Will Luxury Travel Be Affected By The Current Economic Climate?
Adam Deflorian is the CEO of AZDS Interactive Group, a leading full-service digital agency for the luxury hospitality industry.
It's no secret that the market is, at present, on the volatile side. With the announcement of tariffs, followed by the stop-and-go 'will they, won't they' aftermath, many industries are taking stock and wondering how to proceed. For the travel and hospitality industry, many are wondering what summer 2025 will look like.
Don't be a Chicken Little. The sky isn't falling just because things are uncertain.
Historically, the travel industry tends to rebound quickly, and while there may be modest year-over-year declines in the short term, recovery is typically swift. Hospitality is a long-cycle industry, and often any setbacks are offset by a rapid boost. Based on steady booking rates across my agency's client portfolios, high-income households continue to prioritize travel and experiences, indicating to us that they still view them as valuable expenditures.
What may change is the type of travel they intend to participate in. Anticipated spending on trips and experiences is up from 2024; however, many Americans are reversing course on international travel. My agency's clients, comprising ultra-luxury hotel and resort properties, continue to show healthy booking data and revenue growth.
So, how can hoteliers optimize their digital marketing efforts to target travelers?
Advice For U.S. Properties
Americans are embracing the art of the road trip, with more opting to drive rather than fly. Time and time again, our clients express the increasing appeal of experience-focused travel, and an adventure on the open road begins that type of getaway from the jump. With many travelers signaling enthusiasm in exploring their own backyard, my recommendation is for hoteliers to target locally and domestically.
This trend matches our clients' data showing shorter booking windows. A recent report from Bank of America also shows that more than 70% of Americans are planning to travel this summer, and of them, most will stay within the country.
Consider homing in on messaging to entice potential guests at a state level, and including campaign variety that appeals to neighboring regions. Ramp up unique offerings available to guests that show off the authentic appeal of the area. Collaborate with local experts to individualize events. Lean into what makes your property extraordinary.
While potential tariffs may increase the cost of goods like linens and cleaning supplies, which may ultimately affect operating costs, experience-focused travel is a fantastic way to entice guests to stay longer and increase their spend while on property.
Advice For International Properties
The top percentage of households continues to travel, regardless of the economic climate. Based on our large booking data, we're seeing Europe, specifically Italy, the United Kingdom and France, remain as top destinations, with Southeast Asian countries rising in popularity. Digital marketing efforts should continue to target international travelers, along with high-earning American households.
Similarly to domestic travel marketing strategies, an emphasis on experience-driven travel will align with what's appealing to guests. Culturally immersive travel options are especially resonating. Campaigns tailored to specific nearby regions, perhaps promoting localized series like 'Friends of the Chef' food and beverage events, can boost engagement and bookings overall.
The bottom line is that most people will prioritize travel, no matter what is going on in the world. The desire for human connection is a constant and something that hoteliers can tap into to attract guests, both domestically and internationally.
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