Affluent travelers, prepared to spend as much as $48,000 per person this year on travel, are ironically driving a competitive price surge unlikely to come down in the year ahead.
Affluent U.S. travelers are ready to drop some serious money on their travel plans in 2023 and they’re keeping Virtuoso’s global network of luxury travel agents busier than ever.
The company reported a surge in bookings for 2023, up 152 percent compared to 2019, with no signs of the luxury bubble stopping any time soon. David Kolner, Virtuoso executive vice president, added high demand was fueling competitive pricing across travel. Kolner, in an interview with Skift this week, said he was recapping from a recent owners meeting held in San Franscisco.
Kolner said hotels are leading the way in bookings, up 235 percent over 2019, with the average daily room rates (ADRs) booked from the Virtuoso network “continually hitting records.”
“We’re expecting another ten to 15 percent increase in (room rates). That’s 83 percent over 2019,” he added, warning prices are not going to come down and advisors who are waiting to book that special room in Italy, for example, might already be too late for summer 2023.
Increased pricing pressure was echoed in earnings calls from both Marriott (Room rates at 13 percent above 2019) and Hilton (rates at 14 percent above 2019) with boosts from the luxury segment.
Virtuoso’s core target audience is said to be in the top five percent household Income segment, which means the company’s clientele is more than prepared for it, with an expected $48,000 per person spend on travel for this year, according to internal Virtuoso research. Last year Virtuoso said its clients spent an average of $20,700 per person and planned to increase that spend by 34 percent this year to $27,800.
The TUI Group, one of the world’s largest tour operators, echoed similar sentiments for a standout summer in 2023, with the company forecasting a 6 percent increase in summer pricing as its customer base’s appetite also remains largely unaffected by the global inflationary conditions.
With spend and bookings on an upward trajectory, million-dollar sales advisors within the network are increasing at a faster pace than usual, added Kolner. Virtuoso has seen its network of travel agencies and advisors increase by five percent to 21,000 advisors in 54 countries in last year. Half of those advisors operate outside of the U.S. The company has some 2,340 preferred partners; and annual production is up to $28-$32 billion in normalized annual sales.
Ready for Full Bookings From China
Kolner believes China will only add fire to the competitive flame of pricing. Virtuoso’s network had started to take off in China just before the pandemic. The uptake for domestic trip planning kept its estimated 1,000 members and advisors based across Asia busy, with China now one of its fastest-growing markets.
“We’re excited about China re-opening. We are building out a portfolio of regional preferred partners across Asia to help serve the special needs of travelers from those countries or the types of places they prefer to go. We’re advising our agencies worldwide to book it right now because more people are coming online to buy whether it’s from China or other parts of the world.”
Getting the Best Rates
Kabot, who specializes in solo travel for small groups, said she’s never been busier with trips to Paris, Portugal, Italy and Morocco currently planned for the year ahead.
“I’m back from Europe and it is absolutely busy, there’s so many people that want to experience more and they want do it with people that they feel comfortable with, that they feel safe with,” said Kabot.
All her trips are curated with experts and guides Kabot has worked with before and knows very well. Her core challenge was the administrative side of her business, and she was looking to hire support.
Kolner added that some 94 percent of Virtuoso’s travel agencies in the U.S. are hiring in 2023, with 82 percent of those in the network set to hire just support staff to help existing advisors be more efficient and sell more.
Training for its advisors remained a key focus.
“We want to help onboard and build everyone’s business, as quickly as possible. As a result, graduates of the Virtuoso Certified Travel Advisor (VCTA) program sell an average of 72 percent more than their non-VCTA grad peers.”
And as much as the labor challenges within the travel sector remain a concern, responsible tourism was also on the agenda. Internal research done by the company noted that 75 percent of travelers are willing to pay more to travel responsibly if they know how the funds are being used.
Kolner said the company had identified that intent to do good was high, but that follow-through on actionable outcomes was lacking for its clientele. Tracking the breadcrumbs of impact was hard as product offerings all varied in their approach, but he felt it is a challenge the company needed to address.
“For every one of our partners we have a sustainability section where all the partners can tell their story or link to additional resources. Virtuoso is testing new ways of inspiring travelers to make sustainable choices and equipping Virtuoso advisors to communicate sustainability interest for travelers.”