Luxury tourism and hospitality

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Andrew Hallott

What is luxury?

Coco Chanel describe luxury as

“... a necessity that begins where necessity ends”

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Two factors distinguish luxury products:• Uniqueness of product - Uniqueness is the result of a combination of the following luxury components:

Creativity that assures a certain style

Quality in fine material/fabrics Selectivity in the distribution

network and strategy Prestigious location of sales

outlets Limited production in terms of

volume High price, justified by the actual

quality of product, the brand image, and customer needs

- An established tradition of knowledge, skill, expertise

• Brand imagery - The image reflected by the brand and the product is present in:

Brand attributes that guarantee customers access to the upper social circles (geographic origin, designer name, famous patrons, etc.)

Communication of the brand is exclusive and addresses aspirations of a particular group of consumers

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Luxury Price is often thought as the

key to deciding what is luxury, the more expensive the more luxurious the product must be.

Cant just base luxury on price but it should be unique, have good brand identity and be comfortable

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Luxury brands in China

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Luxury tourism as a phenomenon Luxury tourism should be

unique and bespoke to the individual traveller.

Luxury holidays are often used as a signal of wealth and a talking point in social circles. Tourists want a product which is personalised to their exact needs.

Luxury tourism is a continuation on from luxury consumerism.

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Components of luxury holidays

Luxury travel can be divided into the three main segments

• Accommodation• Transportation• Experiences

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Accommodation

• City hotels: classic luxury hotels (The Pierre in NYC, The Ritz in Paris); boutique or designer hotels (The Bulgari in Milan); destination hotels with exceptional surroundings (Monasterio in Cuzco)

• Resorts and spas: beach hotels; golf hotels; mountain hotels; lodges and retreats

• Vacation-ownership properties and self-catering villas

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Globally there are estimated to be 200,000 luxury rooms in 200 destinations out of a total of between 18-20 million rooms which equates to approximately 1% of the market

In Finland there are many nice hotels but only one hotel is classified as “luxury” by the travel trade, which is this?

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Transportation Air, including private charter flights and helicopter chartering.

Most airlines offer at least Business class products as well as longer flights offering a first class service.

Rail, both for travelling between destinations with most providers offering first class carriages, or as part of the holiday itself eg Orient Express.

Water, with luxury cruises a growing luxury segment, especially river cruises.

Road, transportation in both the home and destination ranging from limousine services, valet parking to executive car rentals.

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Transportation task

Different class prices for different destinations

Find: Budget airline Scheduled economy Scheduled business Scheduled first class

(where available)15.04.2023

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Experiences

• Tours: art, history and shopping are key themes that drive the

organisation of travel.

• Outdoors: sailing, skiing, adventure and wildlife are special-

interest outdoor activities that are becoming increasingly

popular in luxury travel.

• Food and wine: many wineries are now developing on-site

restaurants, hotels and spas to meet increasing demand from

tourists. Tasting schools and cooking schools are developing

and opening up to tourism, not only in wine regions but also in

key cities. The Ritz in Paris led the way in the 1980s with the

launch of its Ritz Escoffier. 15.04.2023

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Types of luxury consumers

Uber Wealthy Financial world elite About 150,000 of these people (86% live in Moscow, 11% St.

Petersburg) USD 1 million annual income Mass Elite Major businessmen, officials, heirs of capital About 1.2 million Wealth based on stocks and shares and property Medium Luxury (hybrid consumer) High salary workers, middle class Buy products on credit basis

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Top luxury destination areas

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Hybrid consumer

There is a new type of consumer who usually are professional people earning a bit above the average salary but will shop both in luxury and budget markets depending on their needs, expectations and value for money.

Eg shop in Lidl for food, Stockmann for clothes, stay at 5* hotels in NY, eat meals at a local Deli

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Top International Destinations for Luxury travellers in the USA in 2013:

1 CRUISE – Europe River – (the Danube, Main, Rhine, Moselle, Rhône,

Saône, Seine, Po, and Douro) 35.9%

2 CRUISE – Europe Mediterranean + UK ( Naples, Rome, Monte Carlo,

Barcelona, Cannes, Athens, Istanbul, Mykonos and Palma) 33.1%

3 Italy – Rome, Venice, Tuscany, Med resorts 31.2%

4 Australia – Sydney, East/West coast, Uluru 18.5%

5 France Paris, French Riviera, countryside 11.8%

6 Costa Rica 9.5%

7 CRUISE – Europe – Baltic (Bergen, Stockholm, Helsinki, St Petersburg)

8.1%

8 Bora Bora 7.0%

9 St. Lucia 6.5%

10 England – London, Cotwolds, Cambridge, Oxford, Stratford Upon Avon

6.3%

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Buzzwords for worldwide luxury tourism in 2013 and beyond

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Unique experiences

Personalised/Bespoke

Value for money and

Inclusive

New / developing

destinations

Socially responsible

”Old” luxury

Tends to be people with money inherited through their families

Look for ”classical” luxury experiences such as historic buildings, silver service, traditional designer products etc

Examples include; Rolls Royce cars, Claridges Hotel in London, Prada 15.04.2023

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”new” Luxury

People who are often self made, eg dot com millianaires, business people and sports/entertainment stars

New Luxury is about taking the standard but increasing the quality and experiences consumers feel by using these services.

Examples could include Virgin Atlantic, Burj Al Arab hotel in Dubai, Apple electronics

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New luxury desires for tourism in 2013

Status – keeping up with the Joneses Extravagance – showing off your designer luggage Connoisseurship – great taste Seduction – route to romance Uber premium – ultimate of its kind Creative – expressing yourself Cutting-edge –ahead of trends Ethical – paying for peace of mind eg fair-trade coffee Pampering – well-being eg spa treatments Altruism – giving something back Escapism – taking a break, getting away from it all Actualisation – finding the inner you e.g. personal trainer, yoga Achievement – increasing your power/learning Adventure – an experience, e.g. skydiving

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Research Process

I approached this task as an overseas visitor with little prior knowledge of the luxury hospitality market in Finland

To gather information I:

• Contacted the local tourism bureaus

• Searched the internet for the term “luxury tourism in Finland”

• Used travel literature such as holiday brochures

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Luxury accommodationin Finland

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Luxury activitiesin Finland

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Findings overview

The term “lux-tourism” is still a relatively unknown phrase within Finland

The main tourism bureaus knew very little of luxury tourism products

Many Finnish providers websites are only in Finnish and/or Swedish

International markets have some coverage of “luxury” tourism in Finland… mainly centred around Lapland and Hotel Kämp

Press coverage is poor and if covered often recommends chain branded hotels.

Google “luxury tourism Finland” and very little quality information is found

Investigate further and many luxury tourism products are available in Finland but not marketed as so

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Finland as a future luxury destination

Finland can not compete in the short term with established luxury destinations…

BUT it can create a luxury product around ”wellness and nature”, especially the northern lights in Lapland.

Finlands location makes it easily reachable from Asia, Europe and North America.

Land and space is plentiful, even near Helsinki

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Weaknesses of Finland as a destination Lack of service culture – staff

need to be more warm and personal to customers

Need to develop accommodation options outside of the Finnish ”norm” – mainly 4* standard in Finland

No real luxury brands, however there are many Finnish design brands which are unique to non Scandinavian markets ie Marimekko 15.04.2023

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Your task!!! – You are the luxury agent

Given the scenario you have been allocated come up with a suitable holiday for your customers

give a short presentation to your classmates

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