HNW individuals are worth between $1 million and $5 million; UHNW individuals are worth $30 million or more. We examined the behaviors, passions and drives of both cohorts, the future of luxury travel and why, for the UHNW individual, a holistic lifestyle perspective is the most desirable approach
The Luxury Travel Divide
The luxury travel market is now primarily the playground of HNW travelers, while UHNWI have adopted new habits and preferences in response. Jaclyn Sienna India, founder and CEO of UHNW travel and lifestyle agency, Sienna Charles, says, “The market has split into HNW and UHNW luxury travel. Before, HNW individuals were taking maybe four trips a year, staying at moderate accommodations and flying commercial. Now they’re taking maybe two trips a year–better trips.” Indeed, HNW individuals are investing more money into fewer, yet more luxurious travels.
For UHNW travelers, this means their favorite properties are noticeably busier and rooms and amenities are sold out– or they book and discover they’re no longer among their peers. As a result, India says they’re traveling less and being more cautious about where they go. An August 2021 Fortune article on luxury travelers’ increasing desire for privacy further emphasizes the trend. It quotes the luxury travel agency, Black Tomato, as receiving 61% more inquiries and bookings for private experiences, private transportation and exclusive-use properties in 2020 over 2019. Health concerns may have initiated the shift in consumer behavior, but a desire for greater privacy may sustain the trend for some time.
HIGH NET WORTH INDIVIDUALS: TRAVEL AS THE PINNACLE OF STATUS
Travelers who could never afford Capri and other classic “jet set” destinations are enjoying the ability to frequent such iconic places. India says that as the cohort moves upmarket, they’re also securing the inventory of the finest stateside luxury hotels, including Blackberry Farm, The Ranch at Rock Creek, Amangiri and Amangani. It should come as no surprise. In 2020, Americans amassed nearly $4 trillion in personal savings and 5.2 million people became millionaires worldwide.
Many four-star properties will continue to offer reduced services, such as housekeeping upon request in lieu of daily service. Hotels reaping the benefits of lower operating costs may permanently do away with turndown service and other once-essential amenities, while new airline protocols have temporarily paused traditional first-class offerings such as the pre-flight glass of champagne. Yet travel bookings are stronger than pre-COVID-19 seasons. Aspirational travelers, thrilled to join the world of luxury hospitality, still have much to enjoy as they experience a higher level of quality than their pre-pandemic travels.
Of course, even some of the finest luxury resorts and airlines are not able to deliver the same services they did before the pandemic. It’s an unavoidable, albeit temporary, reality for many. Widespread staffing shortages have hit the industry hard. Others may have the staff, but struggle to return to top-tier service after closing multiple times within the first pandemic year. Finally, supply and logistics issues continue to ail industries across the globe; the hurdles to success are many. Menus have changed, amenities have been reduced and service snags abound…the early aftermath of the pandemic has become all-too-clear in the eyes of loyal luxury guests.
While major improvements are expected as each obstacle subsides, the lack of service and its widespread acceptance will continue to push the HNW travel industry down market. The industry will also continue to cater to guests’ Instagram feeds and become further saturated. HNW individuals and those with less discretionary income will continue to travel in an aspirational fashion, whether due to traveling less to afford more, paying for trips with lockdown savings or choosing vacations that photograph well for Instagram.
ULTRA HIGH NET WORTH INDIVIDUALS: PRIVACY AND EXCLUSIVITY
The pandemic is no longer a concern for UHNW travelers. They have the means to access the conditions they desire, whether requesting fully-vaccinated staff or booking lengthier yacht and villa rentals to ensure the air is COVID-free and fresh upon arrival. They’re also acquiring more yachts, villas and planes, with summer home sales rising in Palm Beach, the Hamptons and the Caribbean. Ownership ensures all standards are achieved, and that access is solely reserved for the people they trust.
Unfortunately, purchasing assets is sometimes easier said than done. The coronavirus pandemic created a spike in private aircraft purchases among the world’s wealthiest individuals. Private travel offered significantly fewer health risks and greater privacy, security, flexibility and control; prices ballooned and inventory started to diminish. Today, according to the International Aircraft Dealers Association (AIDA) as referenced by The Financial Times, only about five percent of the world’s private jets are for sale. And the market for new aircraft sits in a similar position. Corporate Jet Investor says while companies are scrambling to increase production to meet the latest increase in demand, supply chains cannot be accelerated sooner than a timeframe of six to nine months.
Regardless of how they travel, the world’s wealthiest individuals are skipping their favorite destinations this summer. India points to August 2021’s mass migration to Greece; the wealthiest travelers are opting out, choosing destinations that only the UHNW can afford: “It’s about looking at where they want to go, what they want to achieve and helping them stay away from crowds. We find really beautiful, elegant places where people can enjoy the same level of quality and hospitality. That’s really important to us. We like Menorca, Sicily, Umbria versus Tuscany….”
Still, the UHNW are traveling less. They watched and waited when France and Italy reopened their borders, choosing to focus on home instead. India says, “They’re traveling less because they can go whenever they want. They own their businesses and they have the money, the time and the staff to be able to go whenever – they’re waiting to see how places play out. They’re not going back to restaurants immediately because they’re filled with people who never really ate there before. They’re doing things at home, and they’re participating in more private experiences.”
Sienna Charles helps UHNW clients access lifestyle services for home and travel alike. They’re individuals who do not want to make the market so well-known that it becomes easy to replicate. India says they’re asking her agency for amenities and services that aren’t necessarily known to everybody else.
Every UHNW conversation should go beyond travel, to consider lifestyle instead, says India: “They used to use travel to define the luxury life, but they don’t need to be seen at the entrance of the Plaza Athénée anymore. What’s shifted enormously is privacy. When we’re booking clients’ trips, we’re noticing they’re not posting it on their social media anymore. It’s about privacy now and doing things with their lifestyles that they don’t need to post about – whether that’s buying wineries or $30 million homes.”
This article was originally posted on Wealth-X, read the article here.