Luxury travel trends and tips for high-net-worth families

Family finances

Experiential travel is a growing trend for high-net-worth families. Learn how to create a financial plan that meets your family’s needs.


When Angie O’Leary and her husband traveled with a small group of friends to Greece and Turkey on an educational tour, their trip represented part of a growing trend for experiential travel.

“The trend we’re seeing today is for travel to be about an experience, an opportunity to grow as a person and an opportunity to give to others,” says O’Leary, head of Wealth Planning at RBC Wealth Management-U.S. “Our family, our clients and our advisors are finding the kind of vacation where you sit on a lounge chair under an umbrella less appealing.”

Today, high-net-worth families are increasingly opting for unique vacations such as educational travel, expedition tours, adventure travel and personalized trips to share and experience with extended family. According to Skift, a travel industry media company, the luxury hotel property sector experienced five percent growth in 2018, while luxury cruising grew by seven percent.

Adventure travel alone is a US$683 billion market, according to the Adventure Travel Trade Association. And while adventure travelers can choose from activities like mountain climbing or an exploration of Antarctica, the fastest growing types of such travel include family-friendly activities, classes and workshops, wellness experiences and cultural experiences, according to TripAdvisor’s 2019 Experiential Travel Trends report.

Jets for the jet-set

While flying off on vacation on a private jet was once the exclusive privilege of the superrich, more high-net-worth and ultra-high-net-worth families now use “jet cards” for access to private planes, says Liz Jacovino, a wealth strategist for RBC Wealth Management.

“Many of our clients ask us to budget $100,000 to $250,000 for a jet card that provides them with a specific number of hours on a certain size plane,” says Jacovino. “For example, if the family has five people, you purchase a card for 30 flight hours for a six-person plane.”

Typically, says Jacovino, families use the jet cards for less commercially accessible locations such as ski resorts or islands that would require several connecting flights to visit.

“They’re paying for the convenience, so they spend less time in layovers and more time enjoying the experience,” says Jacovino, adding that clients who actually own a plane need a substantially larger budget to cover upkeep, fuel costs and hanger fees.

Paying for pleasurable travel

Travel is a constant for most wealthy families, says Jacovino, but the annual amount spent varies because some years a family might plan for a special trip or pay for more extended family members, while other years might be more low-key. Travel is usually the third item of importance on a financial plan after daily living expenses and health care needs, according to Jacovino.

“Generally, the annual travel budget for clients is between $100,000 and $250,000,” she says.

While inflation of 2.5 to three percent is factored into anticipated regular expenses for planning, says Jacovino, inflation for luxury items, including travel, is estimated at six percent.

The amount to budget for travel depends on individual appetites and life phases. For example, O’Leary says, more money is usually allocated for travel during the “go-go” phase of early retirement.

“We usually budget five to 10 percent of all spending on travel, but sometimes we go up to 20 percent if the clients have the travel bug,” says O’Leary.

But depending on the source of income, sometimes cash flow isn’t consistent with vacation planning. For example, people who receive most of their income in the form of quarterly commissions or a year-end bonus may want to look at several options to pay for their travel instead of putting it on a credit card, says Fred Rose, head of credit and liquidity solutions for RBC Wealth Management.

“To bridge a three-to-six-month gap, you can pledge your assets for a line of credit, make interest-only payments and then pay it in full when your cash arrives, such as when your bonus comes in or you get a distribution from your business,” Rose says. “Typically, you can borrow 50 to 80 percent of your portfolio with a line of credit.”

However, Rose says, he recommends keeping your total borrowing against your portfolio to under half – usually 25 to 40 percent – of what you could borrow.

“As always, you should discuss the appropriate borrowing levels with your financial advisor,” he says.

Another option, Rose says, could be a home equity line of credit that you can repay in full when your cash flow improves.

“I don’t recommend anything that doesn’t give you flexibility,” Rose says. “You don’t want to borrow $12,000 and have to make $1,000 mandatory monthly payments when you could be paying as little as $50 interest-only per month on a line of credit. The interest rates are important for anything you borrow, but you also need to pay attention to your flexibility.”

Managing expectations

Ultimately, even high-net-worth families don’t have unlimited time or money for travel, which could make it important for families to be realistic about their vacation or travel plans each year. Rose suggests people who want to treat their extended family to vacations take an every-other-year approach.”It’s important to manage expectations so people don’t assume that each trip will be bigger and better than the last,” he says. “Maybe you go all-out one year and then do a simpler, less costly option, such as renting a mountain cabin for a week the following year.”

RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.

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