Luxury Sector steers clear of trouble
by Russia and Italy, with Greece not far behind (chart: Average Revenue per Booking Q1 2014). The top five all saw improved average revenues per booking year on year in 2014, with France and Greece enjoying the sharpest improvement. Turkey has moved from an average-booking value below £3,000 in 2011 to £4,500 this year. Finally, a look at the value of first-quarter
bookings by type of holiday shows single- destination trips dominating the luxury sector (chart: Top Five Holiday Types).
Types of booking Aspire bookings can be broadly categorised in three main areas – package, multi-centre and cruise. In this context, a package does not mean a holiday as defined by Europe’s Package Travel Directive, which would also include many multi-centre holidays and cruises, but applies to a trip booked through a tour operator to a single destination; a multi-centre booking involves a tailor-made itinerary to more than one destination; and cruise figures include ocean and river cruising. These three categories account for close
The Deloitte view
The attraction of investing in the luxury hotel market has never been more clearly evidenced than recently. The sector appears to have been
immune to the financial crisis, with more than €15 billion invested in the development or refurbishment of luxury hotels, despite a lack of financing, and €8 billion changing hands in transactions in Europe since 2010. More than $7 billion of this
investment has been in new luxury developments, with a further $4 billion worth of investment under way.
London and Paris have attracted
the majority of investment in new developments, with highlights including the arrival of Asian luxury hotel brands such as Peninsula (in Paris and London), Raffles (Paris) and Shangri-La (Paris and London). US brands have also gained ground
with the arrival of Rosewood (Paris and London) and the increased presence of Four Seasons (London). Owners of established luxury hotels
have piled money into upgrading their product in order to keep pace with
the new supply, investing more than €4 billion in major refurbishments. In France, the UK, Italy and Switzerland, investment has totalled more than €500 million in each location. Iconic assets, including the Hotel du Crillon and the Ritz in Paris and the Lanesborough in London, are due to reopen following extensive overhauls. At the same time, sovereign wealth
funds and high-net-worth individuals have snapped up trophy assets that we are unlikely to see come to market again for a very long time.
to 90% of all first-quarter bookings in the past four years. Most of the remainder comprise accommodation-only and flight-only bookings, both of which are on the rise – together accounting for 13% of the market in 2014, up from 8% in 2011. ‘Package’ bookings had their best first
quarter to date in 2014, accounting for 49% of the total market. Cruise fell a little to 20% of bookings, and multi-centre holidays also dropped to 11%, down from 14% the previous year.
Average values All three booking types saw a rise in average value in 2014, although the increases were small, adding less than £100 in each case to the average 2013 booking value of £6,549 for a package, £7,719 for multi-centre trips and £7,172 for cruises. However, last year the average value of
a package booking rose by close to £1,000, while the value of average cruise bookings rose by almost £1,500. Allied to average lead- in times which now approach 200 days for cruise bookings and 180 days for packages, this suggests a much-healthier market.
42 | Travel Weekly Insight Annual Report 2014
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