250 million, a policy designed to increase wealth that will further bolster demand for outbound travel.57 Asian-owned hotels will have the opportunity to make Asian travelers, both business and leisure, feel at home while overseas. But will the rest of the world be comfortable as well?

As U.S. brands fall into Chinese ownership, the remaining independents are working to ensure they don’t lose the race for Chinese business and leisure travelers.

27


Rosewood Beijing

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While generations travel together because they want to get closer, that doesn’t mean they don’t need space. And the wealthier the traveler, the more space they need.

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Multigenerational travel has been the biggest trend in tourism for more than five years. Now it’s changing the configuration of resort and second-home destinations as the wealthy demand ever-larger lodgings to accommodate extended families and friends – and sometimes, entire communities.

America’s wealthiest travelers go to more places in more ways than other travelers. And they want everyone to come with them. Forty-�ve percent of the top 1% want to vacation with friends – even more than they want to take a family vacation with kids (41%). And 30% want to take a multigenerational vacation – all in numbers signi�cantly higher than total U.S. travelers. But to accommodate these new luxury holiday tribes, with kids, friends and possibly a grandparent in tow, hospitality providers and resort destinations are rethinking the notion of family “unit.”

In primary residences, multigenerational residential living is an old idea for cultures that have made the U.S. their home – particularly Asian and Hispanic – and it’s increasingly common among all races and demographics in the U.S., a result of the recession and longer-living Boomers.

Pew quotes U.S. census data showing that three-generation households – grandparents, parents and grandchildren – housed 26.9 million people in 2014. One in �ve Americans lived in households of two adult generations in 2014, a record 60.6 million people, or 19% of the U.S. population, up from an all-time low of 12% in 1980.58 A normalization of multigenerational primary-residence living is underway in the U.S.

On vacation, it’s already in full swing. The AARP says that vacations can produce a better quality of what Resonance calls “Togethering” than other

05

TOGETHERING IS EVERYTHING

0 5 | T O G E T H E R I N G

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occasions, which may have the weight of tradition bearing on them.59 Sixty-one percent of respondents in an AARP study of multigenerational travel said vacations were the “best way to spend time together” for three generations. Indeed, the report states that multigenerational vacations now account for half of all vacations taken by both parents and grandparents in the U.S.

AARP takes a particular interest in multigenerational travel, since their members are often footing the bill. The survey found that 35% of grandparents, versus 25% of parents, said they pay for multigenerational travel.

But while generations travel together because they want to get closer, that doesn’t mean they don’t need space. And the wealthier the traveler, the more space they need. At Four Seasons Los Cabos at Costa Palmas, 10,000-square-foot villas on the beachfront have been designed speci�cally for a new generation of wealthy travelers and

their entourages. At Four Seasons Resort and Residences Anguilla, stand-alone $6-million villas are attracting European and American families who bring friends and family to stay for extended periods. “One of our recent families decided to purchase a 6,185-square-foot beachfront villa because they have three small children, and the villa affords them the size and privacy to enable the entire family, along with a caregiver and grandparents, to vacation together,” says Nick Cassini, director of sales for Four Seasons Private Residences Anguilla. “They said that this was one of the most important factors in their decision-making.”

Short-term accommodation in hotels is also expanding to service the highly lucrative multigenerational market. Preferred Hotels & Resorts President and CEO Lindsey Ueberroth told Skift that in 2014, 33% of adults that Preferred surveyed said they spent more than $10,000 on a multigenerational vacation, and 18% spent more than $15,000.60

Statistically significantly higher than Top 5%. Statistically significantly higher than US travelers.

Base: All travelersA6. What types of vacations will you take in the next 12 – 24 months?

Visit to a beach resort 43%

Visit to a major metropolitan city 39%

Vacation with friends 31%

Family vacation with kids 30%

Combining business trip with leisure vacation 14%

Cruise 24%

Multi-generational vacation 23%

Visit to a mountain resort 17%

Quiet countryside holiday 16%

TYPE OF FUTURE VACATIONS

% ConsideringTOP 1% (N=723)

TOTAL US TRAVELER (N=3,379)

55%

45%

41%

33%

31%

30%

26%

21%

56%

31


“This is multigenerational travel ‘2.0.’,” says Ueberroth. “And these days, children are calling the shots, grandparents are increasingly funding the cost of the trip, and an overwhelming percentage of Millennials – 91% of those surveyed – say a multigenerational trip is something they try to take every year.”61

With teenage children an integral part of destination decision-making, grandparents’ needs to consider, and harried parents at the heart of it all, the logistics of multigenerational travel can be daunting – which opens the door for travel advisers who can intuit desires and unravel schedules. “Multigenerational travel will grow as parents want to raise global citizens,” Keith Waldon of Departure Lounge – an innovative Austin-based advisory, coffee shop and wine bar (!) – told Virtuoso delegates. “Kids today have experiences that they will carry with them the rest of their lives. Advisers become like family in some ways – there is an opportunity here to form lifelong relationships.”

Preferred Hotels & Resorts is responding to the trend by offering what it hopes is the next big thing, a class of accommodation the company calls Preferred Residences – “a worldwide collection of exceptional villas, bungalows, condominiums, and other idyllic units… that offer membership-free vacation experiences that marry the flexibility, space and privacy of a luxury residence with the anticipatory service, bespoke amenities and quality assurance of a personalized, world-class independent hotel stay.”

At Rosewood Hotels & Resorts, President Radha Arora told Resonance his properties are offering ever-larger suites, villas or residences from San Miguel de Allende (residences), to Castiglion del Bosco in Tuscany (villas) and Las Ventanas al Paraiso in Cabo (signature villas). The Wall Street Journal reported that Rosewood is increasing the percentage of suites at its resort properties

to more than 40% of total rooms, up from around 30%, to accommodate strong demand.62 “These multigenerational families that want to travel together take up not just one room, two rooms but a handful of rooms at the same time, driving the occupancy up,” Arora told Fox News, adding that he believes the phenomenon will grow stronger in the future.63

At hospitality brands favored by the top 1% of American travelers, suites are in the sweet spot. And for wealthy travelers accustomed to multigenerational living in primary homes – from places as different as Brazil, China and India – they’re a natural. At the Mandarin Oriental in Barcelona, the suites have an occupancy rate of about 80%, higher than the hotel’s regular rooms. In a new building nearby, 17 of the 22 new rooms will be suites. Peninsula Hotels and Starwood Hotels & Resorts Worldwide Inc.’s luxury St. Regis brand are adding the number of suites as they build new hotels and renovate existing ones.64

The suites game has evolved as the definition of luxury changes. Once designed to display and communicate the obvious trappings of luxury, suites are now expressions of a rich comfort. “(A suite) was almost like a regal waiting room,” Paul James, the then global brand leader for Starwood's St. Regis, Luxury Collection and W brands, told the Wall Street Journal in 2014. “You walked in and you had lots of obvious earmarks of luxury – the gilding, the bronze work, the marble.” Now, the largest suites “should feel more like a high-end home,” he says. Functionality is key – connecting rooms, more bathrooms and closet space matter.

The combination of a need to spend worry-free time together, worldly kids, and willing and wealthy grandparents and parents bodes well for multigenerational travel. And as those youngsters spend family time in luxuriously functional surroundings, there’s good news for both the hotel industry and the business of resort homes.

Perhaps the most interesting innovation in the vacation home sector is happening in the space between vacation home rental and vacation home ownership, the so-called “Destination Clubs”.

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0 6 | U N R E A L R E A L E S TAT E

Ownership of a vacation home, or many homes, has always been one of the most desirable luxuries for the wealthy. But today, technology is changing the way the affluent access, use and buy – or don’t buy – vacation properties around the world.

The shift in luxury spending from goods to experiences has been well documented, and since 2008, Resonance has been asking the most af�uent households in the U.S. what goods, services and experiences they consider to be the most desirable. For those for whom money is largely no object, we’ve consistently seen that taking exotic vacations is near the top of the list. In fact, the only luxury considered more desirable than taking vacations is owning a vacation home, which landed at the top of the list in our survey of the wealthiest 1% in the U.S. in 2015.

With the continued growth of multigenerational luxury travel and “togethering” with family and friends, it’s not surprising that vacation home ownership continues to be an unwavering desire for those who can afford it. What’s changing, however, is the way we access and manage the vacation home experience. While the role of technology and in�uence of online travel agencies (OTAs) in the distribution and sale of hotel nights is endlessly discussed and debated in the travel and tourism industry, technology has also given rise to new platforms that are changing both the vacation rental and vacation home sales industries.

Although Airbnb is a poster child for the so-called sharing economy, the resort real estate industry actually invented sharing decades before the sharing economy existed with a product called timeshare – an accessible way of owning a vacation home through the purchase of a divided or “shared”

06

UNREAL REAL ESTATE

34


interest in a vacation property. For decades, timeshare, whole ownership or renting a home or villa through a property manager were the primary means of accessing a vacation home experience (other than staying with friends or family who owned one, of course – and everyone would agree that these are the best kinds of friends and family to have).

But just as Airbnb is disrupting the hotel industry (and perhaps the apartment rental market even more), so too are a number of new options and platforms upsetting the traditional ways of renting a vacation home – by allowing owners to directly rent out their properties to consumers through their websites, bypassing traditional property management companies. Pioneers in the space include Vacation Rentals by Owner (VRBO) and HomeAway, which itself lists more than 1.2 million properties in 193 countries. It’s a signi�cant shift in an industry estimated to generate more than $100 billion in revenue each year.

“While awareness of vacation rentals as an accommodation option has grown in recent years, still only 40% of Americans say they have ever stayed in one,” HomeAway’s Vice President and General Manager of North America Bill Furlong told Resonance. “With a minority of people staying in rentals, there’s still plenty of room for growth, especially as companies like HomeAway increase marketing, distribution and word-of-mouth.”

To cater to the luxury traveler, HomeAway has created a separate site that features 9,000 luxury properties that have been selected through a HomeAway algorithm based on location, décor, services, amenities and other factors. Property listings are then manually reviewed by HomeAway staff before being added to the luxury site.

Other emerging rental platforms include one�nestay, an upscale version of Airbnb that specializes in luxury homes and apartments in cities such as London,

Vacation home in the mountains or at the beach

Taking exotic vacations

Owning your own business

Extended time off work

Gourmet kitchen at home

MOST DESIRABLE GOODS, SERVICES & EXPERIENCES

36%

32%

33%

35%

33%

50%

49%

49%

47%

47%

Base: Top 1% (n=724). C1. On a scale of 1-10, rate the desirability of each of the following luxury items and experiences, with 1 being “not desirable” and 10 being “very desirable.”

9 - very important10 - Extremely important Statistically significantly higher than US travelers.

35


Rome, Paris and New York. Hyatt was an early investor in the company, which was acquired earlier this year by AccorHotels for €117 million. Will other hoteliers follow suit or sit on the sidelines to see how AccorHotels fares in the vacation rental business?

But perhaps the most interesting innovation in the vacation home sector is happening in the space between vacation home rental and vacation home ownership. In so-called “Destination Clubs,” af�uent travelers pay a membership fee to access a curated portfolio of serviced villas, apartments and homes managed by the club. One of the fastest-rising stars in the space is Inspirato, which has grown over the past three years from 4,000 to more than 14,000 members who share the use of 700+ properties in 150 destinations around the world.

“That family time of sharing experiences and making memories together is more important than ever, which is why the vacation rental market and our business is growing so quickly,” Inspirato Founder

and Chief Experience Of�cer Brian Corbett told Resonance. “People want to share with others and they want the luxury and the space of a private home but they also want the service. They value the curation, the experience and the certainty that comes with staying in a vacation home that is branded.”

Indeed, research by Resonance shows that for wealthy travelers considering the purchase of a vacation property, a Destination Club is now almost as popular a choice as purchasing a vacation condominium. And as the next generation of luxury travelers grows up using services like Airbnb, and becomes accustomed to staying in residential environments, it seems likely that the popularity of this model will grow for many years to come.

While some would argue that the growing popularity of Destination Clubs and these new rental platforms may reduce demand among the af�uent for luxury hotels, Inspirato’s Corbett says just the opposite

Statistically significantly higher than top 5%. Statistically significantly higher than US travelers.

Base: All respondentsC2. Which of the following do you own now, are considering purchasing, would like to own one day, or would never consider purchasing?

Investment property 16% 19%

Vacation home 17% 19%

Home site to build vacation home in the future 16% 21%

Vacation condominium 13% 16%

Destination club membership 12% 14%

Private residence club membership 11% 15%

Hotel condominium 11% 14%

VACATION PROPERTY PURCHASE CONSIDERATION

% ConsideringTOP 5%

(N=1,667)TOP 1%(N=724)


36

is true. He says their members increasingly look to Inspirato to curate and manage all of their leisure travel experiences, so the club has aggressively selected and negotiated with hotels around the world to offer preferred rates to their members, who are frequently looking for weekend urban getaways as well. “We have added a lot of urban and metropolitan options because that’s a big trend,” Corbett says. “We have lots of demand for New York, London, San Francisco, Paris, London, Rome. We will do about 15% of our nightly rate revenue in hotels this year, and most of that is in urban destinations.”

Ironically, when it comes to whole ownership, HomeAway’s Furlong says the rise of new platforms to rent out vacation homes, which typically sit unoccupied for much of the year, is also making the economics of whole ownership more appealing.

“Renting a vacation home is certainly a more affordable alternative to buying one, and it provides the flexibility to visit new markets and travel with groups of various sizes,” says Furlong. “However, owning a second home can be more affordable than many realize. On average, those who list their home on HomeAway.com generate $28,000 in rental income per year and 70% are able to cover half or more of their mortgages.”

37

“ That family time of sharing experiences and making memories together is more important than ever, which is why the vacation rental market and our business is growing so quickly.”

BRIAN CORBETT, INSPIRATO

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38Four Seasons Los Cabos Private Villa at Costa Palmas, Mexico*Artist’s Rendering

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0 7 | WA R M I S T H E N E W C O O L

07

WARM IS THE NEW COOL

Hospitality design once placed wealthy travelers in an opulent bubble. Then came contemporary interiors, with their rarified materials and clean, hard edges. Now, luxury has warmed up to its surroundings and opened up to the outdoors. But the wow remains.

We live in restless times. We’re urbanized and hurried, detached from the natural world and distant from one another – and wealthier demographics, whose members juggle high-pressure occupations and the tug of family and friends, feel it keenly. At every level of wealth, hospitality has responded through design that helps travelers be more in touch with the places they visit, the landscape that surrounds them and themselves.

In the Resonance 2016 Portrait of the U.S. Millennial Traveler, interior design and style ranked highly among Mobile Millennials – those who have traveled

internationally at least once in a year. Among the wealthiest of travelers, interior design/style is even more important when it comes to choosing a hotel.

Certainly, Airbnb, one�nestay and other hospitality providers of the experience economy make people feel at home – famously “living like a local” – in a destination. Now big hospitality �ags in both urban and resort destinations are creating spaces where spectacular design, even the most contemporary, provides warmth and connection to people and place – just as it offers uniquely fresh, stimulating experiences that they say visitors and potential residence owners can’t get from simply hanging out in someone’s house.

For the wealthy, design needs to be about more than having access to a luxurious home away from their luxurious homes. Make no mistake – the luxury traveler may feel at home in a destination,

40


but these places are nothing like being at home. This is comfort combined with surprise; ease with inspiration. They offer a deeper experience.

Todd-Avery Lenahan, the owner of TAL Studio, has designed interiors for the likes of Four Seasons, Mandarin Oriental, Shangri-La and Auberge Resorts. “We believe the accomplished individual is actually looking for something that’s a really wonderful departure from what they experience in their �ne homes every day,” he says. “It needs to still anticipate them and meet their expectations in terms of function, utility and supreme comfort. But in terms of the overall ambient tenor and the emotional experience, we actually really push to create experiences that add a new dimension or a new texture to their life. I think for a destination resort experience, offering this expanded view of the world, a different set of emotional textures, dimensions and atmospheric experiences is really what the discerning and evolved luxury traveler is expecting.”

In TAL Studio’s most recent design for the new Four Seasons Los Cabos at Costa Palmas, the textures and experiences seamlessly integrate residences and landscape, contemporary design and vernacular warmth. Rather than overwhelm its site, the strikingly modern architecture is designed to allow the landscape to shine through; rather than offering a uniformly modern cool, of-the-moment interiors are paired with furniture palettes and �nishes with “a high degree of ethnicity and rusticity”; and rather than create a protective bubble of luxury, the line between inside and out blurs.

“We're moving to something that is a bit more reductive and a bit more organic,” says Lenahan. “People don’t want to feel like they're trapped in a little windowed aquarium room with air diffusers over their head. They're okay to feel a little bit warmer, they're okay to really feel like they're getting an authentic experience in a region of the world that is totally different than what they touch and feel every

Free internet access

Privacy

Swimming pool

Beach

Hotel restaurant

Fitness center

Walking distance to shopping/restaurants

Concierge service

Proximity to must-see attractions

Lobby lounge and bar

Interior design/style

DESIRABLE HOTEL AMENITIES: TOP 1%

US TRAVELERS

58%

46%

36%

37%

33%

30%

22%

20%

21%

36%

20%

51%

34%

35%

32%

27%

26%

24%

22%

21%

21%

21%

66%

53%

50%

49%

43%

40%

39%

37%

35%

35%

35%

Base: Top 1% (n=723). A12. On a scale of 1-10, rate the desirability of each of the following features and amenities when choosing a place to stay on your vacation, with 1 being “not desirable” and 10 being “very desirable.”

9 - very important10 - Extremely important Statistically significantly higher than US travelers.

41


day in their lives back in Toronto or London or San Francisco.”

At its best, Lenahan says, that experience allows them to “touch the face of the place” – to feel a visual, emotional and textural intimacy with the destination. “That connection is a big validator for people in terms of why they choose a property and how it becomes endearing.”

This desire to feel the “face”, the essence or sense of place is affecting design in urban settings as well. Places like Starwood’s new 1 Hotel Central Park are deliberately warm and decidedly cool. The hotel uses organic materials in a “just-sprung-from-nature sense” writes Forbes’ Ann Abel.65 The front doors are composed of 16,000 twigs and the �oors and walls are made from reclaimed wood. “Nothing is ever lost” is written in an assortment of mosses, fabrics and bits and pieces on a lobby wall.

The Fairmont Austin, set to open in summer 2017, is located near Palm Park and Waller Creek, and is billed as both a hotel in a park and a park in a hotel. Guests will be greeted by two 24-foot-high by 26-foot-wide heritage oak trees �anking the reception desk, and interiors and public spaces were inspired by the ecosystem of Waller Creek, with “indigenous greenery and cultural references throughout the hotel’s interior.”66 There’ll also be the Red River Canopy Walk, a 33-foot-tall elevated connection from Fairmont Austin to the Austin Convention Center, which will allow the public and

guests to view Waller Creek and Palm Park from above. The pedestrian bridge will include a stairway and ramp leading to Palm Park and three miles of new hike and bike trails.

Warm, inviting and comfortable, yes. Seamlessly indoor-outdoor? Pretty much. Home? This is way more exciting than home.

At the far end of the integration-with-nature spectrum are visionaries like French �rm MM Architects Designers & Planners, which is attempting to put guests in touch with the landscape in a more radical fashion.

“Nesting” involves modular constructs above ground where people can meet, work, sleep and live, as well as interact with natural surroundings in an urban environment – which is where 70% of us will be living by 2050.67 “Our basic concern in hospitality is the new urban landscape,” says MM architect and designer Marc Mussche, who suggests that Nesting-type hotels could also help �nance city park maintenance in the future.68

TAL Studio’s Lenahan maintains that hospitality offers one of the last opportunities to design environments that actually helps people slow down. “We can immerse people in a storytelling narrative and provoke certain emotions, guide them into a certain mood, and share the kind of emotional temperatures that are completely missing from their everyday.”

“ We believe the accomplished individual is actually looking for something that’s a really wonderful departure from what they experience in their fine homes every day.”

TODD-AVERY LENAHAN, TAL STUDIO


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0 8 | AT H L E T I C P U R S U I T S

As extreme athletics take the place of golf as the go-to pastime for a new generation of executives, destinations and hospitality providers have new opportunities to attract a wealthy demographic that will go anywhere and spend what it costs to maximize their fitness and improve their results.

The old adage “health is wealth” is a reassuring sentiment for those who don’t have, well, the wealth. But for the rich, the saying could well be “wealth is health”: The New York Times reports that about 90% of the top 1% describe themselves as being in excellent or good health, compared with 75% of everybody else. Similarly, the Resonance 2016 U.S. Luxury Travel Report found that the top 1% of American travelers are likely to participate in health and �tness on vacation 78% of the time, compared to just 60% for general travelers.

Luxury hotel brands have realized this and are targeting the �tness-minded luxury traveler. Four Seasons Los Angeles at Beverly Hills has 200 in-room workout videos, and it partners with the celebrity �tness �rm Blue Clay Fitness for workouts and hikes to nearby Runyon Canyon. The �tness center at the Four Seasons in L.A. is the city’s only exclusively outdoor hotel gym, offering guests an all-access pass to the California sun. Ritz-Carlton Bal Harbor in Miami recently opened a 10,000-square-foot Exhale spa and movement studio for yoga classes and Core Fusion, an intense strength and cardio program involving ballet barres and weights.

Not only are hotels taking the �tness business seriously, gyms are getting into the hospitality business. Upscale gym Equinox, which boasts as many as one million members worldwide – and memberships at $230 per month – recently

08

ATHLETIC PURSUITS

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Dining

Sightseeing

Learning new things

Visiting cultural attractions

Engaging with nature

Fun attractions


Shopping

Health & �tness

Nightlife

Participating in outdoor sports

Participating in a ‘once-in-a-lifetime’ activity

Watching live sports

Attending music festivals

Personally participating in athletic competitions

Volunteering


announced it is venturing into the hospitality world with its �rst hotel in Manhattan's Hudson Yards district. “The demand for �tness and high-performance living has never been greater, and we don’t see it slowing down,” Equinox Chief Marketing Of�cer Carlos Becil told Condé Nast Traveler. “We believe that to maximize results and reach your goals, you need to place equal focus on, and carefully plan, how you move, nourish, and regenerate your body.”

Luxury travelers are also about measuring their results. Mere health isn’t enough for this cohort – �tness has to be proven. Resonance data shows

that many more one percenters participate in athletic competitions like Ironman and triathlon events than travelers in general – 46% to 31%. Unsurprisingly, many of these are top executives.

The average annual household income for Ironman participants is $247,000, according to a 2015 survey conducted for the World Triathlon Corporation.69 The grueling 2.4-mile swim, 112-mile cycle and then 26.2-mile marathon isn’t for the faint of heart, nor for the feeble of funds. For instance, when Marc Blumencranz competed in the 2013 Ironman Triathlon World Championships in Kailua-Kona, Hawaii, he spared no expense. To

ACTIVITIES ON VACATION: TOP 1%

WOULD LIKE TO TRY REGULARLY/OCCASIONALLY

Base: All respondents (n=723)A8. While on vacation what activities do you enjoy regularly, enjoy occasionally, would like to try, or do not enjoy?

Would like to try Regularly Occasionally Higher than top 5% Lower than top 5%

42% 16% 29%

46% 17% 16%

65% 18% 20%

66% 27% 15%

69% 31% 25%

74% 41% 11%

75% 23% 13%

78% 38% 11%

83% 41% 7%

85% 37% 10%

85% 37% 10%

85% 40% 7%

90% 45% 5%

90% 53% 8%

91% 62% 6%

94% 76% 5%

45


prepare, Blumencranz – the managing director at the insurance brokerage and wealth-management �rm BWD – rented a house and a block of hotel rooms for the 10 days leading up to the race, hired a private chef to prepare his meals, then �ew to Hawai‘i with his wife, daughter, coach, massage therapist and physical therapist. The total estimated cost was $100,000.70 The registration fee alone for a full-distance Ironman is approximately $650, and the shorter Ironman 70.3 costs about $300, according to Fortune Magazine.71 In 2014, Ironman saw 200,000 athletes cross its �nish lines compared with 60,000 in 2009.72 In 2015, Ironman generated upwards of $183 million in revenue, and saw a 21% increase in revenue over the previous four years. Then, in August 2015, Ironman cashed out. The organization sold to Chinese conglomerate Dalian Wanda Group for $650 million.73

Ironman may be one of the most successful athletic competition brands in the world, but it now faces competition from fast risers such as CrossFit, Tough Mudder and Spartan. But Ironman’s edge, and attraction for the 1%, is the equipment athletes get to indulge in. “I don’t know if it’s a rich person’s sport, but it’s certainly an upscale person’s sport,” says Dr. Steven Jonas, a public health professor at Stony

Brook University, longtime triathlete and author of the best-selling Triathloning for Ordinary Mortals. “To run a marathon, you need a pair of shoes, a pair of shorts and maybe a water bottle. To do a triathlon, you need a lot more.”74

So how much does it cost to compete in a triathlon? With all the bells and whistles – road bike, cycling shoes, helmet, sunglasses, hydration supplements, extra tires for your bike, wetsuit, digital timing devices, racing shoes, training equipment and facilities as well as race fee, travel and lodging in exotic race locations – costs can run between $7,000 and $26,000, according to The Globe and Mail.75 The Wall Street Journal goes further, reporting the bike alone can cost as much as $20,000 with all the trimmings.76

Ted Kennedy of CEO Challenges, a company that organizes physical challenges like triathlons and marathons for CEOs, told Resonance that “cycling is one of the only sports in the world where you can buy speed. CEOs love to geek out and spend to get the coolest and fastest bike.”

CEOs, in fact, �ourish on the intensity of many kinds of athletic competitions. A 2014 German study

“ Cycling is one of the only sports in the world where you can buy speed. CEO’s love to geek out and spend to get the coolest and fastest bike.”

TED KENNEDY, CEO CHALLENGES

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published in the Social Science Research Network found that CEOs who run marathons are more likely to run companies with higher firm values. After reviewing more than 2.5 million race finishes, the researchers identified 9,549 finishes by 2,694 CEOs and found that fit CEOs manage companies that on average have firm values of almost 5% higher.77

One such would be former Twitter CEO Dick Costolo. In 2016, six months after stepping down from Twitter, Costolo announced plans to create his own software platform “that reimagines the path to personal fitness."78 Costolo’s own Twitter feed, @dickc, is highly regarded among fitness CEO buffs in the Bay Area, “where every other executive you meet is a competitive cyclist or dedicated rock climber.”79 He alternates sessions of CrossFit and SoulCycle on weekdays and biking in the Marin County hills on the weekends, a routine he told Inc.com was integral to his ability to run a large, fast-changing organization. “Everybody in the company's working a very large number of hours on any given

week, and doing things like this gives you the energy to grind through all that and not be completely worn down and unhealthy,” he said.80 Costolo isn’t the only “high performance net worth executive”; CEO Challenges has 1,800 of them in its database.

Ted Kennedy’s CEO Challenges plays to the psyche of the high net worth athlete whose brain never stops looking to conquer the next big challenge. The business model is quite simple: Kennedy targets a dozen particularly high-profile triathlons and events, pays in advance to reserve as many slots as he needs of the few thousand available, and CEOs pay Kennedy not only for the precious slot but also for his help with handling logistics, such as booking hotel rooms, shipping their bikes and equipment, arranging shuttle services and keeping family members updated on race day.81 “The affluent people I deal with aren’t afraid to do the work, but they don’t want anything to do with logistics – and they’re willing to pay someone like me to take care of it,” Kennedy told Resonance.

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When Resonance asked Kennedy when executives �nd the time to train, he said that they can survive on less sleep than most people. “They get up early...4:30 am to do an hour and a half of training, and are at their desks by seven.” Yet increasingly, time management is a factor in the types of events CEOs enter. “Sprints are becoming more and more popular compared to Ironman,” says Kennedy. “True Wall Street Fortune 500 CEOs can’t compete in several Ironman [events] per year, but they have no problem �tting several short distance, cycling and triathlon events into their schedule.” Which sounds a lot like the issue with golf, a game that inevitably consumes the better part of a day.

Kennedy says a growing trend is that CEOs crave variety: they don’t want to attend the same meetings and conferences that they have in the past. “Invite a CEO to a hockey, football or baseball game or golf tournament and they don’t go anymore,” he says. “But invite a CEO to take part in a triathlon event,

they’ll not only show up and compete, but they will be engaged for four to �ve days.” USA Triathlon CEO Rob Urbach referred to triathlon as “the new golf in the boardroom” in an email to Resonance. As many executives are taking up triathlon and becoming involved in other multisport disciplines, according to Urbach, destinations are waking up to the extreme economic opportunity that goes with extreme athletics.

Just over $10 million was the direct impact on the local Chattanooga economy after it hosted a 2014 Ironman event.82 Lake Placid estimates a $15.4 million impact when it hosts the Ironman 70.3 World Championships in 2017.83 The Woodlands in Texas estimates a similar $15 million impact each year it has hosted an Ironman event,84 and the list and dollar amounts go on and on for other U.S. cities. Spartan races and Tough Mudder events are not as large in impact as Ironman, but allow cities to wet their feet in the lucrative business.

“ Invite a CEO to a hockey, football, baseball game or golf tournament and they don’t go anymore, but invite a CEO to take part in a triathlon event, they’ll not only show up and compete, but they will be engaged for four to five days.”

TED KENNEDY, CEO CHALLENGES


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0 9 | T R I P . A D V I S E R S .

Luxury travelers want advisers, not agents; they seek connoisseur-level experts who cultivate relationships and deep knowledge of individual needs in order to assemble experiences as unique as the people who will enjoy them. The advisers who will flourish in the future are those who can combine the human element with innovative uses of technology.

Resource-rich but time-poor individuals have spurred the growth of industries devoted to advising them on how best to plan, invest, buy a home and spend their vacations. They don’t go to the bank, they get �nancial advice and wealth management; they don’t have real estate agents, they have property advisers; their art collections are co-selected with curators. And so it is with travel. From travel agencies, travel advisers and curators have been born – by the thousands. And business is booming. In the 2016 U.S. Luxury Travel Report,

Resonance research shows that 39% of the top 1% book trips with travel agents, as do 32% of the top 5% of travelers – both signi�cantly higher than the general traveling population; in its 2016-2017 Portrait of American Travelers report, MMGY Global notes that only 16% of travelers in general use an agent.

The rest of the world will scroll through 38 sites before booking, according to Expedia, �rst to look for information and then to compare prices.85 But busy high net worths don’t care to compare prices online, and don’t see the value of discounts.

What they do care about is relationships and expertise. Among providers large and small, Virtuoso, which describes itself as “the travel industry’s leading luxury network” is there to offer it. Virtuoso, which is made up of both travel advisers and travel partners like hotels, cruise lines and tour operators, meets twice yearly; at 2016’s Virtuoso

09

TRIP. ADVISERS.

With additional reporting from Siobhan Chretien.

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0 9 | T R I P . A D V I S E R S .

Travel Week in Vegas, more than 5,000 attendees from 98 countries took part, up from 98 attendees at the �rst event, the quaintly named Virtuoso Travel Mart held in Palm Springs in 1989.

Indeed, the growth of specialized travel agencies has been nothing short of phenomenal. Forbes reported that in 2014, Virtuoso’s 9,800 agents sold over $14 billion in travel, slightly more than Orbitz, which had $12.4 billion in sales. Small matter that both were far behind Expedia and Priceline Group, which each registered $50 billion in revenues. Travel is a big enough pie for all to share.86

At this year’s Travel Week, Virtuoso CEO and founder Matthew Upchurch told the crowd that “Travel advisers are the hottest thing that never went away.” The secret at the high end has been in the industry’s evolution from booker of travel to co-conspirator with travelers, and �ttingly, the theme of this year’s event was “Luxury is Personal.”

“You can’t put a price on the freedom you get with having the expertise of a good travel adviser,”

Producer Elan Gale of Bachelor/Bachelorette fame told Resonance. “Celebrities and the 1% want advisers and this will only grow. The agent is insurance.”

“I work with clients long term,” says Susan Farewell of Farewell Travels, “seeing their travel needs in terms of �ve-year chunks. We develop a �ve-year travel plan for them, which we revisit every year. So I get questions like, ‘Where are we going this summer?’ They assume I have already thought it through for them based on their past trips, their kids’ ages, and the �ve-year plan we designed.”87

At Indagare, former Town & Country Travel magazine travel editor Melissa Biggs Bradley combines her journalism connections and experience to offer a mix of travel writing with highly customized itinerary planning. Like many others, her connections provide her community with insider perks, deals and special treatment.

For elite travelers, advisers are tasked with making sure that trips go off without a hitch, and the

Speci�c hotel/resort/airline brand website

Travel website

Over the phone with the speci�c hotel/resort/airline central reservations

Travel agent

Tourism destination’s website

Other

BOOKING METHOD

TOP 1% (N=673)

72%

56%

38%

39%

22%

4%

Base: All respondentsA6b. In the past 12 months, which of the following have you used to book your vacation travel?

Statistically significantly higher than Top 5%. Statistically significantly lower than Top 5%.

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0 9 | T R I P . A D V I S E R S .

pressure to be responsive is high. Kimberly Wilson Wetty of Valerie Wilson Travel, a 30-year-old �rm that pioneered the relationship advisory, says, “We compete against time. It’s challenging as people want information yesterday.” Wilson thoroughly understands her clients’ goals, scrupulously logs their travel history and keeps abreast of changing interests so she can make timely, proactive suggestions.

Advisers are as varied as clients, and range from former travel a�cionados and journalists to Wall Street types who know luxury and relationships and are switching careers. Looking forward, though, relationships will be just one part of the equation, and advisers must continue to innovate in order to differentiate themselves in an increasingly crowded �eld. “To pioneer, we must be curious, and that includes what intimidates us,” CEO Upchurch told Virtuoso delegates. Enrique Felgueres of Felgueres Travel Group of Mexico told the assembled that “Content, human connection and tech are key for travel agency success today.”

Decidedly, one of the most innovative of the high-touch �rms is London’s Black Tomato. The boutique �rm offers a “Bucket List Service” to help people create, plan and carry out lifetime travel goals. It also sends out quirky “20 Questions” travel guides designed to help people discover places as travelers did in the days before guidebooks and internet – by “encouraging conversations and discovering where

they will take you.” Black Tomato has entered into a brand collaboration with Cadillac that sheds gorgeously inspiring light on a destination and a local resident, and the �rm sees partnerships with brands from fashion to wine as growing drivers of travel.88 Now Black Tomato is offering travelers the opportunity to capture travel memories from the perspective of a drone operated by a shooter who may have worked on the James Bond or Star Trek �lms.89

Black Tomato CEO and founder Tom Marchant told the Virtuoso delegates that although technology shapes everything in travel, “at the heart of it is the human. Technology can suck the heart out of travel.” This insight isn’t lost on luxury accommodation providers like one�nestay, which is Internet-based but promises “handmade hospitality”, nor on luxury hospitality �ags, which are treading the �ne line between tech convenience via apps and other conveniences and the personal touch that grows loyalty.

As the number of advisers grows, the business will more and more resemble that of other consultants to the wealthy: those that develop deep personal relationships that combine trust and competency – who can make trips as individually relevant as they are effortless – will thrive. And it won’t be easy: with multigenerational travel ever more popular, advisers will have to have intimate connections with not just one family, but with three or four.

“ Travel advisers are the hottest thing that never went away.”

MATTHEW UPCHURCH, VIRTUOSO


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1 0 | H I G H E R F LY E R S

It used to be that a vacation didn’t really start until travelers had checked into the hotel, found a quiet spot by the pool and taken that first sip of wine. But for wealthy, experience-seeking travelers, carriers are making the getaway begin before the plane even takes off. And in a world where flying is drudgery, the journey is once again becoming as memorable as the destination.

“We are witnessing an important shift in mind-set when it comes to the airport experience and it’s clear that today's frequent �yers no longer view themselves as passengers merely transiting the airport, but as consumers seeking more rewarding travel journeys,” says Stephen Simpson, global marketing director for Priority Pass, which offers frequent �iers access to independent airport lounges.90

Resonance data in the 2016 U.S. Luxury Travel Report revealed the top 1% prefer a destination that is easily accessible by commercial �ights when compared to general U.S. travelers – 45% to 35%. Now, as security has tightened and air travel has become increasingly tedious, commercial airlines are going to great lengths to make travelers comfortable after they pass through the body scanner. “Heightened security has driven the rise of the airport spa,” George Hammer, chairman of luxury hair and beauty salon Urban Retreats – which has locations in major global airports – told the Financial Times.91 "Long-haul travellers often have time in between their �ights, sometimes a few hours, in which they're con�ned to the airport."

At the airport, airlines themselves are tempting af�uent travelers with luxury amenities they once could only enjoy at their destinations. This summer,

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HIGHER FLYERS

54


Etihad Airways, the national airline of the United Arab Emirates, unveiled its new ultra-luxury lounge and spa in Abu Dhabi International Airport. The lounge features 16 unique zones. “Almost every conceivable recreational activity can be indulged in, whether it’s smoking Cohiba cigars, working out in the �tness room, or chilling on a reclining lounger while watching soothing images on a panoramic video wall made up of 27 individual screens,” Jessica Hill writes in the UAE newspaper The National.92 “The lounge was created to ensure a seamless transition from the airport to the airplane,” says Shane O’Hare, Etihad’s senior vice-president of marketing. "Whilst this physical environment is truly remarkable, we have placed special emphasis on creating an aspirational luxury lifestyle space in line with our legendary in�ight service offering. The result is the �nest airline lounge and spa experience in the world."93

In the U.S., competition among commercial carriers to attract the luxury traveler has always been intense. But with bankruptcies and mergers in their rearview

mirrors and low fuel prices helping pro�ts, airline clubs in the U.S. are getting an upgrade.94 “Airlines are �ush with pro�ts from continued low oil prices. Now is the time to re-invest in improvements,” Mike Oshins, hospitality management professor at Boston University told The New York Times. “The ambience, service and amenities of the airport lounge is a tangible representation of the luxury service of the airline, and one area to focus on after some neglect.”95

American Airlines is spending $3 billion to improve more than 50 of its Admirals Clubs.96 Delta is updating its 50 Delta Sky Clubs around the world with redesigned food displays, relaxing background music and a signature scent in the lobby.97 United Airlines is opening its new Polaris lounges for business class passengers �ying internationally, featuring custom-designed chairs, private daybeds, spa-like showers and chef-inspired hot meals served in a boutique restaurant.98 But it’s not only airlines that are reacting to the trend. American

Safety 58%

Favorable climate/weather 47%

Easily accessible by commercial �ights 35%

Scenery and nature 38%

Opportunities to learn something new 32%

KEY DECISION FACTORS WHEN DECIDING ON A VACATION DESTINATION: TOP 1%

37%

27%

25%

25%

19%

TOTAL US TRAVELERS

Base: All respondents (n=723).A7. On a scale of 1-10, what are the most important factors you take into account when deciding on a vacation destination, with 1 being not important at all and 10 being extremely important?

910 - Extremely important Statistically significantly higher than US travelers.

56%

50%

45%

40%

35%

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With bankruptcies and mergers in their rearview mirrors and low fuel prices helping profits, commercial airline clubs in the U.S. are getting an upgrade.

Express operates its high-end Centurion lounges – six of them – throughout the country, offering complimentary chef-prepared meals, soundproof rooms for children and, in some, free 15-minute massages and manicures. Four Seasons opened the Four Seasons Lana‘i airport lounge in Honolulu in 2014. “The arrival and departure experience is under-tapped within the hospitality industry,” Lana‘i property resort manager Charles Fisher told The New York Times, adding that the lounges offer an on-brand experience long before visitors step onto the property.99

Airlines have a separate entry at Los Angeles International Airport for the richest of the rich... celebrities. They get expedited check-in without having to fend off paparazzi, and enter the TSA screening area through a private hallway. LAX is constructing a separate entry lounge for those willing to pay as much as $1,800 per trip, according to the Los Angeles Times.100

On board, some airlines have decided that less is more when it comes to making wealthy travelers comfortable – less �rst class, that is. According to an analysis by Airways News,101 a slew of U.S. and international carriers have eliminated �rst class cabins on international �ights because private jet travel is more affordable and business class is getting better and better.

United, Delta, Cathay, Singapore, Qatar, Lufthansa and Air India have all removed �rst class cabins on select international �ights. United Airlines is improving business class by installing sleeping pods instead of seats, and has partnered with Saks Fifth Avenue to enhance the business class experience with custom bedding. “Following 12,000 hours of research that went into the design of this new service, United found that business class travelers singled out sleep as their top concern,” reports Luxury Daily.102 Cathay Paci�c has left the �rst class cabin off its new Airbus A350-900s and its larger and newer A350-1000s, including only business


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class, premium economy and regular economy seating.103 Qatar Airways’ new A350s have no first class, nor does Singapore Airlines’ new A350, which debuted in March.104 Air India decided to get rid of the first class cabin on the three 777-200LR aircrafts that it uses for its Delhi-San Francisco route due to poor performance. Airline officials told the India Times that the occupancy rate for seats in the front cabin was only reaching about 25%, compared to 30%-35% for business class.105 “The experience isn’t good enough,” was the blunt assessment of AirwaysMag.com Senior Business Analyst Vinay Bhaskara.106 “There are still some travelers who crave that more exclusive experience – but today, they are more likely than ever to opt for private jets.”107

Indeed, the line between first class, business class and private jets grows ever more blurred, according to Jonathan Kletzel, U.S. transportation and logistics leader at PwC. “Recent improvements to business class, such as seats that recline into beds, leave little room to differentiate the two services. Once you’re

lying flat and you’ve got your own personal screen and you’re getting a nice dinner, the distinction comes down to nicer wines and plusher pillows.”108

The decreasing cost of private jet travel has made it easier than ever to rationalize, and new technology has produced larger business jets with much greater range. C-suite business travelers who would routinely fly first class now have a variety of creative and affordable private jet companies to choose from.109

“People who fly [private jet] charter way overpay, and people paying for business class hate it,” asserts JetSmarter founder Sergey Petrossov. "We're making the journey just as important as the destination," Petrossov said. "And that's what really has left aviation."110 Rather than owning and managing a fleet of planes itself, JetSmarter created a system for accessing private-jet operators’ schedules and uses GPS to track the available supply of planes. Its app allows members to easily

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On board, some airlines have decided that less is more when it comes to making wealthy travelers comfortable – less first class, that is.

reserve seats, while push noti�cations encourage bookings. At $10,000 per year, a JetSmarter membership gets travelers seats on shared �ights for a fraction of what it costs to charter an entire plane. It also gives them free access to 40 to 50 weekly scheduled �ights between 10 U.S. cities and within Europe and the Middle East.111 The company has reported a monthly growth rate of 15%-20% since its March 2013 launch, according to Business Travel News.112 Other companies have entered private aviation with similar strategies and mixed results. RISE, Surf Air and JetSuiteX offer unlimited �ights throughout California, Texas and Las Vegas for a monthly fee of up to $2,000 – Surf Air recently announced all-you-can-�y service throughout Europe for $3,250 starting in October – while BlackJet, the charter service backed by Uber co-founder Garrett Camp, folded this spring.113

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We have now reached the ends of the earth.

Early 20th-century crossings on the grand ocean liners and the sweep of transcontinental train travel seem positively quaint in comparison to the luxury travel trends and experiences discussed in the preceding pages. There is nowhere wealthy travelers cannot go – and nothing they cannot do in the comfort to which they have become accustomed. As The Guardian reports in a story about Further Future, a “Burning Man for the one percent,” travelers can request an entourage concierge, described as “a personal, dedicated lifestyle manager and assistant ready to help you with any requirements or desires you may have. No request is ever unattainable.”

Nothing ever unattainable is an awe-inspiring concept. And it is creating an era of ever-more imaginatively fabulous travel offerings, what Quintessentially, a “lifestyle manager” with of�ces in 60 countries, calls “extreme service.”

More than a race to the top, it is a race to the over-the-top.

What’s next? After the so-called “experience economy,” we are at the peak of human possibility, in the “transformation economy,” according to Joseph Pine II and James H. Gilmore in the Harvard

Business Review. The Business of Fashion (BoF) describes Pine and Gilmore’s progression of economic value from commodities to goods to services to experiences to personal transformations “where a better you becomes the product.” Indagare founder Melissa Biggs Bradley told BoF that the process follows Maslow’s hierarchy of needs: “The more money and security you have, the more you think about enlightenment, enrichment, deeper satisfaction.”

The “better you” is not only the ultimate transformation – it’s the ultimate destination. After all, your body can only take you – and you can only take it – so far. It’s in your mind that the real trip happens. It’s a tantalizing idea to begin a journey as yourself and end it as someone more admirable – smarter, more �t, more of a connoisseur, a more fully realized, happier human. For sophisticated and worldly travelers, who have been and seen everywhere and everything, it’s the �nal frontier.

Or maybe it’s not – maybe it’s just a stepping stone to a place we haven’t even dreamed of yet.

To learn more about Resonance’s research, consulting and marketing services, or sign up to receive ongoing reports and insights on the future of luxury travel, please visit resonanceco.com.

CONCLUSION

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1 https://skift.com/2015/09/23/skift-global-forum-2015-crystal-cruises-ceo-on-building-a-lifestyle-brand/

2 https://www.indagare.com/destinations/asia/japan/articles/just-back-from-japan

3 http://www.wsj.com/articles/dont-call-further-future-burning-man-for-billionaires-1465307654



6 http://www.summit.co/7 http://www.theglobeandmail.com/life/travel/

destinations/how-luxury-hotels-are-upping-the-indulgence-ante/article15374343/

8 http://www.theglobeandmail.com/life/travel/destinations/how-luxury-hotels-are-upping-the-indulgence-ante/article15374343/

9 http://www.cnet.com/news/elon-musks-mars-vision-is-bigger-than-you-thought/

10 http://www.telegraph.co.uk/business/2016/02/19/virgin-galactic-returns-with-spaceshiptwo-test-�ight/

11 http://www.telegraph.co.uk/science/2016/04/16/space-hotels-close-as-in�atable-pod-joined-to-international-spa/

12 http://www.telegraph.co.uk/science/2016/04/16/space-hotels-close-as-in�atable-pod-joined-to-international-spa/

13 http://dujour.com/lifestyle/expensive-ascetic-retreats-yoga-omega-institute/

14 https://www.omnihotels.com/blog/art-omni-dallas/

15 http://www.curbed.com/maps/mapping-the-best-hotel-art-in-the-country

16 https://westhollywood.andaz.hyatt.com/en/hotel/activities/hotel-activities/artseenatandaz.html

17 http://www.standard.co.uk/lifestyle/travel/why-highend-hotels-are-investing-in-daring-artworks-from-le-bristol-paris-to-das-stue-in-berlin-a3337051.html

18 http://www.theglobeandmail.com/life/home-and-garden/arts-coming-out-why-galleries-are-the-new-it-spots-for-cityhangouts/article30179794/

19 http://www.visitmarfa.com/arts.php#.V9cs05MrLHc

20 https://skift.com/2015/07/30/skift-global-forum-2015-learning-is-the-new-luxury-in-the-experience-economy/

21 http://www.nytimes.com/2013/02/12/business/connoisseurship-expands-beyond-high-art-and-classical-music.html?_r=1

22 https://news.artnet.com/market/sothebys-stock-trouble-2015-373616

23 http://www.knightfrank.com/wealthreport/ 2016/luxury-investment/uhnwi-luxury24 http://www.npr.org/2016/06/16/481570231/

for-many-art-dealers-selling-is-a-dirty-word-but-not-for-young-collectors

25 http://www.npr.org/2016/06/16/481570231/for-many-art-dealers-selling-is-a-dirty-word-but-not-for-young-collectors

26 http://thecut.io/2c4nqlV27 http://thecut.io/2c4nqlV28 http://nyti.ms/1NlKRBY29 http://www.travelweek.ca/news/ihgs-even-

hotels-debuts-new-wellness-focused-hotel-brooklyn-ny/

30 http://bit.ly/2cErhYl31 http://bit.ly/2cGsXh432 http://www.travelmarketreport.com/articles/

Luxury-Wellness-Whats-New-For-201733 http://www.scmp.com/magazines/style/

article/1670430/asian-hotels-bring-their-brand-hospitality-west

34 http://www.constructionenquirer.com/2015/12/09/green-light-for-500m-peninsula-london-hotel/

35 http://blog.forbestravelguide.com/peninsula-

sets-its-sights-on-london36 http://wapo.st/1oiejQc37 http://wapo.st/1oiejQc38 https://skift.com/2016/06/08/swire-hotels-

opens-east-miami-its-�rst-property-outside-of-china/

39 https://www.ihgplc.com/chinesetravel/src/pdf/IHG_Future_Chinese_Travel.pdf

40 http://www.shangri-la.com/corporate/press-room/press-releases/assila-investments-and-shangri-la-sign-mou-for-management-of-new-luxury-hotel-i/

41 http://www.scmp.com/magazines/style/article/1670430/asian-hotels-bring-their-brand-hospitality-west

42 http://www.scmp.com/magazines/style/article/1670430/asian-hotels-bring-their-brand-hospitality-west

43 http://www.htrends.com/trends-detail-sid-88904.html

44 http://www.htrends.com/trends-detail-sid-88904.html

45 http://www.prweb.com/releases/2015/10/prweb13048895.htm

46 http://www.koreaherald.com/view.php?ud=20150918000895

47 https://skift.com/2016/07/22/abercrombie-kent-acquired-by-chinese-investment-group/

48 http://www.cntraveler.com/stories/2016-06-27/waldorf-astoria-new-york-to-close-for-three-years

49 http://www.reuters.com/article/us-strategic-hotels-m-a-anbang-idUSKCN0WE0YY

50 http://bloom.bg/1YQStAQ51 http://bloom.bg/1YQStAQ52 http://bloom.bg/1UPnHXC53 http://on.ft.com/2clcgWH54 (Resonance 2016 Chinese Travel Report)55 http://bloom.bg/1ql4TF956 http://bloom.bg/1ql4TF957 http://www.techinsider.io/heres-chinas-big-

plan-to-move-a-population-the-size-of-the-phillippines-from-farms-to-cities-2015-7

58 http://pewrsr.ch/2aRC9Os59 http://www.aarp.org/content/dam/aarp/

research/surveys_statistics/general/2015/AARP-Travel-Multi-Gen-Report-res-life.pdf

60 https://skift.com/2015/04/21/hotels-lessons-for-marketing-to-multi-generational-travelers/

61 http://prn.to/2cmF42p62 http://on.wsj.com/2cu316b63 http://www.foxbusiness.com/

features/2014/06/24/rosewood-hotels-ceo-were-back-to-boom-days.html

64 http://www.wsj.com/articles/SB10001424052702304256404579449243739078538

65 http://bit.ly/2cEzPfa66 http://prn.to/2bMCqRx67 http://www.thejakartapost.com/

travel/2016/07/27/best-concepts-for-future-hotel-designs-unveiled.html

68 http://www.thejakartapost.com/travel/2016/07/27/best-concepts-for-future-hotel-designs-unveiled.html

69 http://nyti.ms/1QhBx6h70 http://nyti.ms/1QhBx6h71 http://fortune.com/2014/06/25/iron-man-

triathlon-private-equity/72 http://fortune.com/2014/06/25/iron-man-

triathlon-private-equity/73 http://triathlon.competitor.com/2015/08/news/

chinese-conglomerate-acquires-ironman-for-650-million_121299

74 http://nyti.ms/1QhBx6h75 http://www.theglobeandmail.com/sports/

more-sports/i-am-ironman/article14815416/76 http://on.wsj.com/28qrC4z77 http://www.outsideonline.com/1805436/study-

runners-run-better-companies78 http://www.inc.com/jeff-bercovici/dick-costolo-

�tness.html

79 http://www.inc.com/jeff-bercovici/dick-costolo-�tness.html

80 http://www.inc.com/jeff-bercovici/dick-costolo-�tness.html

81 http://money.cnn.com/2009/02/04/smallbusiness/iron_man.fsb/

82 http://www.utc.edu/health-human-performance/pdfs/ironman14report.pdf

83 http://www.lakeplacid.com/news/2015/05/lake-placid-one-3-�nalists-bid-host-2017-ironman-703-world-championships

84 http://www.chron.com/neighborhood/bayarea/article/Galveston-bids-for-Woodlands-triathalon-8345725.php

85 http://www.travelmarketreport.com/articles/Consumers-Visit-38-Sites-Before-Booking-Expedia-Says

86 http://www.forbes.com/sites/douggollan/2015/08/10/travel-agents-�ock-to-las-vegas-for-business-and-laughs/#502c07c61096

87 http://www.travelmarketreport.com/articles/Travel-Professionals-Identify-15-Luxury-Travel-Trends-For-2016-And-Beyond

88 http://drivesyouforward.blacktomato.com/experience/iceland/?autoplay=1

89 http://www.dailymail.co.uk/travel/travel_news/article-3719523/Black-Tomato-provides-drones-piloted-James-Bond-Star-Wars-cameramen-capture-trip.html

90 http://prn.to/1XA4cXi91 http://on.ft.com/28ZcKSD92 http://www.thenational.ae/business/the-life/

etihad-�rst-class-lounge-review-spoil-yourself-rotten-at-abu-dhabi-airport

93 http://on.ft.com/28ZcKSD94 http://nyti.ms/28RMXvN95 http://www.nytimes.com/2016/06/21/business/

airlines-upgrade-their-clubs-to-lure-customers.html?_r=0

96 http://nyti.ms/28RMXvN97 http://nyti.ms/28RMXvN98 http://newsroom.united.com/2016-06-

02-United-Airlines-Unveils-Reimagined-International-Travel-Experience-United-Polaris-Business-Class

99 http://intransit.blogs.nytimes.com/2014/06/30/for-hotel-guests-a-key-and-an-airport-lounge/

100 http://www.bloomberg.com/news/articles/2016-06-23/elite-travelers-skip-the-airport-security-line-for-a-price

101 http://travelskills.com/2016/05/23/�rst-class-phase-out/

102 https://www.luxurydaily.com/saks-elevates-plane-travel-through-united-airlines-collaboration/

103 http://blog.sfgate.com/cmcginnis/2016/05/25/airlines-phasing-out-�rst-class/

104 http://blog.sfgate.com/cmcginnis/2016/05/25/airlines-phasing-out-�rst-class/

105 http://onemileatatime.boardingarea.com/2016/01/18/air-india-�rst-class-removed/

106 https://airwaysmag.com/industry/does-international-�rst-class-have-a-future/

107 https://airwaysmag.com/industry/does-international-�rst-class-have-a-future/

108 http://qz.com/712016/�rst-class-air-travel-is-disappearing/

109 http://travelskills.com/2016/05/23/�rst-class-phase-out/

110 http://abc7ny.com/travel/jetsmarter-aims-to-be-the-uber-of-private-�ights/1405287/

111 http://www.fastcompany.com/3060271/most-innovative-companies/six-companies-changing-the-way-we-travel

112 http://www.businesstravelnews.com/Procurement/The-Rise-of-Private-Jets-in-Corporate-Managed-Travel

113 http://www.fastcompany.com/3060271/most-innovative-companies/six-companies-changing-the-way-we-travel

ENDNOTES

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