Premium Is Becoming Table Stakes for Travel. Now What?

0:23Alex Trusca: Welcome to the Skip Travel Podcast. I am Jeremy Kressmann with Skip. In today's special episode brought to you by ZS, we are digging into all things premium travel. Yes, that's right. Skift has been tracking the rise of the K-shaped economy in 2026. This is, of course, the phenomenon of high earners spending more on travel while everyone else pulls back. And the industry has been pivoting hard to serve this audience. Delta CEO Ed Bastian said earlier this year that 90 % of the airline's revenue is coming from this high earning, high spending segment. Meanwhile, while Skift's daily lodging report found that U.S.

0:57Alex Trusca: luxury hotel Red Par has been consistently growing by double digits in 2026. For any commercial leader thinking about a premium strategy, the question to solve right now isn't whether premium is working. It's figuring out how premium products and services are actually changing customer behavior. To get a better handle on this topic, we're joined today by Alex Truska. He is an associate principal at ZS Associates. ZS recently co-authored an article on Skift on the five types of travelers driving premium demand, And Skift is going to be featuring a conversation on stage with ZS about premium travel later this month.

1:30Alex Trusca: Let's talk about what is next for premium and travel. Alex, welcome so much to the Skift Travel Podcast. Great to have you here. Thank you for having me, Jeremy. Pleasure to be here. So, Alex, let's talk about your credentials really quick. You've written some pieces on this topic of premium. You know this topic really well. I know you work with a variety of travel brands, luxury hospitality companies, airlines like Air Canada, United Airlines. You've got a lot of knowledge to share. Let's start with this word premium. It strikes me as a bit of a Rorschach. Just like Inkblots, the premium topic means a lot of different things to different people, different audiences.

2:05Alex Trusca: When you talk to clients, how do you make this distinction between premium products and premium strategy? Is there a difference there? First of all, thanks for that introduction and thanks for raising the expectations of listeners now.

2:17Jeremy Kressmann: But to come to your question, it's a topic that we've done quite a bit of research and talked to a lot of our clients about over the last six to 12 months. You are right. There is a distinction and we make a purposeful distinction between a premiumization strategy and a premium product. A premium product is a requirement to a premiumization strategy, but it doesn't necessarily need to be a luxury product. That's the first starting point that I want to start. You don't need to have something that is, quote unquote, luxury or at the highest end of the spectrum in order to have a premiumization strategy.

2:52Jeremy Kressmann: A premiumization strategy simply requires the ability to get consumers to spend an extra amount for an elevated either product or service. So anyone can have a premiumization strategy as long as they have something more valuable to offer than their base product, whether it's a mid-scale hotel chain, whether it's a budget airline, or whether it's a luxury hotel brand, or United selling first-class tickets.

3:18Alex Trusca: Do you have an example of this that you've seen in the industry as you've worked with clients, Alex? Because I think this is such an interesting point. We think about premium and I merely think luxury yachts, having a butler in my room. But premium, as you've said, it's just about getting a consumer to incrementally spend a little bit more than they might have otherwise. So where have you seen this actually come to life in the industry?

3:40Jeremy Kressmann: It's a good point around luxury yachts and butlers. But to your point, it's much more than that. We have seen it come to life most recently, I'll give you a real example, at a hotel brand that has multiple chain scales. And they've implemented a program that offers in-stay upsell opportunities. So they provide either an in-room upgrade or they provide a late checkout for a particular set of customers at a small fee. And they've implemented this for just over a dozen of their properties as a test over the last six months. And they've seen an incremental$1 million in those six months in this pilot as they're testing this capability.

4:23Jeremy Kressmann: capability at, like I said, just a handful of their properties. And that shows the value of something they did not have before that customers, travelers are willing to pay for, for that elevated level of service or that elevated stay that they want to experience.

4:41Alex Trusca: Exactly. You're capturing this unmet demand and certainly it was just a pilot, but we're seeing an incremental$1 million from this pilot in a single property, a couple of properties. That really speaks to the opportunity here. Alex, I want to ask you about behavior shifts here, because when I think about people maybe spending more premiumization as an idea, this is more about people spending in premium ways than maybe like premium customers, so to speak. Is every travel brand chasing the same small group of consumers that really hasn't grown that much? or are we talking about this is every consumer and they could just be spending a little bit incrementally more?

5:21Alex Trusca: And when you answer, can you explain this Uber example that I think we've spoken about before?

5:25Jeremy Kressmann: Our position is that we believe that there is a very large subset of customers that can be engaged in this premiumization strategy for a brand. It's not a limited set and we can talk about the difference with that. What are luxury brands thinking of when they might have a smaller set of targets. But for the broader group of us, even when we did our joint article around the five personas around traveling, I see myself in two of those personas. I see myself in the multifaceted millennial parents and in the inelastic business traveler. I do both and I behave very differently in those and they spend very differently and what I am willing to spend for as an incremental amount to what I'm looking to buy is very different in those two situations.

6:15Jeremy Kressmann: But to your original question around how big is this subset of customers and does it change behavior, I think Uber and Lyft and the rideshare services provide a good example. There's data out there that shows that they've published that their premium rides are increasing their share in how much people are booking. So premium rides are an increasing amount of the revenue for both of the organizations. You can book an UberX, you can book an Uber Comfort, an Uber Priority, an Uber Electric, and all of these come with different price points. And depending on your situation, you are willing to pay for a priority for the same exact car just because it's going to get there a few minutes faster.

6:57Jeremy Kressmann: Or sometimes you just want a better car. So that's an example of a premiumization strategy that started earlier on in our industry that has shown proven results over the last few years.

7:08Alex Trusca: Yeah, it strikes me as a more sophisticated way of doing a segmentation, right? And I think you alluded to this five traveler, premium traveler personas article that Skift co-created with CS on this topic. Two of those personas were talking about some of the ways that this segmentation can actually occur. Alex, I have to ask you a question. We've talked a lot over the past decade, maybe two decades, about this idea of unbundling, right? We talked about a late checkout example that drove a million dollars in incremental revenue for this brand that you worked with. We both fly a lot, right? Am I correct in thinking that?

7:45Alex Trusca: I have watched airlines over the past 15 years start to charge me for things I used to be able to do for free. I'm 6 '5". I love getting those extra legroom seats. That now costs me$50 a pop. You don't have to pay for these things that used to be free. Think about this idea of premiumization and sort of segmenting the different products that you offer. How is this different from unbundling? Something the guests thought they already had and now we're saying, okay, we're going to charge you for this.

8:14Jeremy Kressmann: It is something that has happened in our industry over the last two decades. So that's a very good question. Premiumization has to be a situation where you're adding value, not unbundling something and then charging for something that you're already providing. I think that will not deliver the type of results and impact that everyone would like to see from pursuing this approach. So let's make this tangible when we say adding value. I think, you know, you said we both travel, we both fly a lot. We have preferred carriers that we fly with. But sometimes you're going to have to take a carrier you don't normally fly with.

8:48Jeremy Kressmann: You're going to have to take a flight that is not something that you would prefer to take, but you have to. and for that I just recently found myself in the situation that's why I'm bringing it up I booked a flight on on on the narrowly I don't normally fly I was zone eight that hurts and it was painful I had to check my bag it was not ideal when I would have booked I would have happily paid a little extra to be a particular zone and guarantee that I could put my bag up above above my head so that that's a small example of of something that it's it's an incremental value add to an inelastic business traveler that is willing to make that spend in that moment.

9:27Jeremy Kressmann: But I never had the opportunity to do so. Additionally, there's other examples that we can think of in hospitality. Early check-in is obviously one that comes up a lot, but it's not one that a lot of brands action. If a room is available earlier, you can go in and get it if you happen to be there. But what if you get a notification and you say, hey, you can come drop off your bag.

9:48Alex Trusca: And if you want your room earlier, we can make sure we reserve it for you at this

9:51Jeremy Kressmann: points earlier before the three o 'clock, four o 'clock check-in time. Or another one in hospitality, which I find myself, I get to hotels late sometimes, fly in late, get there late, haven't had dinner. What if there's a pop-up that says, Alice, would you like dinner in your room when you get here? Tell us the time, here's the menu, choose your items. Again, that is an extra value-added service. And another one, and I'm just giving out ideas now, again, selfishly for me, What if hotels offered to just press shirts overnight? No laundry, not the full laundry service that they offer, but an incremental smaller service that say, hey, if you want your shirt pressed, leave it outside your room to ask what time you want it ready for.

10:33Jeremy Kressmann: And it's going to be X amount of dollars. As an inelastic business traveler, again, going back to that persona, that would certainly be a business expense I'm willing to pay for after checking in light.

10:42Alex Trusca: Yeah. Yeah. And I mean, a lot of this, it gets into some of the dynamic personalization and understanding of customers that I think goes beyond the ability for us to talk today. But we have the digital tools, whether it's with AI or algorithms that enable this sort of dynamic segmentation that allows us to capture that demand. So I think this is a really smart way of looking at things. Alex, I want to ask you a demographic question. I don't know how old you are, but I know younger travelers are thinking more and more about premium. I often thought about my 20s, eating at Subway and not really having the means to do these things.

11:20Alex Trusca: But I do think this audience has an appetite for premium experiences and there's different segments there as well. I've heard the stat that something like$80 trillion of wealth will be transferring to younger consumers over the next two decades. They want premium travel experiences. If I'm a luxury travel brand, how should I be capturing this younger audience as I think about premium premiumization.

11:43Jeremy Kressmann: Luxury hospitality brands are thinking about this actively today. Given this wealth transfer that you mentioned, it's critical that they lock in preferences with this younger demographic earlier on, maybe before they are even the ones that are paying for those experiences. So today they might experience these luxury brands and the excursions and things like that on their parents' time. And that's okay. We all benefit from that if we're fortunate enough, but there will come a point where they will have to make that decision. So before that happens, luxury house talent brands are thinking about, all right, what is important to this new demographic?

12:20Jeremy Kressmann: Is it an iced matcha latte option at the pool? Is it the ability for them to customize their stay all on their phone or in a conversational view with an AI-based chatbot that they're so used to using or is it something else? And I think they're actively investigating and trying to do research as to what does the younger generation really care about it and make luxury truly feel like luxury. We've seen this shift to quiet luxury over the years and I think it's shifting even further now. So this is an important question around identifying what is important to this new generation. And then I think the other part is becoming part of their cultural ethos beyond On Just This Day.

13:03Jeremy Kressmann: Guilty pleasure for my wife and I is to watch Below Deck. A year ago, we were watching a new series start, and one of the new stewardesses introduces herself, and she says, oh, I'm a four seasons girl. Immediately, it stuck in a click. What must have happened? How is that brand ingrained in her definition of her identity? Something must have happened. They did something great to get that imprinted. So I go back to that, and I think about how can brands be part of the cultural ethos for this younger generation and identify what's important to them early on.

13:36Alex Trusca: Yeah. Again, this is a very wide ranging topic, but there's these cultural moments, whether it's bars or lobbies or entertainment opportunities for a hospitality brand where you can be part of that and ingrain yourself as a partner that works for that younger traveler

13:50Jeremy Kressmann: who may be premium spending in the future. Just to wrap things up, if we are talking to

13:56Alex Trusca: To commercial leaders, we have a lot of executives that listen to these podcasts, Alex. If someone is building their 2027 commercial plan in the next eight weeks, thinking about the end of the year, premium is part of that conversation. What is the question they should be asking themselves about premium investments that will help differentiate them as they try and capture more of the spend?

14:17Jeremy Kressmann: It's hard to just have one. We talk in our article about understanding and defining what premium means to you and and your customer said, segmenting who wants, what type of offering and service, personalizing it, as you mentioned, commercializing it. But if I was to boil it down to just one thing, Jeremy, I would ask every commercial leader listening if they are willing to commit to a premiumization strategy. And I think the commitment piece is important because this is not just a blip. We've seen this evolve over the last few years. This is not a fad. It's proven results for a lot of organizations already.

14:56Jeremy Kressmann: So what is the level of commitment that these leaders are willing to make to these premiumization strategies? Because that'll determine the scale of success and impact they'll have.

15:06Alex Trusca: I think that's a great place to leave things, Alex. Thank you for joining us today and make sure to join us on September the 23rd in New York. We'll have ZS and Air Canada talking on stage with myself about smarter premium strategies and travel.

15:19Jeremy Kressmann: Thank you again. Thank you for having me and see you in New York. Bye.