Travel and wellness: how luxury is changing and who makes money from it

The luxury industry is changing, with more and more people abandoning luxury purchases in favor of experiences, travel and wellness, i.e. experiential luxury, writes Fortune. Alexander Pukhov found out how brands are adapting to the new reading of luxury - and how to capitalize on it.

"Luxury is dead, long live luxury" - these words begin the report "The New Luxury Code" from Assembly, a business consulting agency for brands. Using its AI, Assembly analyzed open data and surveyed over 3,000 affluent consumers with annual household incomes of $250,000 or more. The agency writes that millennials and Generation Z are at the forefront of redefining luxury, focusing on development, health and adventure rather than hoarding things.

"Luxury is no longer just about what you own," the report says. It matters where you've been, what you've done and what values you stand for.

Global luxury spending on hospitality, for example, is forecast to grow from $239 billion to $391 billion by 2028. The growth rate for wellness, travel and experiences will be double that for luxury goods, the study said.

Millennials and Generation Z, however, are in no hurry to give up expensive brands: searches for brands such as Loewe (part of LVMH), Miu Miu (Prada Group) and Jacquemus (whose shoes are worn by Miranda Priestly in "The Devil Wears Prada-2") among these age groups increased by 50%, according to Assembly.

70% of the Assembly study believe that luxury should look expensive, but the majority - 60% - are not willing to spend a lot on it.

For the first time since the Great Recession of 2008, the market for personal luxury fell, albeit by only one percent, but spending on Experiential Luxury experiences rose, according to the "True-Luxury Global Consumer Insights" report conducted by Boston Consulting Group (BCG) in conjunction with Altagamma.

The reason is that real luxury is once again becoming the domain of the wealthy public. BCG points out that because of macroeconomic instability, consumers with pretensions (i.e., those who spent no more than $5,000 a year on luxury goods) are no longer buying handbags and other visible symbols of wealth. Now 22% of them prefer to save money or invest, 13% continue to buy luxury goods, but already used, and the same number invest in wellness and self-care.

McKinsey data also supports this hypothesis: the most affluent buyers, that is, those who spend more than $70 thousand will account for 65% to 80% of growth in the luxury industry by 2027.

In the shift of consumption from objects to impressions, a large number of high quality fakes played a role - carrying a handbag worth several thousand dollars lost its meaning. As an example, one can recall the release by Walmart of copies of legendary Hermès Birkin handbags priced from $78, the original costs $25 thousand.

According to a study by BCG and Altagamma, hospitality and haute cuisine attract more than 80% of VIP clients with an average annual luxury spend of around €100,000.

Against the backdrop of a declining luxury market, groups such as LVMH and Kering are diversifying into high-end hospitality and travel.

LVHM last year invested in Orient Express, a brand that owns hotels, trains and yachts, and announced a "strategic partnership" with publicly traded French hospitality giant Accor SA, which acquired Orient Express in 2022.

In addition, LVMH-funded private equity firm L Catterton has raised $800 million in a financing round for Flexjet, the world's second-largest private jet rental company. This is how LVMH wants to capitalize on the growing demand for shared ownership of business jets from young ultra-wealthy passengers. Buying luxury in partnership is a new trend.

According to unnamed Financial Times sources, Flexjet is valued at about $4 billion in fundraising as the company seeks to expand its fleet in response to demand from tech and cryptocurrency entrepreneurs, the publication writes.

Kering has decided to expand its empire beyond the fashion system - it has acquired a majority stake in Singapore-based boutique cruise line Aqua Expeditions through its investment company Artemis. The move once again underscores the luxury giants' interest in the world of hospitality and travel.

"Over the last 40 years, this luxury goods industry has expanded significantly. Where once it was a small segment targeting a limited number of consumers, today it is a global industry with groups present in all markets," Delphine Dion, professor at Essec Business School, explains to El Pais. According to McKinsey, the unprecedented demand for luxury goods has allowed the sector to grow by 5% between 2019 and 2023.

But after the boom of recent decades, the luxury segment is going through a period that some experts call stabilization, others - regression, and the most pessimistic - even burst bubble, adds El Pais - last year this market lost 50 million customers.

Oninvest has already written about the problems of the main players in the industry. LVMH's core business - fashion apparel and leather goods - posted a sharp drop in quarterly sales, underscoring continued weak demand for luxury goods after a period of rampant price increases and heightened economic uncertainty. Organic sales of the division, which includes brands such as Dior and Louis Vuitton, fell 9% to €9 billion in the second quarter instead of the 6% expected on Wall Street. The year-on-year drop was steeper than analysts had forecast and was the sharpest decline of any LVMH unit.

The French holding company Kering has not had the best results either. It reported a sharp drop in sales of its flagship brand Gucci - by 25% in the second quarter, wrote Oninvest. Kering's total revenue fell 15%. In addition to weak demand for luxury goods, the market is also worried about the growing debt load: it is now more than four times the level of 2022. Gucci's revenue, which accounts for almost half of the group's sales, fell 25% year-on-year to €1.46 billion in the second quarter of 2025.

Gucci is one of the brands hardest hit by the downturn in demand for luxury goods.

Only a few companies managed to survive the downturn. In particular, as Oninvest wrote, Hermès reported revenue growth of 9% in the second quarter of 2025 (at constant exchange rates), beating analysts' expectations (8.9%).

According to Third Bridge analyst Yanmei Tang, Hermès' strategy of betting on exclusivity, craftsmanship and sustainable brand value rather than volume is particularly relevant as consumers become more selective and emotionally engaged, WWD points out.

Fashion house Prada also reported revenue growth in the first quarter, Oninvest points out. The company's Miu Miu brand, which is popular with the Zoomers, helps it avoid the recession that affected almost the entire luxury sector: it is still in high demand.

Bernstein estimates that sales in the luxury industry as a whole will remain flat in 2025 - which is unusual: the sector has traditionally grown twice as fast as the global economy. Analysts at UBS, which tracks Europe's leading luxury stocks, note that after two years of expecting a recovery, "investors are beginning to doubt the long-term structural attractiveness of the sector".

This article was AI-translated and verified by a human editor