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

The luxury industry is changing, with more and more people eschewing luxury purchases in favor of experiences, travel and wellness, i.e. experiential luxury, writes Fortune. Alexander Pukhov finds out how brands are adapting to a 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 more than 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 report  "True-Luxury Global Consumer Insights" 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. 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, though already used, and the same number invest in wellness and self-care;

Data from McKinsey also supports this hypothesis: the most affluent buyers, i.e. those who spend more than $70k, will account for 65% to 80% of growth in the luxury industry by 2027. 

In the shift of consumption from objects to impressions has played a role in the entry into the market of a large number of high-quality fakes - carrying a handbag worth several thousand dollars has lost its meaning.  As an example, one can recall

The market for truly luxurious experiences, however, is also the domain of the ultra-wealthy,  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 the Orient Express brand, which 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, wrote the publication.

Kering 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 interest of the luxury giants in the world of hospitality and travel.

"This luxury goods industry has expanded significantly over the past 40 years. 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," explains El Pais Delphine Dion, a professor at Essec Business School. 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 the last decades, the luxury segment is going through a period that some experts call stabilization, others - regression, and the most pessimistic - even the bursting of the bubble, adds El Pais - last year this market lost 50 million customers.

Oninvest has already written about the problems at major industry players. LVMH's core fashion apparel and leather goods business showed 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 at 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 Gucci brand - down 25% in the second quarter, wrote Oninvest. Kering's overall 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 2022 level. 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 written by Oninvest, 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 at a time when consumers are becoming more selective and emotionally engaged, points out WWD. 

Модный дом Prada также отчитался о росте выручки в первом квартале,

According to an estimate by Bernstein, 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: after two years of expecting a recovery, "investors are beginning to question the long-term structural attractiveness of the sector."  

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