Travelers’ desires shape the hospitality industry

“Ultra-high-net-worth individuals” (UHNWIs) have been defined as those with a net worth of $30M or more, including their primary residence. Knight Frank’s 2023 Wealth Report reports that in 2022 there were approximately 579,625 UHNWIs. This is forecast to grow to 744,812 by 2027, an increase of 28.5 percent. 

Ultra-luxury hospitality is now an accepted and growing part of the global travel and tourism industry. “Luxury” just isn’t enough to convey the nature of some products that are pushing their way beyond what in the past developers tried to describe as “6-star” or “7-star” hotels. There is a step change from $1,000 per night to $5,000 per night that requires a redefinition of the whole business model and the approach to positioning and marketing.

Travelers’ desires shape the hospitality industry. We should pay attention to how these desires are evolving. Business is about giving customers what they want, not just what they need. 

Beyond the Basics

The pandemic sparked a transformation in how we think about travel, and UHNWIs are no exception. They increasingly value the personal development gained through unique and personalized experiences rather than focusing solely on material possessions.  

UHNW global travelers seek flexibility, adaptability, personalization and efficiency. Of course, they expect exceptional quality and design, innovation and comfort, but this covers their basic needs. Ultra luxury hospitality must go much further to seduce them. It is here that we see the rise of the private island, the whole property buy-out, the wilderness retreat, the private yacht charter experience on dry land, and many others. 

Like the world of high-end residential real estate, there is a point where price stops being the issue and cannot be rationalized through benchmarks and market penetration rates. Don’t be tempted to work out what the price per square foot is of a penthouse valued at $50 million—you will likely not be able to fathom the answer.

Exclusivity and privacy in remote destinations, away from mass tourism, provide places where people can feel safe, discovering new cultures through immersive experiences and where personalization and tailor-made activities are the foundation. This is where the value originates.

The UHNW market is also fully aware of the importance of sustainability, not only in the present but for the long-term. Accommodation, forms of travel and experiences that are environmentally and ethically friendly to nature and local communities rank very highly with this market and these travelers will prefer destinations that allow them to recharge, heal, reconnect and rejuvenate through medical or holistic experiences. 

Anything that facilitates and improves the overall experience, from the booking process to accommodation design or the ability to work remotely, will be highly valued and this is thanks to advances in technologies and digitalization. 

Quality Assurance

Superb quality is the bottom of the value pyramid and is not enough on its own to satisfy UHNWIs. Those who focus on offering something unique and incomparable, and not just on being profitable or imitating others, will lead the way and will make the difference.   

As a counter to FOMO (the fear of missing out), JOMO (the joy of missing out) is trending strongly in the UHNWI universe. The focus is on prioritizing self-care, enjoying to the maximum the simplest things and ignoring everything that is not yourself. “Off the grid” works for many UHNWIs because it offers the possibility of personal enrichment. However, they are interested in feeling disconnected while remaining digitally connected. Hospitality needs to be redesigned to meet and exceed expectations to a level that is beyond the mainstream.

Are the desires of the top 1 percent really that important for the global hospitality industry? Allied Market Research reported that the global luxury travel market was valued at $638.2 billion in 2021, and is projected to reach $1,650.5 billion by 2031, growing at a CAGR of 8.9 percent from 2022 to 2031. 

This economic impact should be attractive enough for both destinations and hospitality investors to devote their resources to developing specific products for this market niche. But we need to be careful when we talk just about products. Success in this arena goes hand in hand with the intangible; the essence of the experience, the purpose of travel, and, most importantly, the interaction between people. Finding and training the right people to deliver this level of service is probably the ultimate success factor.

Travel and tourism are in many cases the source of a destination's wealth. Accommodation providers, transportation companies, travel agencies, destination management companies, local restaurants: all of these will have to live up to the expectations of the UHNW traveler. It is the overall experience and the emotions built around the whole journey that will add up to a lasting business model.

Philip Bacon MRICS, FCA is the senior director, global practice leader - hotel valuations, specialist in strategy, planning and development, and Hotel Asset Management for Horwath HTL Spain. Irene Santos is a consultant with Horwath HTL Spain.