Leisure-focused hotel guests are increasingly drawn to unique and targeted experiences and are willing to pay more to align them with their beliefs and needs.
Speaking at the World Travel Market event in London, Caroline Bremner, senior head of travel research at Euromonitor International said travellers in eight niche segments - eco adventurers, blended travellers, leisure seekers, cultural explorers, luxury seekers, digital travellers, wellness worshipers and adventure lovers – are more interested in sustainability efforts.
Sustainability and ESG
This point is further buttressed by research from Booking.com which found that out of 27,000 travellers surveyed across 33 countries and territories, 60 per cent want to see sustainability in action, 53 per cent are looking for accommodation that has wow-factor sustainability innovation and 65 per cent want to see the outside brought indoors with green spaces and plants in vacation accommodation.
And leisure hotel guests are willing to pay more to stay in places which prioritise ESG, Bremner noted.
“Wellness worshippers are interested in paying more for nature and outdoors, with 72 per cent of respondents willing to pay 10 per cent more and 10 per cent of respondents willing to pay 50 per cent more. Over 90 per cent of luxury respondents said they would pay up to 10 per cent or more for sustainability with almost 40 per cent saying they’d pay between 30 to 50 per cent more.
“Sustainability needs to be front and centre - people will pay more for it. And of course, we can be challenged in the say/do gap but being upfront with your sustainability efforts is absolutely crucial and very appealing,” she said.
She adds: “Eco-adventures’ values are very important to them and they’re engaged and active both socially and politically – this means that they will vote with their feet and boycott where they see fit.”
But sustainability isn’t the only key. Hoteliers need to pay more attention to targeting audiences with special interests and aspirations, as niche guest experience concepts continue to attract significant interest.
Granular targeting
Gonçalo Rebelo De Almeida, CEO of Vila Galé Hotels, the second largest hotel group in Portugal told an audience at the Resort and Residential Hospitality Forum last month: “If you have a purpose, a specific experience, it’s easier to get the right customers for that product, to meet their expectations and probably to surpass those expectations. You are more aligned with the guests, and you focus the offer and the spaces around that purpose or motivation.”
Figuring out how – and where – to achieve this niche targeting can be difficult. However, data can act as a guide.
“When it comes to traveller segments by region, there is a high level of luxury seekers in the Middle East as well as a high penetration of digital travellers, Bremner said adding, “in the advanced markets of North America and Western Europe, we saw a large representation of leisure seekers - so that mainstream sun-and-sea type of holiday – and with blended travellers where there's a desire for a strong work life balance, we saw very strong interest in Latin America.”
She noted that the highest concentration of tech-savvy digital travellers are in India, noting that emerging markets are really embracing the digital traveller segment.
She added: “In the UK, we do see this stubborn interest in being leisure seekers but more and more, we're seeing greater levels of segmentation into wellness and into adventurer.”
When exploring age segmentation - looking at the breakdown of the eight segments by generation groups – she added that while unsurprisingly, there’s a very high level of penetration of digital in the younger generations, Gen X unexpectedly showed a strong interest in being blended travellers.
In the middle of a cost-of-living crisis, its’s also important to know where the segments sit across the income brackets.
“Not surprisingly, luxury is right at the end of the scale at the higher end of the income range, with leisure seekers at the lower end - that mass market low to middle income bracket. Towards the upper end - so mid to high - we have adventure lovers, with wellness worshippers towards the high end, and eco adventurers in the middle,” Bremner said.
Location, location, location
Matching segments with geographies where they were most present, there was the highest representation of luxury seekers in a very varied mix of markets – India, Egypt, China, the UAE, Thailand and Saudi – with the presence of emerging markets further signifying their potential. The highest penetration of eco-adventurers were in countries such as Vietnam, China, India, Indonesia, Italy and Thailand. Asia and Latin America had a very high presence of blended travellers, and there were very large numbers of wellness worshippers in Latin America, through to Asia such as in South Korea and in South Africa.
Digging deep into the specific needs of each segment, 93 per cent of luxury seekers placed a lot of importance on spending money on quality experiences, with 77 per cent going further to express interest in virtual experiences.
Bremner added: “When it comes to luxury seekers and their preferred travel features, relaxation, wellness and safety top the list but not as much as the global average. If anything, it's about the quality of what they experience in the destination, being immersed in that culture and in that community as well as the quality of the food and the dining.”
Eco-adventurers are also highly interested in curated personalized experiences, an interest which Bremner notes presents opportunities for AI, tailored and targeted marketing. However, she stresses the need to balance this with the human touch.
Speaking at the Annual Hotel Conference in Manchester, Paul Harnedy, EVP at Cedar Capital Partners warned that while AI and technology can be used transform and elevate guest experience by allowing them to effectively self-serve and make their own decisions about the facilities they do or don’t want, careful thought is required in terms of application.
Turning to blended travellers, creating experiences where they can get to know the destinations, the cultures and the communities that they're staying with is of utmost importance.
Positively, Bremner notes: “They are not only interested in traveling abroad - only 10% of our sample said they wanted to travel abroad to do their blended travel – and so there's a huge domestic opportunity. Globally, we see the opportunity for blended traveller at $40 billion.”
For wellness worshippers, Bremner forecasts $131 billion in spending in that segment by 2028.
Peering into the future
Looking ahead, Brener stated that luxury and upscale hotels, which have been leading the post-pandemic recovery charge are expected to recover again in 2024 and into the future, noting “we see very strong levels of growth at 14 per cent CAGR over the next five years.”
Speaking to Hospitality Investor earlier this year, Ana Ivanovic, executive vice president at JLL Hotels & Hospitality Group, made a similar point: “Ultra luxury hotels have seen growth continuation from last year and I think rate growth will still continue for ultra-luxury hotels because the clientele for these types of hotels will most likely not suffer from whatever crisis which may or may not occur.”
It seems that for all segments the outlook is rosy, with all eight niches willing to pay more for features they deem important.
Bremner says: “In terms of tourism spending plans, the results are quite optimistic as segments are continuing to spend the same or even more. We're having this sense that resilience is coming from these niche market segments; resilience from the luxury seekers, immersive eco adventurers looking for cultural as well as environmentally positive experiences, blended travellers looking for community, and very savvy wellness-worshipers with a sense of fun and enjoyment.”