Findings of a recent survey show that high-end travelers are reining in their vacation spending.
Findings of a recent Bloomberg MLIV Pulse survey show that high-end travelers are reining in their vacation spending.
The survey consisted of 465 respondents from the US, Canada, and Europe that included traders, portfolio managers, senior managers, and retail investors, and found that respondents don’t want to pay more than $500 a night for a hotel, even for “greener or fancier options.”
The author notes that, “The results come during what should be one of the busiest periods for travel booking.”
Asked the question, “What is the maximum you are willing to pay for a night in a hotel on vacation this year?” approximately 69% of poll participants said their maximum budget for a night in a hotel room was $500, while 24% were willing to spend up to $1,000. Five percent set their limit at $2,000, and 2% may spend $3,000 or more a night. The number of people “splashing out” on their next vacation was a small seven percent.
69% of poll participants said their maximum budget for a night in a hotel room was $500, while 24% were willing to spend up to $1,000. 5% set their limit at $2,000, and 2% may spend $3,000 or more a night.
Setting the limit at $500 eliminates more upscale hotels in most major markets, and even suites or larger rooms at mid-tier properties.
According to data from Google, five-star hotels in New York City are typically priced between $523 – $999 per night in April and May. In Paris they range from $707 – $1,382, and in St. Barts, the average is $1,451.
Bloomberg states, “The results of the survey suggest that luxury hotels, restaurants and airlines will face increasingly irritated consumers this summer,” and muses that the decreased willingness to spend may be a reflection of diminishing consumer confidence or feelings that service quality has not increased apace with inflated pricing.
Hotels and resorts facing a pullback on customer spending might consider emulating the airlines and implementing revenue management strategies. Airlines have been using yield management since the 1970s, and American Airlines CEO Robert Crandall has given it credit for saving the company from bankruptcy. More recently, they have taken revenue management even further. Services that were once bundled in with the cost of a plane ticket are now commonly sold separately, most notably checked bags, but also meals, alcoholic beverages, and even headphones.
Hotels and resorts with spas or ancillary revenue departments that are already employing yield management may explore more revenue management strategies with rooms and services like upsells and add-on packages.
We know that discounting services can negatively impact a brand but “upgrading” to VIP spa services or in-room treatments and services, for example, can have the opposite effect of increasing, rather than decreasing, perception of value. A mini facial or hot stones added to an existing spa reservation, for example, costs little for the property and adds value for the guest. Similarly, a VIP Cabana package of food, drink, and a poolside massage, or post-ski, fireside experience with a cheese plate and glass of sparkling wine or hot toddy, can do the same.
Travelers intending to spend less means hospitality companies have the opportunity to get creative with their offerings to make guests feel that their money is well spent. There will always be a market for excellent service quality and truly exquisite experiences.
Spa Executive is published by Book4Time, the leader in guest management, revenue and mobile solutions for the most exclusive spas, hotels, and resorts around the globe. Learn more at book4time.com.
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