The luxury travel market is growing and diversifying, with an increasing focus on experiential experiences, according to GlobalData, a leading data and analytics company.
According to the company’s latest report, ‘Tapping into the Luxury Travel Market’, the global number of guests staying in luxury hotels increased from 186.3 million in 2009 to 306.3 million in 2017 and is expected to reach 394.6 million in 2021.
It also reveals that upscale tourism is gradually changing, with travellers shifting from opulent to exclusive experiences.
Konstantina Boutsioukou, Associate Travel & Tourism Analyst at GlobalData, commented: “Whereas luxury travel was once associated with first-class transportation, five-star accommodation and Michelin-starred restaurants, changing consumer perceptions and priorities are redefining the concept of luxury in travel. A high appreciation of different cultures and a prioritisation of experiences over ownership of goods have resulted in travellers seeking deeper travel experiences.”
As the concept of luxury tourism changes, so is the target audience.
Shift in target audience
Millennials may not be the wealthiest generation and might not be considered a target demographic for luxury tourism. But while they may not be willing to spend much on upscale accommodation, they are willing to trade up on exclusive activities characterised by a more experiential element.
Nicole Quattro, Head of Sales and Marketing for Ilios Travel, agrees and has noted that millennials are starting to take over the luxury travel market.
She has seen a decrease in service and accommodation spending, and an exponential increase in spending on experiences. “It is clear to us that luxury travel is now, more than ever, experiential,” she says.
Ilios Travel’s research has revealed that, where baby boomers would favour being transferred to every sight or attraction as a standard of luxury, millennials are more inclined toward sustainability and a reduced footprint when travelling, and therefore enjoy walking or taking other forms of transport between sights.
Change in demographics
According to Boutsioukou, GlobalData has identified four key types of luxury travellers and categorises them as bleisure, time is money, special occasion, and ultra-luxury travellers.
“The first three categories attract interest from across the generations, particularly millennial consumers; the ultra-luxury category tends to be dominated by high-nett-worth individuals (HNWI) and ultra-high-nett-worth individuals (UHNWI) male baby boomers. However, the number of ‘ultra luxury’ female and millennial travellers continues to grow, representing a good opportunity for market growth,” says Boutsioukou.
According to GlobalData, a growing number of female HNWIs come from emerging nations in Asia. This group is particularly interested in travelling, presenting further opportunity for tour operators to capitalise on, especially in health and wellness tourism.
This was reiterated by Quattro, who cites the fact that the Chinese market has become the leading nation in outbound travel with almost seven million travellers annually.
“This growth in outbound tourism in China is due to the growth of the middle class and increase in their available disposable income. The interesting variable is that for Chinese millennials, having a guide who can speak their language is an aspect of luxury travel.”
Quattro says the luxury travel market is not as polarised as many believe. Luxury travel today can be classified by the reason for travel, the age group of the consumer, the type of luxury travel, as well as the varying perceptions and offerings based on the location.