Across both markets, emotional connection now ranks as a top driver of brand desirability, ahead of traditional markers like craftsmanship, heritage and exclusivity. Consumers are buying to signal identity, not wealth.

Perhaps the most interesting finding for Palm, given the sectors we work in, is around experiences. Travel ranks as the top choice in both markets for how consumers would spend additional discretionary income, ahead of any luxury product category. The report is careful to point out this isn’t simply about holidays over handbags. It’s that people now attach luxury to moments that feel personal and hard to repeat, which is exactly the territory hospitality and food and drink brands already live in.

And then there’s discovery. Consumers are using AI tools, resale platforms, creators and peer networks to research, compare and validate products before they ever enter a boutique. The path to purchase is no longer something brands fully control, and for the hotels, restaurants and drinks brands we represent, that means visibility now depends as much on how a brand shows up in an AI-driven search as it does on a review in the press. Something that we are passionate about.

Our main takeaway is that none of this is really about luxury goods. It’s about how people decide what deserves their attention and their spend, and that applies just as much to an independent boutique hotel in the Cotswolds as it does to a global fashion house in Paris. Brands that build emotional connection, offer access that feels earned rather than manufactured, create memorable moments and show up where people are actually discovering things now will be the ones that grow.

Read the full McKinsey report.