From first-class airline suites to five-star hiking trips, this year's six biggest trends are already changing the future of business.

by Brendan Coffey
September 2006

Travel remains a challenge. But for the first time since 2001, the travel industry appears to have switched from viewing the future with apprehension to optimism. Business travelers and tourists alike have become more resilient. Data from a number of organizations shows a sharp uptick in international business meetings and plans for future meetings.

“The market is buoyant, despite the perceived threat of terrorism,” says Paul Kennedy, group director of Reed Travel Exhibitions, a U.K. company that runs some of the industry’s largest trade shows.

More than simply benefiting from another positive economic cycle, travel is fundamentally evolving to meet new demands and challenges from the likes of globalization and aging populations, says Dipak C. Jain, dean of the Kellogg School of Management at Northwestern University. Jain points to the reality that while many nations’ populations are getting older, the phenomenon of “healthy aging” will power the industry as retirees look to explore the world.

This is coupled with the sharp reduction in airline capacity since the 2001 terrorist attacks on the U.S., along with the massive amounts of airline miles that coming retirees will be looking to cash in. This doesn’t necessarily mean airlines are guaranteed future financial health, but it certainly bodes well for hotels, restaurants and third-party travel services like tour operators and consolidators, Jain explains: “Travel and tourism is going to boom. I am convinced it will be very, very big.”

Each year, Executive Travel examines the trends that change the way we live, work and travel. Here are six of the trends we’ve observed this year and a look at the companies that have capitalized on these trends.

The widening luxury gap

The gap between the haves and the have-nots in airline travel is growing, and our expectations are adjusting accordingly. It’s particularly telling that a plan to offer standing “seats” in the economy class of new jets met with little surprise. The idea was only briefly considered by Airbus, then dropped. Still, it seems like every little amenity for coach class passengers—from meals to a few inches of extra legroom—is going away. Even Boeing and Airbus, which had pushed a 3-2-3 seat configuration for their new jets (to boost the odds of getting a window or aisle seat) have relented to airline demand and are outfitting planes with 3-3-3 rows.

On the other end of the spectrum, if you are one of the fortunate who flies first and business class, the experience is only getting better. On Emirates nonstop flights between Sydney and Dubai, for instance, first-class passengers now enjoy a flatbed suite with special lighting to counter jet lag, a private minibar, the ability to slide doors closed for privacy, and a phone to call for room service. “It’s been quite a pioneering product,” says Nigel Page, Emirates’ senior vice president of commercial operations for the Americas. The first-class “suites” were installed at a reported cost of $125,000 each. For those connecting through Dubai, the airline foots the bill for a 30-minute massage and a three-hour session at a health club in the airport.

Perks like these have enabled the Dubai-based airline to enjoy 18 consecutive years of profits and an average of 20 percent annual growth. Last year, Emirates made an impressive $674 million in pure profit, and it’s looking to build on its growing reputation for luxurious service to double in size by 2012.

Across the board in the airline industry, the luxury gap is needed: Total ticket revenue has dropped 33 percent since 1995, according to Andrew W. Menkes of Partnership Travel Consulting. While premium-class passengers account for about 2 percent of all passengers, they account for 4 percent of profits, which means attracting and keeping first- and business-class passengers is a must. The dilemma for airlines is that the cost of premium class often makes private jets a viable alternative. To keep business, they have to keep upping the perks.

Nigel Page won’t reveal the new features Emirates has planned, lest competitors catch up. One rumor, however, has the airline preparing to install amenities like showers in first class. For Emirates, as for its best customers, money is no object. The only sticking point could be the recently announced delays in the new super-jumbo Airbus, of which Emirates is the largest customer, with 45 A380s on order.

World Heritage tourism boom

Travelers to Australia quickly learn that Aussies are proud of their natural heritage and don’t hesitate to mention when a spot in their country has been cited by Unesco as a World Heritage Area. And nowhere generates more pride than the Great Barrier Reef, the 1,400-mile coral reef off the country’s east coast.

Last year, 1.8 million people visited the reef, generating some $3.2 billion in tourism revenue. By contrast, on Australia’s west coast lies an equally spectacular (if much shorter) barrier reef, the Ningaloo. It’s not a World Heritage Area and is nearly unheard-of outside the country. Last year, it received a mere 104,000 visitors. It’s not a coincidence that officials in Australia say it is perhaps the only barrier reef system in the world that isn’t in imminent danger from excessive tourism.

Much of the Great Barrier Reef’s popularity stems from its spot on Unesco’s Heritage Area list, with which the organization seeks to identify and protect areas that have “outstanding value to humanity.” Yet by the very act of recognizing the areas, Unesco may be accelerating the destruction of the places it wishes to protect.

When Unesco began the World Heritage Area list in 1978, it contained 12 place names. Today, the list has ballooned to 812 cultural and natural sites, ranging from Independence Hall to Red Square to the Mayan ruins in Mexico. Unesco’s list has a dual function in practice—it genuinely tries to conserve these areas of unique beauty and importance, but also helps countries bring in tourist dollars. Often, the dollars win. Newsweek magazine recently blamed Unesco’s popularization of the Mayan ruins for creating a “Disney-esque mecca” that is harmful to its preservation.

Given all the criticism, it’s a bit surprising that Unesco lent its imprimatur to Jet Tours’ group trips to World Heritage Areas last year. Jet Tours is France’s leading tour operator and a subsidiary of Club Med. Unesco criticized Club Med in 1999, calling the company’s locations “pleasure domes [that] often seem indecent in poor countries,” and saying executives’ “talk about discovering other cultures” has “a hollow ring.”

Clearly, attitudes have changed. Or perhaps pragmatism is winning out. Francesco Bandarin, director of the World Heritage Center, says that “the promotion of a responsible and sustainable form of tourism is one of our priority action areas.” After all, Club Med is going to run tours to these areas, regardless.

Part of the deal with Jet Tours enables the company to train tour guides at Unesco headquarters in Paris, teaching them about sustainable tourism to create trips that are more respectful of fragile areas. With tourism continuing to rise at Heritage Sites, the hope is that teaming with tour operators will allow both preservation and access to work simultaneously. To date, 12 sites in Egypt, Mali, Mexico, Morocco, Tanzania, Thailand and Tunisia have been targeted for guide training.

Hotel condos on the rise

Condominiums in hotels were once fixtures on the occasional resort property on Hawaii beachfronts or Colorado ski areas in the 1970s. But they largely disappeared when poor investor returns and the closure of favorable tax loopholes rocked the market in 1986, says Robert M. Chasnow, an attorney specializing in resort real estate at Holland & Knight in Washington, D.C.

Yet now hotel condos are seeing a resurgence that far exceeds the developments of 25 years ago. Currently, Chasnow estimates there are more than 100 hotels with condo components in development across the U.S., primarily in resort areas in Florida, Hawaii and Colorado. The trend has spread to urban areas, too: St. Regis sold out of condos at its newly opened luxury property in San Francisco, while parent Starwood Hotels says 90 percent of its planned properties have a residential component.

This surge in popularity is not confined to larger operators either. A young luxury hotel company, The James, is using the demand for condos to fund expansion from its Chicago location, which opened in April 2006, into New York and Los Angeles, says cofounder Brad Wilson: “It allows us to grow and build.”

The primary reason behind the growing number of hotel residences on offer won’t shock you: It’s money. For one, booming condo prices have made it irresistible for developers to cash in. More significantly, though, the same rise in real estate prices has also made acquiring and opening a hotel much pricier. Hotel companies now need upfront condo sales to raise capital for financing the debt on the whole property. In The James’ case, Wilson notes the Chicago location was funded by selling the first James hotel he and cofounder Danny Errico developed, a celebrated “value chic” resort in Scottsdale, Ariz.

Of course, while condos are good for hoteliers, they must also have some customer appeal to convince guests to buy. For those who invest, it allows access to all the hotel’s amenities, room service, and at The James, VIP status, which affords perks like easy restaurant reservations. When the owners are away, the hotel will add the unit room to its inventory, providing owners with rental income.

Prices for units in The James aren’t set yet, but Wilson expects the units will price similarly to Chicago’s luxury condo market (units in the nearby Water Tower command $1.5 million for a two-bedroom). Maintenance fees are higher at hotel condos than traditional buildings, but do include daily maid service. All told, 100 of The James’ 297 rooms will be sold off as condos. The list of interested buyers consists of suburbanites looking for a high-end pied-à-terre and a large number of out-of-town businesspeople who visit Chicago frequently. Ultimately, explains Wilson, “It is nice to have your bed and come back to a place you can call home.

Unique business travel experiences

Too often, business travel has an unnerving sameness: The airports, hotels and even the restaurants that road warriors frequent leave them feeling like they could be anywhere. This has come about partly by design—similarity in airports helps speed travel along, while offering a familiar room or meal has long been an effective marketing tool.

But ever busier business travelers have begun to take a hard look at what they do with their limited time, and some of them are seeking out unique experiences as a result. Recognizing that movement, Holly Arnowitz, a one-time heavy traveler for Turner Broadcasting and Major League Baseball, started Indigo Experiences, a small outfit that offers short, customized experiences for business travelers in New York and Los Angeles.

Since opening its doors in 2002, the company has seen tremendous response from busy businesspeople looking to spend two hours with an art historian touring the Metropolitan Museum or an afternoon with a Los Angeles image and personal style consultant. “It’s about the value of experience versus the value of things,” Arnowitz says. Nowadays, people realize the value of spending money to educate, enlighten or simply entertain themselves.

Indigo has a steady slate of experiences on offer. In New York, art is very popular. Currently, you can book a one-hour private tour of the Jackson Pollack show at the Guggenheim for up to five people for $550. In L.A., those with two and a half hours to spare can meet with a ceremonial studies expert to learn the meaning and significance of milestones and celebrations, as well as how to add more meaning to events like birthdays, anniversaries and even divorces. That experience runs $600 for up to five people.

Indigo will also craft personalized experiences on request. Those often tend toward less academic disciplines and more toward activities travelers ordinarily wouldn’t pursue, such as dancing at a trendy club where Arnowitz has arranged for customers to glide past the velvet rope. “Regardless of where you are or why you’re there, when you’re going to do something, make it enriching and memorable,” Arnowitz says.

This idea is spreading to major companies as well: InterContinental Hotels is undertaking a program to train all employees, from housekeeping to chefs, to direct guests toward local experiences more effectively. (Details of that program are still under wraps.) Even airlines are doing it: Singapore Airlines offers brief guided excursions into town for those who’d rather not cool their heels at the Changi Airport mall between connections. All told, the percentage of business people who report they carve out some personal time on work trips is up to 69 percent this year, from 59 percent in 2001, according to the National Travel Monitor.

Expect more companies to start similar efforts in an attempt to provide value to experience-hungry travelers. Says Arnowitz, “Having really extraordinary experiences makes people feel more interesting and more interested in their world. Plus it gives [them] something to talk about back at the office.”

Rugged luxury hits its stride

Two summers ago, James Sano and his family took a hiking vacation in the Canadian Rockies. The vast, largely inaccessible area is a hiker’s dream, with untouched trails and pristine wilderness. The trekking was strenuous, but Sano didn’t mind. When each day was done, a helicopter landed and picked them up, transporting them back to a five-star resort where they relaxed and enjoyed sumptuous meals. The following morning, the chopper flew them back to continue their hike where they and their guide left off. “You just simply cannot go backpacking in some of these places, because they are so remote,” Sano marvels.

Where once luxury travel meant lounging poolside while waiters delivered cocktails, it now more often means roughing it during the day and luxuriating in a high-end resort or luxury tent at night. Sano should know: In addition to pursuing such diversions himself, he’s president of luxury adventure travel outfit Geographic Expeditions (GeoEx). The San Francisco–based company arranges high-end trips to the likes of Inner Tibet, the Russian Caucus and Lebanon (his heli-hiking trip was with another company, Canadian Mountain Holidays).

For Sano, the reason behind the popularity of these trips is easy to identify: The Baby Boomer generation is filled with people who used to be rough-and-ready hikers, enduring unending flights and lugging heavy gear around the globe. “Now, as they reach 50, they recognize their limitations. They don’t want to carry 50-pound packs. Or they want to take a trip, but have a certain amount of creature comforts,” he explains. Over the years, this has changed the nature of what GeoEx (founded in 1980 by an Everest enthusiast) offers to emphasize more of the finer touches.

Credit for this trend also goes to the gradual opening up of previously closed societies, as well as the accompanying development of tourism infrastructure. Twenty years ago, a hiker would have had to pitch a tent in Nepal and Bhutan. Now there are plenty of lodges spaced out well enough to allow a comfortable, sheltered night’s sleep at the end of each day, Sano notes.

The ability to be so comfortable has made what were once activities only for outdoor enthusiasts become corporate perks, adds Mark Zoller, president of Zoller’s Outdoor Odysseys, a Washington white-water rafting outfitter. Zoller says since 2001, his business is up 80 percent, thanks largely to corporations like Nike, Intel and Farmers Insurance using white-water rafting for incentive trips, replete with lobster dinners in forbidding places like Hell’s Canyon, the continent’s deepest gorge. Zoller sees much of the boom made possible by improvements in equipment technology—it’s far lighter, more durable, comfortable and affordable than 15 years ago.

No doubt a lot of the appeal is being able to add experiences to your life list. In GeoEx’s case, that demand has led to offerings like a 25-day circumnavigation of Antarctica, starting at $14,000, to tours of North Korea, which started at $5,200 in August 2006. Luxury has become relative. In North Korea, simply getting to make the trip is the luxury. In other regions, like Syria or Yemen, much of the bill goes toward extensive, if inconspicuous, security details. But even with security concerns and high price tags, Sano sees no end to the pull of rugged luxury. “The trend has been growing rather significantly over the years,” he explains. His own family vacations are proof.

Lurking online has its benefits

Travelers often gripe that companies don’t listen to their complaints. Thanks to the Internet, there is a ready forum where they can vent their anger. Usually, it’s just to other travelers. But if it’s about Starwood Hotels, you just may get a response from the Lurker.

Since 2000, the Starwood Lurker (actually William R. Sanders) has haunted message boards and chat sites, primarily the popular FlyerTalk Web site, offering advice, answering questions and soliciting input from the many Starwood Preferred Guests (SPG) who post on a message board. It’s a wise move. With the ability of the Web to spread and magnify misinformation, companies ignore at their own peril what their customers are saying online.Sanders fell into the role of Lurker in 2000, after a supervisor in Starwood’s Preferred Guest service center noticed the volume of SPG members posting on chat boards. It fell to Sanders as part of his duties in the service center to answer emails and help customers who described problems or had suggestions.

What started as a side responsibility now takes up about 45 percent of his week, Sanders estimates. Often he’s answering questions about the program, such as if a certain booking arrangement will earn points. At other times, he offers advice on what the lowest available rates are at, say, the Bora Bora Nui Resort. It’s not always easy—he frequently comes up against complaints or misperceptions. “Sometimes I just feel as if I’m throwing mud against the wall,” he says. Sanders says his efforts work best when he is able to email customers directly, usually explaining a policy or the reasoning behind a hotel’s actions. “You can change perceptions one at a time, but you can’t change them en masse,” he says.

Sanders’ efforts have been enough to change some corporate minds as well. This June, Continental and Southwest airlines added their own official Lurkers, joining recently dedicated Lurkers from Hilton, Marriott, Delta and British Airways. FlyerTalk president Randy Petersen, a publisher of Inside Flyer magazine and a columnist for Executive Travel, figures there will be 25 different Lurkers on his chat board by the end of the year. While companies don’t need permission to lurk, they usually ask for guidance. When Petersen gives it, it often includes contacting Starwood for advice on how to approach the project.

More than just squelching problems, Starwood finds benefits in the Lurker’s ability to identify problem properties faster and implement suggestions more quickly. Most advantageous of all, his presence lets loyal guests know they are being taken seriously, says Robin Korman, vice president of loyalty marketing for Starwood. “The value William brings is that we’re not just a faceless program. He’s an individual people can have an ongoing relationship with,” she explains. “He’s built a sense that we care a lot about them as individuals and aren’t just looking for their money.”

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brendan coffey is a freelance writer based in New Jersey. Email Brendan at editor@executivetravelmag.com.


See also:

• Top travel trends of 2005