Post pandemic, in 2022, there was a huge desire and willingness for the wealthy to travel again – somehow making up for the almost 3 years of pandemic restrictions. However, demand has slowed down towards the end of last year and in 2023, demand has not yet picked up. For the summer 2023 season (May onwards), demand for luxury hospitality will be lower than the same period last year. Considering increasing operating costs and staffing shortages, rates will likely remain at the same levels of 2023.
Americans flocked to Italy (Rome, Capri, Amalfi Coast, Tuscany, Sicily) Spain (Barcelona), U.K (London), France (Paris), Netherlands (Amsterdam), Greece (Athens, Santorini, Mykonos) – occupancy reached staggering levels from June to October in 2022, with record rates at luxury hotels, in many cases, much higher than pre-pandemic levels.
Wealthy U.K. travellers have been arriving in record numbers in Italy (Rome, Capri, Amalfi Coast, Tuscany, Sardinia) Greece (mostly islands), Spain (Madrid, Barcelona, Mallorca), France (Paris, French Riviera) Turkey (Istanbul, Bodrum) and other beach resort destinations), Portugal (Lisbon, Algarve).
Vienna, Prague, Budapest, Athens, Berlin, Munich, Hamburg, Dublin are among the destinations which have seen a much more balanced and staged recovery post-pandemic, without particularly high rates. In most of these destinations, demand was mostly driven by wealthy travellers from other European countries. Switzerland has seen feeble demand in 2022 due to the lack of snow.
Travel constraints and an inhibition in spending for the luxury travel sector have been growing exponentially from November 2022, reaching a climax with January / February 2023. The rest of 2023 may be disrupted on various fronts.
Some of the destinations which are likely to see an increased demand for luxury in 2023: Italy, Spain, Singapore, Hong Kong, Oman, South Africa, Thailand, Japan, Australia, United States (select destinations). Luxury hospitality in several destinations will remain stagnant – Turkey, Morocco, Mexico, India, U.A.E., Portugal, Egypt,
- continuously worsening war in Ukraine – threats of a nuclear outburst are more vivid and realistic – no end in sight and a very long war is expected
- increased perception of lack of safety beyond just Central & Eastern Europe
- major economic hardships directly / indirectly generated by the war in Ukraine – huge rise in cost of living
- no return of the wealthy travellers from Asia, mainly China, Japan, South Korea – due to a mix issues including the pandemic, a rise in long-haul air fares to/from Europe; prices of luxury branded goods are only 10-15% higher than in Europe
- continued disruptions in travel with major staffing shortages at airports but also airlines – with unprecedented flight cancellations
- lower service standards at luxury hotels and resorts – the staffing shortage has not eased! it has been and continues to be ”mission impossible” to find qualified and motivated staff (all, while rates will remain the same or may even increase)
Oliver Petcu
Il San Pietro di Positano
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