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According to a new study issued by PricewaterhouseCoopers hospitality and leisure group, the luxury hotel sector continues to attract interest from investors. Luxury hotel proprietors owning prestigious buildings are benefiting from the capital value of their properties, while branded-luxury hotel operators use their brand equity to attract both corporate and leisure customers.
Growth prospects for the sector as a whole are good, with investors looking for opportunities in emerging European market cities due to the shortage of suitable prestigious sites and buildings. With the trend towards individuality posing a greater challenge to luxury hotel chains than to smaller properties and operators, addressing the demands of younger customers is fuelling the growth of the small, design-intensive luxury hotel chains.
Julie Clark, Director of PricewaterhouseCoopers hospitality & leisure industry team commented:
“Notwithstanding the patchy economic recovery, investors can take heart that corporate profits may be on the rise again since the number of high-net worth individuals keeps growing, and the lifestyle effects of younger, prosperous working couples are likely to combine to sustain demand for these top-end products.”
The study canvassed the opinion from a selection of key operators in the sector, financial analysts and industry observers, found that:
- 70% of respondents agreed that far more than the traditional attributes of fine hotel infrastructure – exclusivity, individuality, privacy, a sense of place, and a location which satisfied both aspirational and experiential requirements were pre-requisite characteristics of the ‘luxury’ tag.
- Demand for luxury hotel accommodation varies with the type of property, and is influenced by factors such as location, size, style, and on-site facilities. Large city-centre properties are more likely to depend on corporate business than on leisure customers (but leisure can be crucial at weekends); country or coastal hotels may be leisure-based, but may also attract the corporate meetings and incentive market; small luxury hotels may be aimed at wealthy leisure guests but may also cater to local business activities; and some more fashionable properties aimed at the trendy younger leisure market may also attract similarly trendy company business.
The markets for luxury hotel accommodation are diverse, but would include:
- “Corporate travellers” who play an important role in top-end hotel demand in Europe, both from European countries and from North America and key countries in Asia;
- “Conference attendees” a subsidiary segment of the corporate market that is likely to be attracted at a senior-level to luxurious hotel facilities that are also fully-equipped with conference and meetings facilities, the latest technology and quite possibly full health and sports facilities.
- “Lifestyle travellers” who might either be travelling on business or as private individuals, but whose hotel choice is influenced not only by their ability to pay for the best, but also by a desire for features such as exclusivity and individuality.
- “Double-income/no kids” (DINKS) younger travellers who are cash-rich but time-poor.
- “Traditional high-end travellers”, who might typically be both wealthy and older, who are accustomed to expecting and paying for the best and therefore likely to remain loyal to individual properties or to gravitate towards the more traditional luxury-end of the market on the recommendation of their peers.
- “Luxurious relaxers”, who might typically seek out luxurious health spas and/or country retreats where indulgence and relaxation can be combined with the pursuit of health and/or sporting activities.
- 65% of those surveyed stated that the fall in demand from the USA and Japan had had an especially damaging impact on luxury hotels in Europe in the past few years.
- Analysts reported that demand for luxury hotels in Europe has picked up since Q4 2003, though variably by main city. London appears to leading the way, with achieved room rates as high as
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
