Why Luxury Travel Keeps Getting More Expensive

Luxury travel has always been the pinnacle of tourism. These hotels and experiences, which cater to the highest earners, are also the most expensive way to travel. In the post-pandemic years, though, prices are out of control. The number of travelers now exceeds pre-pandemic levels. That’s certainly one of the reasons why prices continue to rise. Most people, however, may not necessarily be aware of how much they have increased.

A representative for luxury travel company Virtuoso recently told CNBC that hotel prices for July 2024 are currently 85% higher than they were in 2019. As mentioned, this increase is not only visible in hotel room rates. La Dolce Vita Orient-Express, a train that covers routes across Europe that isn’t even in service yet, has seen its ticket prices increase by 75% in the last 16 months. The steady demand for luxury travel experiences is one reason why prices continue to rise. However, that may not be the whole story.

Inflation is Part of the Deal

Hand putting wooden cube and inflation word a on coins
Image Credit: Shutterstock / Deemerwha studio

Inflation is certainly something that’s been a constant in the global economy in general. When it comes to luxury travel, the demand is still there despite inflation. This has led companies to be able to adjust their prices to the new rates without losing customers. Inflation could largely be the culprit of the massive increase in prices that were mentioned earlier. After all, it would be nearly impossible to see a 75% increase in price without inflation. That’s regardless of whether it’s a tour or a commodity even, that has increased its value so much.

Demand has not decreased in spite of adverse financial conditions; this provides other information. In a recent interview with CNBC, a managing director at the Oxford Economics Company mentioned, “It…reflects the fact that income and wealth levels, including accumulated savings, remain healthy for higher net wealth households.”

In a sense, higher-income households haven’t been affected by inflation. Although that’s a general statement, the fact that luxury travel demand has remained steady seems to prove it’s a valid one.

Pricing Isn’t as Important

Vertigo Rooftop Restaurant and Moon Bar are among the best rooftops in Bangkok
Image Credit: Shutterstock / i viewfinder

Another element that experts are pointing out to justify the increase in luxury travel prices is the fact that pricing isn’t as important. What they generally mean by this is that luxury travel brands won’t compete in the same way that budget hotels do. Budget hotels, for example, will be more than willing to lower their prices to attract more customers. In other cases, they’ll run travel packages with different brands to get more people in the door.

Luxury travel brands don’t operate in this way. Lowering their prices could actually negatively affect how potential customers perceive them. If a luxury hotel’s price is too low, these travelers may assume that amenities at that resort will also dip in quality. These are some of the main reasons why rival luxury properties typically never engage in a price war.

If attendance drops at one of these hotels, they may promote new experiences on the property. Another idea could be to invest more in marketing. Slicing prices, though, is generally not something that these places have historically done. Going back to the inflation issue, that also leaves them with less room to maneuver.

People are More Into Experiences

Couple watching the sunset in an infinity pool on a luxury vacation in Thailand
Image Credit: Shutterstock / fokke baarssen

Current travelers seem more willing than ever before to pay heftier fees for unique experiences. This is something that hotels have had to adapt to as well. As mentioned, one of the ways that luxury properties lure more guests in is by promoting the unique experiences that the facility offers. Hotels, therefore, are no longer just places to get a good night’s sleep. They’ve become entertainment venues in many destinations, something that in the past was only seen in places like Las Vegas to provide a concrete example.

Hotels have had to increase prices to justify the inclusion of more “entertainment” within a resort. As mentioned, lowering prices is sometimes seen as a drop in quality in the industry. With all of this in mind, it’s hard to imagine that luxury experience prices won’t continue to rise.

Mario Perez

Author: Mario Perez


Mario is a seasoned journalist who’s worked with multiple publications over the years. He has a passion for looking for that story within the story itself. When he’s not actively looking for breaking news, he enjoys playing and watching sports.

Leave a Comment