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The changing face of the luxury travel market – what does this mean for travellers and investors?

By Emily Woolard, Founder, The Tartan Road

In March 2020, the world ground to a halt as a result of the coronavirus pandemic. Whilst we’re still feeling its effects more than a year later across almost all sectors, tourism and hospitality have perhaps been more affected than most.

We still talk in terms of ‘getting back to normal’, but is that really going to happen? For the travel sector, at least, I don’t think so.

Some pre-existing trends have accelerated as a result of the pandemic and some new ones have emerged. Opportunities for both domestic and international travel will return as restrictions ease, but the sector will be forever changed.

The shifts in demand that we’ve seen over the past year will not only alter the products and services offered by the industry, but also the economics of the travel sector. This will create opportunities for savvy investors.

What luxury travel trends are emerging as a result of the pandemic?

Covid has sent a gradual trend towards lower-volume, higher-spend tourism into overdrive, and we don’t think it is going to reverse entirely when the pandemic is over.

Time with family has become more precious than ever after more than a year of enforced separation[i]. We see people wanting to travel in their own bubble and stay in their own, segregated space. This is playing out in increased demand for single-household self-catering properties and smaller boutique hotels, to the detriment of larger chains and hostels with communal facilities.

A desire for ‘slow travel’ is emerging. People who would ordinarily try to cover as much ground as possible in a trip – perhaps moving to a new location every single night – now want to slow down the pace and find themselves a base for multiple days at a time. After a period of so much uncertainty, the value of familiarity has increased, which is good news for providers as it increases the likelihood of repeat business.

Flexibility is the number one request by post-covid luxury travellers. Having seen how quickly things can change, they want to know they will not lose out if circumstances outside their control prevent them from travelling. Providers of accommodation and transport have had to keep pace with this in order to make any bookings at all, often taking on a great deal of risk themselves in order to offer travellers the flexibility they crave. Non-refundable deposits, advance prepayments, and lengthy lock-ins appear to be a thing of the past. It will be interesting to see if travellers will allow providers to revert to type once the pandemic is over – we suspect not. This could be challenging for smaller operators whose minimal cash reserves mean that late-notice cancellations and refunds hit hard. The counterpoint is that demand for the very best places is higher than ever, so travellers may find themselves having to pay a premium or accept inferior conditions to secure the location or accommodation they want.

Coming from a financial services background and being familiar with a heavily regulated environment, navigating the requirements of the Package Travel Regulations and putting in place financial protection for clients’ bookings was non-negotiable when setting up my business. It’s paying dividends now as clients increasingly look for reassurance, membership of an industry group (such as ABTA or ABTOT) and the peace of mind they gain from regulatory protections.

Travel and hospitality businesses have had to get used to doing things very differently in the last year. In times when face-to-face contact was considered dangerous, luxury hotels – for example – had to make a normally high-touch service work with as little human interaction as possible. Those who invested in technology were able to automate their processes and provide a slicker customer experience, allowing them to stay open for longer[ii].

Despite the lack of physical contact, travellers still value a human touch in the planning and booking process[iii]. They want access to knowledge that others may not have from an experienced person who will listen to their preferences and provide recommendations.[iv]. This puts tour operators in a great position – their expertise is now not only valuable in helping someone have a great holiday, but potentially also in keeping them and their family safe[v]. The stakes couldn’t be higher.

In summary, post-covid luxury travellers are holidaying in smaller groups with space of their own, and they’re demanding a more personalised, flexible and protected booking process which they don’t mind paying for. The net effect is a move up market.  For destinations like Scotland, this has accelerated a shift that was already underway, but the pandemic has propelled it forwards much more quickly than expected.

‘Staycation’ boom – the good, the bad and the solution

Driven by concerns about flying, fear of crowds in airports, and nervousness over fast-changing regulations at home and abroad, demand for domestic travel has increased enormously since early 2020, with a boom in ‘staycations’ widely reported in the UK. This has exacerbated already extant tensions between communities resident in popular tourist destinations and the tourists who flocked to them as soon as restrictions were lifted. Locals who had been shielding since March reported being afraid to go out due to the crowds. Rubbish bins overflowed, a lack of public toilets had predictable results, and narrow roads were blocked by inconsiderate parking. Infrastructure that barely coped in a normal year was overwhelmed, especially in some of the UK’s most remote locations.

Responsible tourism is the answer to these challenges – it’s not only the right thing to do for the environment and local communities, but travellers are increasingly likely to demand it[vi]. As a tour operator, we can help by spreading demand, marketing less-visited hidden gems and stretching the season to include the shoulder months of March, April, October and November.

I made the conscious decision when setting up The Tartan Road that we would not actively market the main tourist hotspots in Scotland during the summer, and in some cases we would actively discourage travel and offer alternatives if we felt this would be in the best interests of the client and/or the local community. The Isle of Skye, Scottish Highlands and NC500 route are justifiably very popular, but there are equally lovely – and much less busy – areas of Scotland to discover during the peak summer months. An escape is no longer an escape if thousands of people flock to the same spot at the same time!

Our efforts this year are focused on Dumfries & Galloway in the south west of Scotland – easily accessible from England by car and packed with history, outdoor activities and beautiful scenery, including some of the best (and emptiest!) beaches in the country. The north-east coast is another gem, from Inverness and the Moray Firth round to Aberdeenshire and Angus, and inland to the Cairngorms National Park. These areas are just as stunning as the west coast and western Highlands, but likely to be far less busy in the summer.

We feel it’s our job – as responsible business owners and travel organisers – to help prospective visitors find out about places they may not have considered. If it works, there will be less overcrowding in the key hotspots, much-needed business for quieter areas, and travellers will get the escape they crave. Everybody wins.

What does this mean for investors? 

If the trends discussed above play out as expected, firms focusing on luxury, small group and single-household trips are likely to perform better than those catering to larger groups or budget and mass-market tourism.

Travel and leisure companies whose stocks have traditionally performed well may have to invest heavily in order to navigate the new normal, which is putting some investors off. That said, stocks in this sector already took a significant tumble in January this year[vii], so they may still represent good value if you expect demand to bounce back over the longer-term.

Opportunities are emerging for shrewd investors to acquire shares in struggling boutique hotels, B&Bs and other tourism and hospitality businesses with the aim of turning them around and benefitting from the expected recovery. We are seeing new structures emerging here in Scotland: new funds focused solely on distressed hospitality and tourism ventures, and innovative management models with equity-based rewards replacing the usual cash retainers.

What we expect this summer

It seems clear now that travel between the UK and overseas destinations will resume in some form during the course of 2021. Having initially refused to give much clarity at all, the UK government has recently been speaking more positively about the prospect of foreign holidays this year[viii].

The bigger question is whether travellers will be put off by the level of complexity, the necessary testing and isolation requirements and the potential for rules to change quickly and leave people stranded. At what point does the reward of going on an overseas holiday no longer justify the level of risk and effort? Thresholds may be different for each individual, but there will be a limit beyond which demand is just not there.

Regardless of the exact rules that emerge, we expect to see fewer people than normal heading overseas this year, and more holidaying domestically as a result. Some of this demand is likely to persist even as unrestricted overseas travel resumes.

What can Scotland offer travellers?

From outdoor adventures, unspoilt landscapes, incredible wildlife and dramatic scenery to vibrant cities, world-class food and drink, art, culture and history, there’s a real quality and breadth to what Scotland can offer visitors.

Here are some of the most fun trips we’ve recently put together for our clients:

  • A self-drive trip for a history enthusiast taking in some of the most beautiful and scenic areas of Scotland. Castle visits and historic tours every day and stays in a castle hotel every night, including the fabulous 5* Fonab Castle Hotel in Pitlochry.
  • A chauffeur-driven whisky extravaganza taking in the isles of Arran, Islay and Jura and the cult whisky capital of Campbeltown on the Kintyre peninsula. 14 distilleries in 8 days to celebrate a 40th birthday.
  • A week-long family adventure – playing on the beach, exploring the place that inspired JM Barrie’s Peter Pan, hunting for fairies, trekking with alpacas, water sports, fishing, farm animals, guided cycling and a private falconry show.
  • A mother-and-daughter gin itinerary, including distillery visits, learning about botanicals, and distilling their own spirit at ‘gin school’ and a cookery class making cocktail-based desserts.
  • A whistle-stop tour of some of the most remote islands in Scotland, using helicopter transfers to bring these normally inaccessible locations within reach for a trip lasting just a few days.
  • A long-stay family holiday with pre-arranged activities each day, including fishing, foraging, photography, horse riding and 4×4 off-roading, based at the spectacular Fife Arms in Braemar.

Availability is fast becoming the number one challenge for travellers to Scotland this summer. A perfect storm has occurred, with 2020 bookings rolling over and combining with extremely high demand for the 2021 season. The Three Chimneys on the Isle of Skye and the Torridon in Wester Ross – just two examples of the country’s popular and remote high-end boutique hotels – have already completely sold out for the summer months and well into October.

The indecisive may therefore find themselves having to wait until 2022 for their Scottish adventure, but we’re absolutely sure it will be worth it!

The Tartan Road is a bespoke luxury tour operator specialising in single-vehicle, single-household trips in Scotland. Drawing on local knowledge and a select network of excellent suppliers, we put together tailored packages combining accommodation, transport, activities and experiences built around the traveller’s unique needs and preferences. Find out more at www.tartanroad.co.uk

[i] https://www.luxurylifestylemag.co.uk/travel/5-luxury-travel-trends-the-experts-predict-post-covid-19/

[ii] https://www.fodors.com/news/news/luxury-travel-will-be-different-after-covid-were-predicting-these-5-trends

[iii] https://www.luxurylifestylemag.co.uk/travel/5-luxury-travel-trends-the-experts-predict-post-covid-19/

[iv]  https://www.fodors.com/news/news/luxury-travel-will-be-different-after-covid-were-predicting-these-5-trends

[v] https://www.luxurytravelmagazine.com/news-articles/what-does-the-future-of-luxury-travel-look-like-in-a-post-coronavirus-world

[vi] https://www.lux-review.com/emerging-luxury-travel-trends-in-the-post-covid-world/

[vii] https://uk.investing.com/indices/travel—leisure-components

[viii] https://www.bbc.co.uk/news/business-56682226

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