Curious About the High Cost of Luxury Travel? Here’s Why!

However, high luxury prices, which surged during the Covid epidemic, are not returning to normal. In fact, they are getting higher by the month.

Luxury hotel rates reached “peak levels” this year, with average daily rates up 70% from 2019, according to Virtuoso, the luxury travel business.

“July 2024 stands out with the highest rate, marking an 85% increase compared to July 2019,” a firm official told CNN Travel.

Luxury train travel is becoming increasingly expensive, with fares for Accor’s next La Dolce Vita Orient-Express rising 75% in 16 months. The beginning price for a one-night ride on the train, which is scheduled to debut in Italy in 2025, increased from 2,000 euros in late 2022 to 3,500 euros ($3,776) last month.

Belmond’s Venice Simplon-Orient-Express has increased its rates from £3,530 in February to £7,060 ($8,925) in March, according to a website review.

Travel expenses have risen for many of the same reasons as in other industries, including inflation, growing labor costs, supply chain difficulties, and debt servicing rates.

However, vacationers’ unwavering readiness to pay the new rates suggests that “old” prices for a five-star holiday may be a thing of the past.

When money is ‘no object’

As inflation and rising costs subside, luxury travel prices remain stable.

That is because at much higher rates, “the demand is there,” said Henry Harteveldt, head of Atmosphere Research Group, a travel industry research firm.

“Money is almost no object for some of these guests,” Harteveldt stated on “Squawk Box Asia” Monday. “These are the wealthy and ultra-wealthy travellers, for whom 1000 euros, $1,000, or more each night is nothing. Most users estimate it to be around $250.

He added that wealthy passengers value new and unique experiences, such as luxury train travel.

“They want something exclusive … and these companies are going to capitalize on it while they can.”

Where pricing matters

According to Harteveldt, competition will bring down costs in the budget and mid-scale industries.

“For those of us who live on planet Earth… budget airfares have been coming down because competition there is growing,” he went on to say. “Budget and midscale hotels are among the most rapidly expanding in the hotel industry. They, too, offer cheaper prices as they open or expand the number of homes in those categories.”

Booking early can save money on airfare, but hotel pricing is different, he noted.

“With hotels, you either book early or wait until within two weeks of your travel date,” Harteveldt added. “I personally book refundable and changeable hotel rates [because] I have noticed that, in some cases, hotel rates can go down… closer to the check-in date, if demand isn’t where they expected it to be.”

The luxury boom continues

Overall, travel demand is strong, but studies reveal that some travelers are beginning to struggle with the costs.

However, Dave Goodger, general director for Europe, the Middle East, and Africa at Tourism Economics, an Oxford Economics subsidiary, says that this is not having the same impact on the luxury travel industry.

“The luxury boom continues despite the flatlining economic activity in some major developed markets,” he said in an interview with CNBC Travel.

He said the industry is still seeing upward pricing pressure for luxury experiences.

“This has come as some travellers have traded up for more luxury experiences,” said the travel agent. “It also reflects the fact that income and wealth levels, including accumulated savings, remain healthy for higher net wealth households.”

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