The days of conspicuous consumption seem to be rapidly fading into the distant past, at least according to this Penn Fashion Week panel discussion titled, “Can Luxury Survive the Economy,” hosted by Wharton. The consensus there was that for high-end shoppers on Madison and Fifth Avenues in New York, the hottest must-have accessory for 2009 is not the crocodile cuff bracelet, the snakeskin clutch or the python leather purse — it’s the plain paper bag. This is in stark contrast to the time when people were ready to buy the cheapest item available from a high end brand, just to carry it out of the posh store in the logo bag. Now, any ostentatious purchase is considered suspect and openly flaunting wealth is out, as the New York-based Luxury Institute, reports  62% of wealthy consumers saying.

The travel industry is not immune to this development. Not only have corporations scaled down their spending for any kind of event that could even remotely been considered as lavish or extravagant but even what used to be considered essential gatherings are being canceled or downgraded. Las Vegas has become the poster child for non-appropriate, as considered to much of a fun, destination. De-luxe hotels and resorts are equally affected and many do seem to be hurt by the changed consumer and corporate behavior.

One striking difference between luxury goods and the high-end travel suppliers seems to be their readiness to discount. According to Wharton companies like Bottega Veneta, the Gucci subsidiary, and other luxury fashion design houses are firmly opposed to the efforts by department stores to put their products on sale. They are worried that once discounted their brands will suffer serious long term damage from which it is hard to recover.  The Maserati marketing director shares this concern and despite a 30% slide in first quarter sales, suggests that a better strategy is one that focuses on the product’s experience and value and is inspirational. The fact that the car is hand-built and they the customer really does need it.

Of course, this is not exactly the same situation as having a huge number of beds to fill every night or seats in a five-star restaurant but in the luxury segment in travel the same risks to long term brand damage exist and need to be taken into consideration before large scale discounting is considered as the main strategy in a downturn. As is the case for the luxury consumer brands, strong focus on almost flawless service delivery is a must to keep existing customers satisfied and as some restaurant do, staying in touch with regulars is another important element.

The larger question being asked, however, is whether this shift away from extravagance might be more permanent with all the consequences this will have on consumption. Here the travel industry should be in a better position than sellers of luxury consumer goods as getting together for a meal at a restaurant is a social event people will not want to do without for long and vacations have become more of an entitlement rather than an extravagance, which can’t exactly be said for a Maserati.