Quality vs LuxuryCommon Threads - Different Notions

October 2005Hotel Profit Conference, Warsaw

Dr. Aris IkkosDirector

JBR Hellas

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Contents

Luxury

Quality as a component of Luxury

Quality: an autonomous characteristic

Quality improvement programmes

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Importance of Luxury Market

3% of tourists

spend 20% of tourism expenditure

=> Spend per tourist

- average for Greece $750

- top 3% ave spend $5.000

- remaining 97% $600

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Who are the Luxury Travelers? They have time and money Usually FITs, not in groups Personal and Confidential Service Demands that are:

– “absurd” for average person– to be evaluated in light of amount spent

Well-Traveled & Adventurous Sharp, Experienced, Informed Young & Seeking VFM Seeking Qualitative experiences

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Segmentation by Income

Tycoons

capable of fulfilling all material fantasies

Very Rich

demanding; individuality & confidentiality

Rich

qualitative service all round

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Psychographic Segmentation The The Elite Elite Luxury LoverLuxury Lover in decline

Image–status–exclusivity–ostentatious consumption

The The Aspiring Aspiring Luxury LoverLuxury Lover

Elite copycat – financial limitations

TheThe Savvy Savvy Luxury Shopper Luxury Shopper rising trend

Self-made – VFM – Smart and Rational – Internet

The Luxury The Luxury ExplorerExplorer

Intense Feelings – Rare Places – Educated – Anti-snob

The The Satisfied Satisfied Luxury Luxury AdmirerAdmirer

Older – Infrequent travelers

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Common Requirements

High Quality Service Seeking All-round Experience

– Specialised travel agency

– Transportation

– Transfer

– Hotel

– Sightseeing and Entertainment

– Other Tourist Enterprises

i.e. Integrated Total Experience Approach

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Contents

Luxury

Quality as a component of Luxury

Quality: an autonomous characteristic

Quality improvement programmes

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A luxury hotel

5 star Hotel and Bungalows Private pools - Private beach Spa, Watersports, 9hole golf € 400 - 8.000 p.d.

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A quality hotel

Rooms & Suites Next to the beach € 90-220 p.d. B&B

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Another quality hotel

Rooms & Cottages € 65-110 p.d. 1km from beach Self-catering

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and another

Self Catering Apartments, € 60-160 p.d. – Breakfast as Extra Santorini Top Location

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A Quality Experience

Hotel Infrastructure

Quality Experience

MarketingOther sectors

Environment & Infrastructure Hotel

Service

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Current Current StandardsStandards

Future Future Market NeedsMarket Needs

Quality Guide

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Quality Standards Town Planning

StandardsStandards

Material Service

Hotel Focus

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Public Private Partnership

• Planning:

– Project Team to include Private Sector

• Implementation: breakdown of responsibilities

– Public Sector: Laws, Regulations, Audits

– Private Sector: Financing

– Joint: Communication with Tourism Sector and

joint Decision Making on Tough Issues

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Contents

Luxury

Quality as a component of Luxury

Quality: an autonomous characteristic

Quality improvement programmes

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Implementation of Quality Upgrading Policies

•Croatia

•Malta

•Cyprus

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Results in Croatia  2001 2004  

Category Beds % Beds %Undergoing the process of

recategorization1* 7.642 8,2% 3.642 3,7% 2* 38.387 40,9% 31.158 31,7% 3* 42.482 45,3% 53.985 55,0% 4* 2.224 2,4% 6.172 6,3% 2.199 (11 hotels)5* 3.093 3,3% 3.219 3,3% 1.136 (2 hotels)Total 93.828 100,1% 98.176 100,0%

8,2% 40,9% 45,3%2,4%

3,3%

3,7% 31,7% 55,0% 6,3% 3,3%

0% 20% 40% 60% 80% 100%

2001

2004

1*

2*

3*

4*

5*

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Results in Malta

Beds % Beds % Beds % Beds % Beds %2* 4.114 10,7 3.404 9,0 3.401 8,8 3.581 8,9 3.521 9,23* 14.360 37,5 13.504 35,9 14.350 37,0 13.716 34,1 12.622 32,94* 16.093 42,0 16.969 45,1 17.265 44,6 17.848 44,4 17.175 44,85* 3.750 9,8 3.750 10,0 3.738 9,6 5.040 12,5 5.040 13,1

2002 2003 2004Cate-gory

2000 2001

10,7% 37,5% 42,0% 9,8%

9,2% 32,9% 44,8% 13,0%

0% 20% 40% 60% 80% 100%

2000

2004

2*

3*

4*

5*

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Cyprus Options

Possibilities Key Challenges Change of Category Building Infrastructure Upgrading Building Infrastructure Change of Use Town Planning Issues Withdrawal Town Planning Issues Replacement Market Conditions Τechnical Assistance for Marketing,

Training

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Holistic Policy Making for Quality Upgrading

FinancialSupport

Alternative Solutions:upgrading,

change of use,withdrawal

Technical Assistance

to SMEs

Laws & Regulations enabling & guiding market to adapt

Implementation:Control and

Decision Making

Thank you for your attention

Dr. Aris Ikkos

a.ikkos@jbrhellas.gr+30-210-3605002