Has Luxury Travel Hit Its Ceiling? Virtuoso Says Demand Still Has Room to Run
Virtuoso executives say higher prices are only part of the industry’s continued gains, with booking volume and longer trips also contributing to growth.
Photo: Briana Tozour / Unsplash
After several years of extraordinary demand, soaring hotel rates, and seemingly relentless growth, luxury travel has prompted an increasingly obvious question: How much higher can it go?
Virtuoso isn’t calling the top yet.
Speaking during a press conference to travel trade media at Virtuoso Travel Week in Las Vegas, Matthew Upchurch, the company’s chairman and CEO, acknowledged the unusual strength of the luxury travel market since the pandemic, but pointed to a combination of behavioral and economic forces that continue to support spending.
“If you look at what’s happening, coming out of the pandemic,” Upchurch said, “nothing motivates a human being like having something taken away,” emphasizing how having travel taken away proved to be a powerful motivator when the world reopened.
But that initial rebound has still lasted far longer than many expected. Upchurch described a continuing “carpe diem” mentality among travelers—a sense that experiences should not necessarily be postponed for some hypothetical future date. At the same time, he pointed to wealth creation as another major contributor, saying equity markets have historically been one of the strongest correlators with luxury travel.
“There’s a psychological piece of you’ve got to live your life. What am I holding back for?” Upchurch said. “But there is one other thing that’s very pragmatic and practical. The number of high-net-worth and ultra-high-net-worth people has exploded.”
The durability of demand is particularly striking given the geopolitical backdrop. Upchurch pointed out that ongoing conflicts and other global uncertainty might once have been expected to put a more significant dent in travel. Instead, travelers have become increasingly willing to reroute when necessary rather than abandon trips altogether.
There may also be a bigger generational change at work: older generations, Upchurch said, were more likely to regard travel as a luxury—something discretionary and occasional—while for several younger generations, it has become far more fundamental.
“For several generations now, it’s like a right,” he said. “And it’s fundamental to who you are.”
Still, strong sales figures alone don’t necessarily prove that travelers are taking more trips. With luxury hotel rates having climbed substantially in recent years, revenue growth could simply reflect travelers paying more for the same amount of travel.
But David Kolner, Virtuoso’s executive vice president, strategic communications, said the group’s data suggests that isn’t the whole explanation. Asked what is behind the network’s continued sales increases, he said the figures are generally based on same-source sales rather than growth coming simply from newly added agencies. Looking specifically at hotels, Kolner said three factors are contributing: higher average daily rates, longer stays and more bookings.
“It’s like a third, a third, a third,” he said, describing it as a rough rule for what is currently driving hotel sales growth.
It’s an important distinction to make, since, if luxury travel’s gains were overwhelmingly the result of inflation and rate increases, the industry might have more reason to worry about approaching a pricing ceiling. Instead, Virtuoso is seeing travelers stay longer and book more alongside paying higher rates.
None of that means luxury travel can grow indefinitely. But for now, Virtuoso’s numbers suggest the boom has not been sustained by price alone—and that the ceiling, wherever it is, has yet to become obvious.
