Upchurch flags 12-24 month cushion of strong demand

Virtuoso CEO says current conditions to prevail for up to two years

Matthew Upchurch, Chairman and CEO of Virtuoso, is forecasting the strong trading conditions for luxury travel around the world to be sustained for another 12-24 months, pending any “black swan” events.

Speaking to a media contingent at last week’s gargantuan luxury travel show in Las Vegas, Virtuoso Travel Week, Upchurch said he believes there will be around a 1- to 2-year “cushion” before the COVID-rebound runs out of legs, even with a potential recession.

“The number one corollary to luxury travel has always been the health and equities markets (assets, real estate, etc.). If you look at what happened there was a massive amount of wealth accumulated during the pandemic, and I think that’s buffered by the fact that, if you can afford it, travel is a priority for the next two years,” Upchurch said.

Matthew Upchurch, CEO Virtuoso, Opening Ceremony, Virtuoso Travel Week 2022

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The luxury travel expert, who a few months ago referred to the period as the start of the “Golden Era of the travel advisor,” said he believes after that “cushion” demand will likely return to previous patterns.

“Pre-pandemic, one of the reasons that travel was on the trajectory it was is because never in the history of the planet have we ever had five, soon-to-be-six, generations of people all traveling at the same time in the numbers they’re traveling.

“When the last baby boomer turns 60 in 2024 it will be the first generation in the history of the planet where 80% of the entire generation is expected to live another generation. We’ve always had 80-year-olds in the world, just not as many as we’re about to see. That’s just never happened.”

Upchurch said that at the same time, Millennials and now Gen Z ers prioritise travel like no other generation before.

“We’ve been seeing the journey of prioritisation on experiences versus goods. It’s been a trend that’s been happening for a long, long time and to me this pandemic just accelerated that.

“I don’t know exactly. Obviously, black swan events and things like that, but overall, I think it’s anywhere from a year to two years where I think we have a buffer to the normalisation. It could be longer,” Upchurch remarked.

First Class all the way - Qantas Suite

Micheal Londregan, Virtuoso’s Senior Vice President of Global Operations told LATTE he believes Upchurch is being conservative with his timeline.

“I think it will be longer. Most people have taken this opportunity to rebalance how much they’re going to spend on things and how much they’re going to spend on experiences. And I believe the recalibration has been pretty strongly towards experiences.

“I believe we’re going to see a move towards people buying experiential things, and less on material. I don’t think that’s a one- or two-year trend,” Londergan said.

“I’m thinking two to three years. Our problem is going to be more around attracting talent to our industry, getting capacity than it is finding customers.

Where, what, when and how much?

Virtuoso global sales for the January-July 2022 period are at 102% compared to 2019, fueled by hotel business (139%) and service (108%), while cruising (82%) and air (74%) still have some ground to make up, according to Virtuoso Back-Office data revealed.

The United States, not surprisingly, is leading the luxury network’s outbound leisure travel sales in 2022, with business up 122% compared to the “high water mark” of 2019. Australia’s outbound leisure travel sales are up 113%, while Canada is up 80%.

Misty Belles, Virtuoso’s Vice President, Global Corporate Relations, said leisure travel booking windows for US travellers at hotels have returned to 2019 levels, for both domestic and international hotels, while rates soar.

“Hotel bookings for those that were once days long are now getting back to pre-pandemic levels, and in fact some of the booking windows for hotels are longer than they were in 2019 and going back to 2018 numbers,” Belles said.

Data collated by Virtuoso indicates that the average daily rate at luxury international hotels have soared by 55% in 2022 compared to 2019, while luxury US hotel rates have surged 58%.

According to Tourism Economics research, all outbound leisure travel sales for Virtuoso have recovered to 67% of their previous peak, with a full global recovery tipped by Q1 2024. By the end of the same year, global leisure travel sales will be up 121%, leaping another 11 percentage points in Q4 2025 and up to 155% twelve months later. Belles says “excess savings is driving the wealth effect”.

Misty Belles, Vice President, Global Public Relations, Virtuoso

“So unlike in previous economic downturns or slowdowns, the wealthy still feel wealthy because they accumulated so much during the pandemic.

“Typically the stock market is the greatest indicator of how luxury travel will perform. Things are a little bit different now because there’s much more confidence and so much more pent-up demand, converging at the same time,” Belles said.

Whereas in the past year the affluent traveller would spend US$20,700, in the next 12 months that number will skyrocket 34% to US$27,800. While Virtuoso’s core ultra-wealthy target traveller is planning to spend close to US$50,000 next year.

Among trends, solo travel among people 65+ years of age has gathered momentum, leaping from 4% in 2019 to 18% in 2022. On the other side of the coin, the 18-34 year age bracket travelling alone has halved from 12% to 6% within three years.

The United States was the top international destination for Virtuoso bookings coming out of Australia, Canada, the US (domestic) and the rest of the world for the period from September to December 2022. Italy, France, Canada and Mexico were all popular, while Fiji was also a clear favourite with Australian travellers.

As for when people will next travel, 38% will be in the next 6-12 months, 25% within the next few weeks, 24% in one to three months, and 10% more than 12 months.

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