Luxury Travel Market

Market Overview

The luxury travel industry has been growing at an unprecedented rate in the last few years on account of increasing spending power, growing middle-class population, debouching luxury trends, and expanding luxury hotels. Recently, Marriott International announced to expand its luxury footprint across Asia-Pacific by establishing nearly 100 new luxury hotels in the coming years. As recorded by UNWTO, international tourism arrivals grew by 7% in 2017, which are about 1,322 million arrivals.  In 2019, Virtuoso, Ltd registered a 12% growth in the total sales, which was over USD 23 billion, up from USD 12.5 billion in 2013. 

Market Dynamics

Rising Internet Access and Competitive Travel Packages to Drive the Market Growth

Rising internet access is subsequently driving online research in terms of luxury holiday planning. In line with this, the leading players are offering exclusive deals at competitive prices to gain a competitive edge. As per the Travel and Tourism Statistic, around 83% of people use the internet for luxury travel planning, whereas 40% of people prefer travel agencies for luxury travel planning.

As per the data published by Our World in Data Organization, the number of internet users increased from 413 million in 2000 to over 3.4 billion in 2016. The online marketing strategy and strong internet presence of travel agencies such as TripAdvisor, Zoover, and Black Tomato Group drive the market growth. For instance, in 2018, eDreams Odigeo, a leading European e-commerce travel company, attended to over 18.5 million customer's travel needs.

The luxury travel market's most prominent driver is the burgeoning spending power across the globe. As per the Investopedia, around 22.8 million people fall under the high net worth income category and contribute over 30% to the global annual spending on travel. Apart from this, shifting preference towards sustainable traveling drives the market growth.

Increasing Number of Solo Travelers Drive the Market Growth

Travelers around the world are exploring ways to de-stress and restore mental health. In line with this, cruise lines are offering wellness luxury travel packages with restorative spa experiences, healthy menu choices, onboard oxygen bars, and the latest fitness equipment. Experiential traveling and access to new destinations and places by cruise drive the luxury travel market. An increasing number of solo travelers and female-centered cruises provide an impetus to the market growth

Regional Analysis

Germany: An Ideal International Luxury Travel Destination

Europe's tourism market witnessed an 8% growth in 2017. Germany, France, and Spain are at the forefront of the regional luxury travel market due to its rich cultural heritage. Germany has been witnessing a significant hike in tourism from international and domestic traveler's, further driving the market growth. As stated by the Internationale Tourismus-Börse (ITB), around 3.6 million luxury travel trips are taken by the British. Germany is considered a cultural travel destination and a suitable destination for international trade fairs across the globe. The country also secures the top position as a destination for international luxury travel in Europe by the German National Tourist Board. South East Asian countries such as Thailand, Malaysia, Singapore, and Indonesia are countries showing great potential to drive the luxury market in the European region, as there were 2.1 million trips being generated by these main markets to Europe in 2016. The below info graph depicts the global international arrivals in 2030 estimated by the United Nations World Tourism Organization.

Luxury travel is booming in the Asia-Pacific region due to its rich cultural heritage and developed adventure activities. According to United Nations World Tourism Organization (UNWTO), Asia-Pacific is the world’s fastest-growing regional tourist destination since 2005. The number of international tourists arrivals grew by 6% in 2017 to reach 323 million, which is above the world average of 4%. Traditional Asian beach hotspots like Thailand, Bali and the Maldives are gaining traction than ever before owing to the strong presence of world-class hotels and the best of cuisine. Among the Asia-Pacific region, China has emerged as the growing market for luxury travel in recent years, and also a top spender in international tourism. The region witnessed a spur in business tours cause of strong industrialization and favorable FDI policies, further boosting the luxury travel market sector.

Wellness luxury travel is a significant factor in driving market growth in the Asian region. According to the Global Wellness Institute, Asia-Pacific is the fastest-growing wellness tourism market and is expected to double from 2017-2020, from USD 137 billion to USD 252 billion. In the midst of the growth, Asia-Pacific recorded over 250 million wellness trips annually, backed by changing lifestyle and spending behaviors.

Segmental Analysis

Millennial's Contribute to Over 20% of the International Tourists

By age group, the millennial (21–30) segment holds the largest market share. The millennial and generation X are reshaping the luxury travel industry due to social media influence. Around 72% of millennials prefer spending money on experiences than material objects and account for over 20% of all international tourists. Scott Dun, a leading luxury traveling company, has been witnessing significant growth in the last few years. 

Adventure & Safari Segment to Grow at an Exponential Rate in the Luxury Travel Market

The adventure and safari segment is projected to grow at an exponential rate during the forecast period on account of rising demand for nature-based holidays. The high-income travelers are inclining towards unique personalized vacations such as educational tours, adventure & safari, and cruise/ship expedition. As per Skift, a travel industry media company, the cruising sector experienced a 7% growth in 2018. Today, activities such as mountain climbing, jungle safaris, and sky diving are witnessing huge popularity among the traveler’s. As per the Adventure Travel Trade Association (ATTA), the adventure travel market was valued at USD 683 billion in 2018 and is projected to double in the coming years.