The travel industry is basically back on target.
But high prices in the luxurious sector, which rose within the wake of the Covid pandemic, aren’t returning to normal. In fact, they’re growing higher by the month.
Luxury hotel rates reached “peak levels” this yr, with average day by day rates up 70% in comparison with 2019, in accordance with the luxurious travel company Virtuoso.
“July 2024 stands out with the best rate, marking an 85% increase in comparison with July 2019,” an organization representative told CNBC Travel.
The price for luxury train travel can also be soaring, with rates for Accor’s yet-to-be-opened La Dolce Vita Orient-Express climbing 75% in 16 months. The starting price for a one-night trip on the train, which is about to open in Italy in 2025, went from 2,000 euros in late 2022 to three,500 euros ($3,776) last month.
Rates on one other luxury European train, Belmond’s Venice Simplon-Orient-Express, also jumped this spring, from £3,530 in February to £7,060 ($8,925) in March, in accordance with a review of its website.
Belmond has not yet responded to CNBC’s request for comment, but Accor told CNBC Travel that pricing and plans “are continually evolving.”
Travel prices have increased for most of the same reasons which have affected other industries: inflation, rising labor costs, supply chain issues and debt service rates.
But travelers’ unflinching willingness to pay the brand new rates means the “old” prices for a five-star holiday could also be a thing of the past.
When money is ‘no object’
As inflation and rising costs abate, luxury travel prices are holding firm.
That’s because at significantly higher rates, “the demand is there,” said Henry Harteveldt, president of the travel market research company, Atmosphere Research Group
“Money is sort of no object for a few of these guests,” Harteveldt told “Squawk Box Asia” Monday. “These are the rich and ultra-wealthy traveler, and for them 1000 euros, $1,000 or more an evening, is nothing. It’s like perhaps $250 to most consumers.”
Wealthy travelers also value latest and different experiences, corresponding to luxury train travel, he said.
“They want something exclusive … and these firms are going to capitalize on it while they will.”
Where pricing matters
For price-conscious travelers, competition will temper costs on the budget and mid-scale sectors, said Harteveldt.
“For those of us who continue to exist planet Earth… budget airfares have been coming down because competition there may be growing,” he said. “Budget and midscale hotels are among the many fastest growing within the hotel sector. They too introduce lower pricing as they open or expand the variety of properties in those categories.”
Booking early can lower your expenses on airfares, but hotel pricing works otherwise, he said.
“With hotels, you either book early or wait until inside two weeks of your travel date,” said Harteveldt. “I personally book refundable and changeable hotel rates [because] I actually have noticed that, in some cases, hotel rates can go down… closer to the check-in date, if demand is not where they expected it to be.”
‘The luxury boom continues’
Overall, travel demand stays strong, yet surveys show some travelers are starting to buckle under the prices.
But this is not affecting the luxurious travel sphere at the identical level, said Dave Goodger, managing director for Europe, the Middle East and Africa at Tourism Economics, an Oxford Economics company.
“The luxury boom continues despite the flatlining economic activity in some major developed markets,” he told CNBC Travel.
The industry continues to see upward pricing pressure for luxury experiences, he said.
“This has come as some travellers have traded up for more luxury experiences,” he said. “It also reflects the proven fact that income and wealth levels, including amassed savings, remain healthy for higher net wealth households.”
