It's the biggest independent luxury travel show in the world, at least in terms of the number of high-end hotel chains and individual properties in attendance. I'm talking about the International Luxury Travel Market (ILTM), which took place in Cannes, France, earlier this month.
This was the 13th edition of ILTM and I've been to the last five. I'm continually amazed by the number of luxury hotel companies at the event, as well as the new upscale accommodations, services and experiences that they showcase on an annual basis.
There also seems to be no end to growth in the luxury market or the show itself. This year, ILTM welcomed more than 1,452 buyers, planners and designers of luxury travel (read travel advisors) from 75 countries, 36 percent of whom have never attended the show before.
There were increases in the number of buyers from the U.S., Japan, the Middle East, Northern Europe and Brazil. These buyers met with 1,461 exhibitors from 95 countries in more than 57,000 pre-scheduled appointments, an increase of nearly 11 percent on last year. There were also 70 members of the media present (up from seven in the original show 13 years ago).
That growth reflects the dramatic expansion of the luxury travel market itself-a market that shows no signs of decline. Indeed, presenters at the annual ILTM Global Forum gave some optimistic assessments (for the most part) for the future of luxury travel overall.
I have to admit I've never been a big fan of the programming at ILTM's events, but at least some of these speakers were intriguing if not always on topic. Nenad Pacek, an author and advisor with Global Economic Megatrends, gave a surprisingly optimistic assessment of the global economy that bodes well for the immediate and long term future of luxury travel.
Pacek said the U.S. continues to act as the engine for the global economy, growing at a rate of 2.5 to 3 percent, though he admitted things could change if some kind of crisis hits again. He said the U.S. dollar will continue to strengthen and interest rates will slowly creep up.
On the other hand, Pacek said the Eurozone was acting "like a cancer" on the global economy (his words, not mine). He said the region was in the midst of prolonged stagnation, public debt was at its highest since World War II and the euro is getting weaker. But he also said the number of wealthy people in Europe won't fall despite these gloomy situations.
Among the emerging markets, Pacek said he saw yet another engine for growth in the global economy. Emerging markets, he said, will still outperform the developed world in economic growth, though some areas, such as Central and Eastern Europe, may lag. He predicted growth of 7 percent for China, 6 percent for India, and 5-6 percent for Indonesia, for example
In Latin America, Pacek said Brazil had been hit by a bit of a slowdown but he forecast that it, along with Mexico, Colombia, Peru and Chile, would be the leaders in the Latin American economics, with almost a trillion dollars in reserve and low public and private debt.
Countries in the Middle East, Pacek said, are sitting on the largest accumulation of cash in the world, roughly $2.5 trillion. There are certainly weak spots in the Middle East, he said, but he called it the best part of the world in terms of corporate sales growth. Meanwhile, Africa is growing at a 5 percent clip.
All this bodes well for the luxury travel industry, according to Pacek, since the number of wealthy people is on the rise in nearly every region of the world. There are more wealthy people in the U.S. and Europe (roughly 4.5 million high net worth individuals in both regions), while the Middle East has roughly 600,000 and Asia has 650,000. More than 13 million people worldwide have investable assets of more than $1 million, he said. "For your segment you're in a nice spot…the number of rich people continues to grow, though the growth in inequality will continue to rise."
Given the focus on the spread of Ebola in West Africa and its effect on travel, ILTM organizers apparently felt the need to address the crisis (which seems to abated somewhat recently, at least in terms of media attention to it). They did so by asking Justice Malala, a South African journalist and columnist, to speak about Ebola and Africa in general. Malala responded by delivering a surprisingly optimistic message, saying Ebola would not significantly disrupt the growth of democracy of the economies of Africa.
He pointed out that countries affected by Ebola are quite literally thousands of miles away from some of Africa's top tourist destinations, such as South Africa and Kenya. He also criticized coverage of the Ebola crisis, saying the world focuses too much the fear of contagion instead of the facts on the ground. He compared the Ebola situation to what happened in 2002 with the SARS epidemic and in 2009 with H1N1 flu, both of which were health crises that quickly abated, despite the media frenzy surrounding them.
Malala said the cost of the Ebola epidemic won't reach the wildly high figures originally predicted and he said the West African region primarily affected was beginning to see a turnaround, complete with news of the success of an initial trial vaccine for the disease.
Instead of Ebola, Malala said he preferred to focus on the growth of democracy in Africa, which he said was leading to more tourism from abroad and greater wealth for Africans themselves. "The story of the African continent is absolutely bright," he said. "When democracies become stronger, people make money and it becomes a better place to travel to with more high net worth individuals….Africa now has the fastest growing middle class in the world."
For Malala, Africa has changed fundamentally and its narrative of economic growth is not coming to an end, Malala asserted. "In South Africa we are celebrating the fact that our democracy is holding and growing," he said. "My view is that in South Africa and Africa we are ready to do business. Ebola is a blip on the map."
For its third speaker, ILTM selected Lauren Capelin, chief knowledge officer at consulting firm Collaborative Lab, who had a message that not too many in the room seemed comfortable with. Capelin focuses on a new field of economics called collaborative consumption, where consumers seek access to products and experiences, including those in the travel sphere, rather than ownership. This is sometimes called the shared economy.
In the travel space, some of the prime examples of this are Uber, the car ride service, and AirBnB, where owners of apartments, houses and other accommodations can "rent" them out to guests. "The collaborative economy is game changing opportunity for luxury travel," Capelin said.
Capelin said a new breed of website is changing the way we think about getting access to luxury items, similar to what's going on in the music industry with such websites as Spotify and Pandora. Indeed, she called the shared economy one of the 10 ideas that will change the world, with global revenues for shared economy outlets set to increase from $15 billion today to $335 billion by 2025.
On the travel front, Capelin said AirBnB has amassed a collection of 650,000 rooms in 92 countries in just four years. By contrast, it took Hilton decades to amass 610,000 in 28 countries.
Capelin was also quick to say that the collaborative economy is creating new opportunities, developing new markets and growing the travel pie, rather than simply taking a piece of the pie away from other businesses. On the other hand, she was speaking to an audience of top hoteliers and travel advisors, who so far don't seem to have seen the relevancy of collaborative economic models.
Indeed, when she asked how many in the audience had used AirBnB, barely a single hand went up. And only a few more hands were raised when she asked how many had used Uber. Clearly, however, there are applications yet to come in luxury travel. Just think shared private jet and helicopter services.
"The next generation of luxury travelers is under 45 years old," Capelin said. "They live and breath mobile technology….this new on demand world is about the experience of getting instant gratification….and the disintermediation between buyer and seller and getting rid of middleman. We are shifting to a digitally driven, on-demand lifestyle that is shifting the role of the middleman."
Whenever I hear talk about "eliminating" or "altering" the middleman, however, I think back to when the airlines cut commissions to travel agents more than 15 years ago. That did not eliminate agents, of course, so predictions of their demise once again would seem to be at odds with the evidence. But I agree that the new collaborative economy is going to have an impact on luxury travel, just as it is having an impact on all forms of travel today.
Just what that impact will be remains to be seen, and Capelin did not provide any insight into what might happen. Instead she simply said the industry could stick its head in the sand, fight legal battles in an effort to stop "shared economy" websites like AirBnB and Uber from succeeding, or embrace the changes as an opportunity that will inevitably come in the industry. How luxury travel should embrace those changes was unfortunately not part of Capelin's presentation.
Yes, there was a another speaker at the Global Forum, futurist Edie Weiner, but either I was tired of note taking or just getting a bit "speakered" out at that point. The one thing I did pick up on-and something that I think almost everyone can agree on-is how quickly change is happening today. Weiner called it "templosion" or the implosion of time, where even the biggest changes are happening in smaller and smaller flashes of time.
So I guess if my annual experience at ILTM is an indication, I can expect a luxury travel industry that is even bigger, more adaptable and faster changing than ever when I show up in Cannes next year!
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