While much of the North American travel industry faces a gloomy forecast over the next couple of years, the luxury segment of the market is basking in the sunny glow of growth and the warm breeze of unwavering demand.
"I've been in the luxury market for the past eight years and I have lived through it after Sept. 11," says Francine Prud'homme, the Montrealbased director of Carlson Wagonlit Travel Concierge, a luxury agency. "Even if something major happens in the economy, luxury travellers are not affected the way mass travellers are. The difference is these people purchase a lifestyle."
High-end hotel companies are investing heavily to establish a firm hold in the realm where their well-heeled guests will come, recession or not. Toronto-based Four Seasons Hotels and Resorts, considered by many to be the ultimate in luxury, is undergoing a dramatic expansion, opening nine new properties this year, including ones in Mumbai, Bora Bora and the Seychelles.
In the highly competitive resort category, Sandals Regency La Toc in St. Lucia is building Sunset Bluff Million Dollar Luxury Villas with Private Pools, slated to open on July 1. Club Med, the French hotel chain once known for its free-spirited party atmosphere, is also trying to move into the luxury category, hoping to attract guests who expect more and are willing to pay a premium for it. Club Med has already spent US$1.5-billion renovating 70 resorts.
"Our ambition for Club Med is to become the worldwide specialist in all-inclusive, upscale, friendly multicultural holidays," Henri Giscard D'Estaing, chairman and CEO of Club Med Worldwide, said recently at the launch of Club Med Ixtapa in Mexico, which reopened after a US$20-million renovation.
When I visited in the second week of April, as a guest of Ixtapa Club Med, the resort was at capacity, but you would never have known it. There were empty chairs and hammocks in the shade, no wait at the bar or lineup at the buffet and a tennis court was available whenever you wanted it.
One of the ways to create an upscale atmosphere is to limit the number of guests, and this resort has even fewer rooms after the renovation, about 300, on a 40-acre property.
"Some would say that to have such large estates and not build more rooms means you are not optimizing your asset," Giscard D'Estaing said. "But then the quality of the place becomes not exceptional."
The big difference between luxury hotels and mid-range properties is that bookings typically remain strong even when lower-end options decline, says Bobby Bowers, senior vice-president of operations with Smith Travel Research in Hendersonville, Tenn. "When things get bad, the luxury market is insulated because of the types of people who stay in these hotels."
Occupancy in U. S. luxury hotels was the highest of any category, averaging 72.2% in March, Smith Travel Research reports. Guests paid, on average, US$323.80 for a room, up from US$306 for the same period a year before.
Indications from established luxury brands such as the Ritz-Carlton are that bookings are healthy and haven't been affected by the economic woes in the U. S., Bowers says. "They say everything looks just fine."
Club Med says its Ixtapa resort is already 65% booked for the Christmas and New Year's season: a holiday that has jumped in price to about $1,700 a night (all-inclusive) for a family of four in a suite with a separate bedroom for children. Which goes to prove that luxury may be recession-proof, but it isn't cheap.