Horwath HTL Insights: Emerging trends in the luxury segment

The perception of what is luxurious in hospitality is ever evolving. What trends in luxury today provide an insight to the future for the wider accommodation community? More specifically, how is the luxury leisure sector responding to serve evolving guests' needs? 

If the history of the lodging industry is any indicator, we will see a gradual trickle down of the current trends in luxury guest expectations to the more affordable property classes. For instance, at the turn of the twentieth century, only hotels serving the ultra-rich had guestrooms with ensuite bathrooms. By mid-century, ensuite bathrooms were found in even the most modest motels across the U.S. In the late 1960s, only the best hotels in big cities had color TVs in every room and telephones bed-side. By the end of the century, color flat screen TVs were commonplace, and telephones were found bedside, desktop, even in bathrooms. Only a few years back, Wi-Fi was available only if you paid extra, now it is expected free everywhere. Guest expectations of hospitality tend to flow downstream from the luxury sector. What is aspirational at the higher end of the hospitality sector eventually becomes expected at the lower price points.  

While the affordability of technological advancements accelerates this expectation curve, generational lifestyle differences also affect what facilities and amenities guests demand. For decades the traditional hotel sector fretted about how they would meet the needs of Millennials. This group, unlike the generations prior to them grew up with the internet and smart phones. While baby boomers and Gen X appreciated standardization and hospitality without surprises, Millennials craved authenticity and expected to be surprised.  

The concept of luxury for older generations focused on lavish white-glove service levels, exclusive restaurants serving haute cuisine and calming bass-devoid elevator music throughout. To the contrary, Millennials placed a higher importance on an approachable service style, open inclusive public areas to see and be seen, and artisanal regional coffee roasters with co-working tables. Now Gen Z is starting to become the next target for the travel industry. This cohort also requires authenticity from hospitality, but stack on top a need for real-world community. 

So how is the luxury sector of the lodging industry reacting? Several themes are emerging, driven by current cultural mores of the elite in our society and supported by the motivations being pushed by the younger generations.  

The importance of “experience” over the physical property as a theme continues to drive luxury brands. Having a more immersive relationship to the natural world is leading the experiential theme. Advancements in durable materials, biophilic design and green technologies are allowing luxury hospitality to move outdoors. Amangiri in southern Utah, Alila Ventana in Big Sur and Four Seasons Punta Mita, to name a few, have all incorporated many of these themes in adjacent tented camps. With room rates in the thousands of U.S. dollars, it is no surprise that more luxury tented camp projects are under development around the globe. 

A natural progression from these outdoor hospitality extensions of luxury resorts, is actual activities that add on to the experience of sleeping outdoors. While luxury resorts have always had a concierge to coordinate activities, these properties incorporate guided nature walks, whitewater rafting, fly-fishing, via ferrata (guided harness rock climbing) and other soft adventure into the usual guest experience.  

The luxury sector has also seen a consistent, albeit slow, growth in wellness brands. Major hotel companies have purchased or developed brands focused on luxury wellness such as IHG’s Six Senses, Hyatt’s Miraval and Larry Ellison’s Sensei. These brands focus on wellness and a holistic approach to how guests spend their time on the property. Facilitating the guests’ sleep, exercise and nutrition experiences are curated throughout the stay. The development of entire brands dedicated to this wellness sub-sector and the caliber of the companies dedicated to their growth and success is an obvious telltale to the future of leisure travel. 

While the outlook is bright for demand with these new styles of luxury, supply growth remains slower than most investors would like. Issues such as local entitlement processes, environmental concerns and limited venture capital have created a perfect storm to thwart growth. This opens the opportunity for more brands at lower price points to take the lead from the luxury sector and start providing similar facilities and amenities into their guest experiences. As we can see from history, it’s only a matter of time before the aspects of current aspirational luxury will become widespread across the industry.

Todd Wynne-Parry ISHC is the managing director at Horwath HTL.