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Defining the New Luxury.
By Yeoh Siew Hoon
Saturday, 20th June 2009
 
Is the new luxury about stealth and simplicity or is it still about ego and face? It would appear both worlds collide in the new world. Yeoh Siew Hoon reports.

A friend of mine has decided to spoil himself to a once-in-a-lifetime holiday in India with his family before returning home to a new job.

He's booked himself a one-month holiday which includes a sun and sea stop in Lakshadweep, a group of coral islands in the Arabian Sea off the south-western coast of India.

To get there, you have to fly with Kingfisher Airlines and the flight costs a whopping US$850 return each. And when you land, you have to take a boat to another island and you stay in the most basic of accommodation, which can cost up to US$600 for a night.

Having just returned from the Asia Luxury Travel Market in Shanghai, I wonder if this is the new luxury – where people are willing to pay a lot of money to get as far away as possible from the madding crowd and to experience simplicity and nature. No pool villas but simple, thatched huts with no mod-cons and where you walk barefoot on the sand and feel the kiss of the air on your skin, day and night.

I myself have booked such a trip later this month in Sabah, where I will fly somewhere, and then go by road to a river where I will hop onto a boat which will then take me to my rainforest lodge where I will commune with monkeys, crocodiles and fireflies.

Panellists at the ALTM Conference in Shanghai last week, discussing the question, "Is luxury dead?", would seem to agree. In mature markets, stealth is in, flamboyance is out. In developing markets though of the new rich, ego and face still matter.

Karthik Siva (pictured left), chairman of the Global Brand Forum, took a philosophical stance. As long as man has ego, he will always pursue luxury, he said. "There will always be those who aspire to acquire," he said but suggested that in the current climate, people were less likely to flaunt it.

He said one key trend was the desire and quest for authenticity. "Everything is looking alike, every product is looking alike, people will pay for a brand that is authentic."

Mary Gostelow, editor-in-chief of WOW Travel, the online magazine of Kiwi Collection, agreeing with Siva's idea of authenticity, believes the idea of luxury travel has changed – from one that was ostentatious to one that is simple. Softer things have become more important – a beautiful sunset, a perfect cup of coffee, involvement in local communities.

Space and seclusion are the new luxuries, she said.

Zoe Wu (below right), managing director of Horwath HTL in Shanghai, took the other view. To emerging markets like China, she said luxury was still about aspiration for more materialistic pursuits. "We are at the preliminary stage and people are still buying based on ego and face."

She said that a huge domestic market was opening up in China for the luxury sector and that the industry needed to adapt to cater to this market, as the Western model may not necessarily apply.

"Maybe we need a new definition for luxury travel," she said.

In his keynote speech, Larry Hochman said the luxury travel sector has to ask itself tough questions if it is to survive the current economic meltdown which has seen steep declines in premium travel across the world.

"Ask yourself, who is your biggest competitor, and I'd say your biggest competitor is your view of the future. What is luxury travel going to mean, post-recession? How do you cut costs and staff without cutting your own throat?

"Because of the recession, customers are more demanding, discerning and more aware. They are less forgiving."

Highlighting the plight of the airlines which are set to lose US$9 billion this year, Hochman said the one figure to remember is that in the first quarter, there was a 19.8% drop in first and business class travel around the world.

"What are you doing to do? What will people want after the recession?"

Hochman said that people were after lives that are less complicated and they want service and information at the speed of life. Agility, responsiveness, flexibility and transparency were vital. Value for money also means different things now, he said.

He said that innovation was not about complexity, but about building one-on-one customer relationships. Get rid of bureaucracy, he urged, calling it "wasteful and evil". "It keeps you at a distance from your customer."

He said, "Use the recession to make the structural and strategic changes that are required. There is room to manouevre, you don't have to explain."

Financial success is about building and maintaining customer relationships one at a time, he said.

Brand value in these current times is about closing the promise gap and small acts of kindnesses that people will remember.

"Post-recession, what do you want your customers to remember?"

Yeoh Siew Hoon, one of Asia's most respected travel editors and commentators, writes a regular column on news, trends and issues in the hospitality industry for 4Hoteliers.com.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her other writings can be found at www.thetransitcafe.com

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