Historically, the uncertainty of an election year equals a drop in luxury sales across all sectors, including travel. Should we be worried this year?
Last week, I attended a panel with industry experts moderated by Kimberly Wilson Wetty of Valerie Wilson Travel in New York. The question was posed—will luxury travel sales drop? And what is everyone actually worried about?
Matthew Upchurch, CEO of Virtuoso, said that the company studied election year sales and noticed that in three previous election cycles, in the years before an election, sales grew by 14.3 percent in the United States. In election years, the rate of growth dropped to 2.9 percent. But in 2020, sales are going strong.
“We’ve seen that the number one correlating factor to luxury travel spend isn’t the general economy or politics. It has to do with the equities market, and right now we’re within points of records on the markets,” he explained. “And my personal opinion is that, even with any drop, the correlation will mean less. [Today’s spending is] much more driven by multigenerational travel and the prioritization of experiences over goods.”
Others echoed this sentiment. Delta’s sales were up 7–8 percent in 2019, according to vice president Chuck Imhof, with premium revenue growing even faster. The airline signed up 6 million new SkyMiles customers last year, and the Delta Private Jets partnership with Wheels Up, a membership-based private aviation company, has been a successful addition to the company’s portfolio.
Four Seasons Hotels & Resorts is building a new private jet to keep up with demand—the company already has one 52 flat-bed seat plane—and is seeing big growth in its private retreats portfolio (which currently includes more than 750 properties), according to senior vice president Ben Trodd.
On the luxury cruise side, it seems to be the same story. Seabourn’s Chris Austin, a senior vice president, sees “robust North American sales numbers” so far this year, continuing a growth trend that began in 2015. “The WTO stated that 1.5 billion people took a vacation or holiday last year, 30 million took a cruise in 2019, and 32 million will take a cruise in 2020,” he said, pointing out huge growth opportunity in those numbers.
Silversea is doubling its capacity, partly thanks to changes in how the population is aging. “Ten years ago, a customer slowed way down past 75. Now, it’s not until 85. People are living longer, but also healthier,” said managing director of the Americas, Mark Conroy.
Wetty added that it’s all about the mindset, which doesn’t have anything to do with your chronological age. People across all age groups want to keep traveling, and they’re traveling with a sense of curiosity, adventure, and empathy.
So if not sales numbers, what does keep these experts up at night? It’s the uncontrollable factors that are the hardest to deal with: geopolitical events such as changes to Cuba travel restrictions, health scares like the coronavirus, and natural disasters, such as the Australian wildfires, which are only becoming more frequent thanks to climate change.
It was Trodd’s response to these difficult issues that will stay with me. It was a reminder that travel businesses serve travelers, of course, but they’re also key parts of their communities.
“You see the damage of world events, and we feel responsible to a destination, the local economy, and the ability of our 50,000 employees to look after their families. It is increasingly part of our role to make sure the industry continues to be a fantastic employer and helps to retain employees when times start to get a little more difficult,” he said.
