Baby Boomers are set to account for a rising share of luxury travel as the generation continues to retire, according to new data shared at Virtuoso’s annual Symposium in Vancouver, British Columbia.
According to a presentation by keynote speaker Ken Dychtwald, Ph.D., CEO of Age Wave, households headed by those 65 years and older have more than 21 times the median wealth of households headed by people under 35.
From a travel perspective, the figures become even more resonant, Virtuoso said. Consumers 50 years of age and over account for 33 percent of the population, yet they are responsible for 51 percent of entertainment expenses, 53 percent of airfare expenditures, 59 percent of lodging expenditures, 70 percent of all disposable income, 74 percent of ship fares, 76 percent of total net worth, and 92 percent of all affluent households. What’s more, those aged 55 and older will soon face time affluence like the world has never experienced, with 2.5 trillion hours of leisure time over the next 20 years.
Dychtwald shared data from the joint Age Wave/Merrill Lynch study his group produced. With plenty of downtime ahead of them, Dychtwald stated that 47 percent of retirees are most excited about their newfound ability to travel. They are in search of peak experiences (48 percent) and adventure (45 percent), with 95 percent of retirees saying they prefer to have more enjoyable experiences than more things. His message to the Virtuoso travel agency executives in the audience: optimize invaluable expertise. Dychtwald said that travel agents are poised to become more important than ever, as they help clients imagine their dreams by reimaging tomorrow’s travel marketplace, and provide an unseen layer of safety and protection during the actual travel experience.
During another keynote presentation Virtuoso Chairman and CEO Matthew D. Upchurch built on Age Wave’s research and zeroed in on the scalability of loyalty at a time when interrupting the trust that comes from genuine human connections appears to be the primary driver of so many travel organizations, Virtuoso said. He shared that when the ownership of the coveted client is at stake, scaling loyalty and creating a system that expands while also growing allegiance must be the goal. Success comes from combining both the structural and emotional components of loyalty.
Upchurch talked of the opportunity facing the luxury travel industry, citing the emerging customer base and an IATA statistic showing anticipated air passengers nearly doubling to 7.2 billion by 2035, as well as the growth of the cruise industry and the innumerable niche products. And while there have never been more choices, consumers are looking for someone to simplify their lives as they become even more overwhelmed by information. They are turning to travel advisors to make their lives more secure and fun.
Said Upchurch, “Today we are in the era of exponential choices. We’re swimming in options and there are so many more products. The goal for all of us should be enduring loyalty, which is not to be confused with repeat business. It’s building lifetime connections and lifetime value.”
Continued Upchurch, “There is a legitimate commodity play based on price, convenience and accessibility, but this is not what we in the luxury and experiential business are working to create. Points and cards are everywhere. They’ve become a new currency, which, like real money, can increase and decrease in value. We want to scale enduring loyalty – experiences worth paying for.”
Upchurch went on to say that structural components like mobile apps that register guests provide new conveniences and reward behaviors, but to some degree have created a structural arms race within the industry. However, he pointed out, human beings don’t make decisions solely on facts, points or price. They make choices largely based on emotions, quoting Harvard Business Review’s The New Science of Customer Emotions: “On a lifetime value basis, emotionally connected customers are more than twice as valuable as highly satisfied ones.”
Human connection matters and it is this desire that has fueled the growth of travel advisors as a profession. Luxury and experiential customers come with high value and high expectations. Structurally, they want things to be fast, efficient, productive and in the way they like to communicate. They also want the personal touch, and to feel cared for.
Upchurch called on Virtuoso’s partners to elevate and integrate the next phase of the digital revolution, going from a direct-only bias to compensating on the whole. He surmised that scaling loyalty will take a combination of game-changing elements, including synchronizing structural systems like data conformity and providing assets that support travel agencies as they develop their own systems to support their advisors and the many ways they go to market.
Lastly, he concluded by restating that authentic human connections amongst its travel agencies and preferred partners make a notable difference in how his network’s customers experience travel. And the power to scale loyalty begins with the everyday touchpoints that occur before, during and after the trip. The emerging advisory sector will co-create the peak experiences of the future and uncover new opportunities. And the emerging customer, with unprecedented wealth, time and need for powerful experiences, will lead to the sustainability of the travel industry as an economic powerhouse and a force for good.