During the summer, Deauville in the north of France draws an eclectic mix of tourists. Americans and Canadians come to see the beaches of Normandy and the cemeteries of the World War II soldiers who fought to free Europe from the grip of the Nazis and died doing so. The English come across the channel in their cars and campers by ferry and tunnel, enjoying the rolling hills of the French countryside. Sheiks and princes from the Middle East descend in their private jets, bringing their horses to the famous racetrack. Parisians drive the two hours of highway and winding roads to escape the city heat and visit their version of the Hamptons. Others take a chance at the casino. The clay courts in front of the 5-star Le Normandy hotel are filled with vacationers dreaming they are playing in front of the crowds at Roland Garros.
Normally in February, there are no crowds, and the micro-systems of weather mean sunny skies are followed by gale force winds, driving rain, then the sun comes back out moments later. You get four seasons of weather in one hour, locals say. Last week the three luxury hotels of the Barriere group were unusually filled, packed with some 800 hoteliers, executives of destination management companies (DMCs) and high-end travel agents. They spent four days listening to luxury experts from other fields speaking about trends and then 10-hour days speed dating with 10-minute appointments to discuss which clients would be a fit for which resorts, seeing pictures of new suites, spas, and event space, and brainstorming about over the top experiences they might concoct when money is not an object. One DMC executive that specializes in the United States, said she is putting together a trip that will price out around $500,000 for the client of a travel agent. It was another sign that those in the media who for more than a decade wrongly wrote stories comparing the travel advisor profession to dinosaurs can now dine on a meal of sautéed crow.
This gathering of travel agents was for the annual conference of Traveller Made, a Paris-headquartered group of “travel designers” made up of 270 agencies with 949 designers spanning 55 countries. The group will hold its meeting here for the next two years after outgrowing its previous venue in Montreux, Switzerland. The conference center in Deauville can accommodate the group’s projected growth, expected to reach 500 agencies in the next couple years.
In total, the various agencies and their travel designers, who operate independently, generate just under $2 billion in annual sales. And while that’s not bad for an organization that launched less than four years ago, it still pales against other agency groups such as U.S.-based Travel Leaders and Travelsavers, which both claim over $20 billion in annual sales for their member agencies. Virtuoso, another U.S.-based group, estimates its member agencies sell $14 billion per year in travel. Yet the fact that a new consortium of agencies is bursting onto the scene shows that the travel agency distribution system, far from being on life support, is, in fact, a key source of customers, particularly in luxury travel, friends and family groups, destination weddings and even weekend getaways.
“The travel agent has become a very important source of business again. Nobody thought it would turn out this way,” said one hotelier who was attending the conference. Conventional wisdom was that booking travel could mainly be handled online, and giant online travel agencies, or OTAs in trade lingo, annually spend over $3 billion in marketing and advertising trying to persuade consumers to plan their own trips.
Many consumers who have tried booking online are now back using agents. Multiple studies show technology tied Millennials are the fastest growing segment of travel agency users, more than ready to turn over the time-consuming job of planning the perfect trip to experts. Increasing airline delays and overbooking, disruptions from strikes and storms and terrorism have caused more and more consumers to decide they need a professional to look after them when they are on the road, even if it is rebooking a canceled flight instead of waiting on hold or trying to tweet for help. In fact, Traveller Made gives an annual award to a designer for “Crisis Management.”
For Traveller Made’s founder and CEO Quentin Desurmont, the growth of his group reflects that newly minted Super Rich families around the globe who have made fortunes in the past 25 years were never a fit for Expedia or Travelocity. Traveling with extended families and in large groups, they often need multiple suites, even taking over entire hotels. Organizing these type of trips is more akin to planning a concert tour for the Rolling Stones than searching for best rates on Kayak.
Launched officially in September 2013, the agents, who in Traveller Made talk are referred to as travel designers, are focused on the over 200,000 families worldwide with a net worth of at least $30 million, a target market referred to as Ultra High Net Worth or UHNWs. Desurmont says this group of customers controls over $30 trillion in wealth, roughly equivalent to the combined GDP of the United States, China, and Japan.
“The trend in hospitality is (suppliers such as hotels) to go direct, but top customers need the support of their travel designer,” Desurmont told some 50 journalists from 20 countries who attended the conference, adding, “The Super Rich give us the keys to their house. They tell us their secret travel fantasies, what their families need, everything they want to do, and then we make those dreams come true.”
Traveller Made's growth, says Desurmont, is coming not from agencies that were previously with other networks, but new agencies from emerging markets in Southeast Asia, China, South Korea, Central Europe and places such as the Stans and South America, and even the U.S. and Western Europe.
While Airbnb may be thriving, Traveller Made is launching its own collection of luxury villas, chalets, and apartments, each of which will be pre-inspected to make sure they can accommodate the needs of wealthy travelers, be it security and when clients arrive, the place actually looks like it did in the pictures.
Desurmont apparently subscribes to F. Scott Fitzgerald’s saying, “The rich are different than you and me.” He says, “Ninety-five percent of these people don’t cruise. They rent yachts.” To capture more of that business, he recently signed a preferred agreement with a yacht broker, the first for Traveller Made.
The focus on the Super Rich means the profile of Traveller Made agencies is different than other groups, Desurmont says, proudly touting, “small is beautiful.” His largest agency does $40 million in sales. One agency purportedly only handles the travel of a single billionaire family, much the way the Super Rich have family offices to manage their investments.
Jack Bloch, CEO of JB’s World Travel Consultants in New York, describes member agencies as “more boutique, fewer clients, but wealthier, sophisticated. It’s all about personal service.”
And while technology has been a driver in the travel industry since American Airlines figured out how to computerize ticket reservations in the 1960s, nearly 80% of bookings by Traveller Made’s designers are by email or phone to hotels or DMCs, the companies that help plan that dinner for 50 at the foot of the pyramids or get you into the Louvre before it opens to the general public. Only 13% of bookings are done via computer systems, and hoteliers say even most of those are followed up with personal phone calls and emails to work through the details, be it what should be stocked in the bar or the client’s preferred type of flowers, what type of fresh fruit should be in the welcome basket, and making sure the view is of Central Park instead of the parking lot.
While their uber successful clientele may spend most of their waking hours plotting acquisitions and how to grow their businesses, always in control, Desurmont says it’s not unusual for customers to tell their designers, “Surprise me. I want something new.”
Desurmont says, 70-80% of clients fall into the UHNW category, and of those, 40% made their money either via owning companies, many of which they founded and sold, or finance, with 10% coming from the legal profession, 9.5% medical, 7.8% from show business, 7.5% from fashion, and 7.2% from sports. Only 11% inherited their money.
For his travel designers, their main focus is “elaborate itineraries,” which account for 45% of transactions, followed by 17% resort holidays, 11% family and small group events, 10% corporate events, 7% weekend getaways, 5% villas and chalets, with 4% boats and yachts.
The reasons the rich travel are varied. Desurmont says relaxation (29%) is the top reason, followed by culture (19%), adventure (17%), celebration (16%), spa and wellness (8%), gastronomy (7%), sports (4%) and medical tourism (1%), an areas he believes will see exponential growth.
The Traveller Made designers are particularly bullish on the future. Desurmont refers to the doubling of UHNWs in the past decade and the expectation of significant growth in the next decade. The rich are getting richer as we all know. Nearly 80% of designers expect 2017 to be a good year, a 33% uptick over last year. Even in Russia, where sanctions and a drop in oil prices have hit luxury spending, Desurmont says confidence increased by 50% compared to 2016.
Desurmont says the Super Rich often “start (using designers for) elaborated itineraries, then ask them to do more. When you do quality, you end up doing everything. All of a sudden, it’s, ‘Oh, can you do my board, my corporate travel.”
Next year the conference in Deauville is expected to attract over 1,000 attendees regardless of the less than desirable weather. Long live the dinosaurs!
