Jamsheed Pocha and his wife Jennica, co-founders of The Pelican Club

How surging travel costs are impacting luxury travellers this fall and festive season

TORONTO — If you’re wondering whether travel is more expensive than usual, you’re not alone.

A perfect storm of factors has led to surging travel prices, including increased travel demand following the pandemic years, inflation, higher operating costs for airlines and hotels, rising fuel prices, labour shortages and less capacity, which means demand is far outweighing supply.

According to NerdWallet’s Travel Price Index, the overall cost of travel is up 12% compared with July 2019. Hotel prices, based on data from U.S. Bureau of Labor Statistics’ Consumer Price Index in August 2023, fell from their record highs in August but are still up nearly 7% over the past year. Car rentals are among the most costly expense for travellers post-pandemic, up 9% than they were a year ago, according to CPI data. And in April, travel app Hopper released its 2023 Consumer Travel Index, finding that airfare to Europe was 24% higher compared to pre-pandemic, and an astounding 60% higher for flights to Asia.

And yet, people are still travelling, to the relief of travel agents and suppliers. Zeina Gedeon, President and CEO of Trevello Travel Group, tells Travelweek that she’s not hearing any concerns from customers about not being able to travel due to higher costs.

“On the contrary, we have experienced an unprecedented increase in travel bookings compared to 2019 and 2022, with a noticeable surge in travel interest even during what is traditionally considered a slower booking period,” she says, adding that the luxury travel market in particular has shown remarkable resilience, with the trend of “hyper-personalization” becoming increasingly popular among affluent travellers.

Virtuoso, which specializes in luxury and experiential travel, is seeing similar results. Úna O’Leary, General Manager of Virtuoso Canada, told Travelweek last month that “74% of Virtuoso travellers say that creating a travel experience that best fits their expectations is more important than price.”

Noting that Virtuoso clients are less likely to be price-sensitive, O’Leary added that they’re also “booking longer hotel stays and cruises, staying 1.5 times longer than the average traveller” (according to Virtuoso’s 2022 Brand and Travel Trends Research).

So are luxury travellers more likely to weather this perfect storm of inflationary travel prices? If so, are they prepared for what will surely be an expensive fall and festive travel season ahead?

Jamsheed Pocha, co-founder of The Pelican Club, a Toronto-based luxury travel agency, would know. On the heels of being a panelist at Virtuoso Travel Week in Las Vegas last month, where he discussed the impact of surging travel costs on the rest of the year, Pocha tells Travelweek that he first noticed prices going up when quoting trips to Europe for early this year.

“Business class tickets were 50% or more higher than previous years in many cases, and top hotels were booking up for prime periods at rates well above 2019,” he says. “For example, this past month we spoke to a client looking to travel to the Caribbean for a luxury four-night stay in mid-November, typically a shoulder month, with a room budget of $1,500 per night. The places we normally would have suggested were quoting over $2,000 per night.”

Noting that the cost of tours hasn’t increased as much as hotel and air, Pocha added that at a recent dinner with Sir Rocco Forte, the founder of Rocco Forte hotels told him that Rome experienced the highest-ever average rate in the luxury market for the month of June at over EUR2000 per night.

But all this, says Pocha, seems to have little impact on The Pelican Club’s clientele, who are generally high net-worth individuals or families between 35-55 years old. They also all pay an annual membership fee to be part of the Club.

“From our perspective, we are not seeing luxury being impacted by rising costs. High net-worth, affluent clients are not as impacted by rising costs and they are still willing to spend on luxury,” he says. “There is, however, some extra consideration when buying to ensure they are getting good value, and not just mediocre products at inflated rates.”

For the fall season, Pocha says the agency “already has lots of booked trips” and is expecting more last-minute quick trips to come in. But his focus right now is the festive winter season, which he says is very important, so much so that the agency starts booking for it after the previous festive season ends, when clients rebook their regular rooms and villas to ensure they don’t miss out.

“Everyone wants to be with loved ones or somewhere fun for the holidays, usually south to the Caribbean, Mexico and Costa Rica. We have seen a lot of demand for big resorts like the Rosewood Baha Mar in The Bahamas, as well as for private villa bookings on islands like Mustique, St. Barts and Turks & Caicos,” he says.

“We continue to get festive bookings all the way until early December, however, availability and pricing play a factor when leaving festive planning until too late,” Pocha adds.

When asked what his clients are saying about high prices, particularly for the fall and winter seasons, he says that they have noticed an increase but that the more pressing issue is availability.

“Prices are high, yes, however, space for more sought-after hotels, destinations and configurations (ie. multi-bedroom/connecting) are limited. We feel it’s more about availability, as demand even with higher pricing has not slowed down. Some clients are planning on booking flights outside of the holiday range to avoid those surge rates on opening and closing weekends of schools,” says Pocha.

To ensure that there are no surprises when it comes to higher prices, Pocha and his team have calls with members about their travel plans every 3-6 months. As a result, he says, the agency has not seen any drop in repeat bookings.

“We always need to be transparent and sincere with our clients. We are not the hotels or airlines determining the pricing, and they know that we turn every rock to find the best products within their budget and criteria,” says Pocha.

Another way that The Pelican Club looks out for its members, even before mishaps occur, is by building its hotel relationships so that when clients are travelling abroad, they’re instantly flagged as VIPs and given that little extra attention and service.

“The best way to tackle luxury is to have a plan and someone to execute that for you,” Pocha insists. “This is what we do for our members and it gives them the peace of mind to know they are not in a last-minute rush, or spending on the wrong experiences. Pre-pandemic, there was a lot of chatter about travel advisors not being necessary. It’s times like these that highlight our value and expertise.”

And so with good planning, expert agents and affluent travellers, the luxury sector is poised to withstand the economic pressures of current times, says Pocha.

“Luxury is extremely resilient, which is evident in the number of new luxury hotel openings, the way demand has surged after the pandemic, and the willingness of our clients to travel in luxury, regardless of the added cost implication,” he says.

“People want to attend F1 races with Paddock passes, they want to be on a yacht in St. Tropez in July, and they want to enjoy time with friends and family in incredible surroundings. In my opinion, this energy to live life and experience luxury is only growing.”

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