Luxury tourism is gradually recovering to pre-pandemic levels, but prices in this sector are increasing because demand is still strong.
According to luxury travel company Virtuoso, luxury hotel prices have hit “record levels” this year with average daily prices increasing 70% compared to 2019, with July having the highest increase rate of 85%.
High-class train ticket prices have also skyrocketed. Accor’s La Dolce Vita Orient-Express train ticket prices increased by 75% in 16 months. The starting price for a one-night stay on the ship, which is expected to start welcoming passengers in Italy in 2025, increased from 2,000 euros from the end of 2022 to 3,500 euros in February this year.
The price of another luxury train in Europe, Belmond’s Venice Simplon-Orient-Express, also skyrocketed this spring, from 4,130 euros in February to 8,310 euros in March, according to the company’s website. Accor representatives said prices will “constantly increase”.
Like other industries, tourism prices increase for many reasons including inflation, rising labor costs, supply chain problems, and interest rates. But tourists are still willing to pay the new price.
Henry Harteveldt, president of travel market research firm Atmosphere Research Group, said luxury travel is a special niche. Money is almost no problem for this customer base. They are wealthy or extremely wealthy tourists. “For them 1,000 euros a night is nothing,” Harteveldt said.
In addition, rich tourists also like new and different experiences such as traveling by luxury train. “They like unique things. Service providers will take full advantage of them when possible,” Harteveldt added.
Dave Goodger, CEO of a global financial company, said the luxury travel segment continues to grow despite slowing economic activity in some markets. This reflects the fact that there are still many customers who are rich or have good income and have a lot of accumulated money.
For price-conscious travelers, discount competition will be in the affordable segment such as low-cost airlines or mid-range hotels. Harteveldt singles out budget accommodations as the fastest growing in the hotel sector. Hotels in this segment will offer lower prices as they expand their business and increase competition. Therefore, tourists will save money on air tickets if they buy early. But for hotel room prices, Harteveldt suggests booking half a month in advance and choosing a place with a refund policy.