We recently shared our latest luxury and hospitality macrotrend, Guilded Luxury, which examines the luxury and hospitality industry’s response to global uncertainty with the implementation of strategies to build long-lasting and enriching relationships with their most discerning clientele.
With geopolitical uncertainty seemingly around every corner and global economies still recoiling from the effects of the pandemic, conventional wisdom suggests that discretionary categories might bear the biggest brunt of the crisis, feeling the first effects and being the slowest to recover. But Bain & Co reports that the global luxury sector could recover to an estimated market value of £277bn ($338bn, €330bn) by the end of 2022 – growth of 10–15% over 2021. Looking further ahead, this could rise to £319bn ($389bn, €380bn) by 2025.
‘Even if the industry is emerging relatively unscathed from the pandemic and its immediate aftermath, it has certainly not surfaced unchanged,’ says Lavinia Fasano, foresight analyst at The Future Laboratory.
Guilded Luxury has emerged from the ashes of the pandemic fuelled by continuing uncertainty. it addresses a changing set of consumer expectations, needs and values which are to redefine the luxury category.
While in recent years, luxury brands have used aspirational positions to offer products in entry-level categories, lowering the barrier to entry and accepting some dilution of brand capital in exchange for keeping brands culturally relevant, economic pressures and an impending recession have led them to move away from this model in favour of removing discounts, or even increasing prices. According to Bloomberg, luxury house Chanel has raised the price of its small classic flap bag by 60% since 2019. This strategy re-emphasises the rarity of luxury brands and is designed to maintain their appeal among high-net-worth individuals, who make up a significant share of their Very Important Customers (VICs).
At the same time, the number of ultra-high-net-worth individuals has increased by 9.3% globally between 2020 and 2021, according to Knight Frank. But although they may have benefited from the pandemic economy, the lack of personal freedom and travel restrictions have created a new-found demand for sensory experiences. In recognition of this, brands will need to invest in money-can’t-buy and invitation-only VIC experiences to drive loyalty and customer sentiment, and encourage continued spending. We’ve noted this rise in more detail in the full report, but one example is travel agency The Luminaire, which is targeting ‘deeply curious’ travellers with bespoke experiences that immerse people in local cultures.
Just as the pandemic has led to a drive for exclusive experiences, it’s also responsible for a new crop of digitally native consumers. Buoyed by their success in the cryptocurrency market and from digital businesses created during the pandemic, they find themselves newly moneyed and keen to spend on new status symbols. Paired with this rise, heritage and new-age brands are responding with the launch of blockchain and non-fungible token (NFT)-enabled experiences, providing rarefied experiences for digital-first luxurians. One example is the Affable Hospitality Club, which lets VICs book one dinner each week through an NFT subscription that costs £823 ($1,000, €980).
Published by: 
20 September 2022
Author: Joe Portman
Image: Palm Heights Grand Cayman and Marrakshi Life
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Key thought-starters for luxury and hospitality brands and businesses:
Foster community engagement
As consumers participate in online communities centred around shared interests to gain exclusive access, brands and businesses should look at the role these communities can play for them, opening a valuable channel to enhance loyalty and strengthen relationships where engagement can be incentivised with exclusive access and perks. How can brands and businesses employ communities to create new opportunities for exclusive, money-can’t-buy brand experiences?
Double down on VICs
From products to experiences, consumers are seeking new status symbols, where being in the know and well connected count for more than a high price tag. As VICs expect elevated sensory experiences, how can brands and businesses develop bespoke and personalised touchpoints that build loyalty and sentiment?
Address digital native luxurians
As digital native luxurians redefine expectations of luxury, fuelled by NFTs and the blockchain, what role can brands play by integrating digital signifiers of wealth and status to drive engagement from a new set of luxury consumers?
Summary
With new consumers, new products and new ways to connect, the changes in the luxury and hospitality industries are clear to see. While economic pressures mean some customers are being squeezed financially, others are wealthier than ever. Brands will shape what happens next. Those that are successful will find ways to create memorable customer experiences, relationships and products.
Our team of strategists have developed a wide-ranging set of strategic decision-making tools to help provide future-first solutions for our clients. If you would like to discuss how our Redemptive Diets macrotrend could support future planning for your brand, or if you have any questions about embedding our macrotrends into your business, send us a message at hello@thefuturelaboratory.com. We look forward to accelerating into the future with you.
Strategic foresight is the most valuable tool you can adopt to identify and chart a course for future growth and long-term prosperity. Our strategic services employ this future-first approach.
