Luxury travel spend hits $180bn
The size of the luxury travel market is estimated to be at three per cent of total international tourist arrivals worldwide, or 25 million, according to the ILTM Industry Report commissioned by International Luxury Travel Market.
Expenditure on luxury travel, excluding domestic trips, totals around $180 billion a year or $7,200 per arrival, however, this could in reality amount to around $20,000 per arrival as most international trips involve more than one destination.
The detailed report focuses on the demand side of the market – key traditional markets, as well as new emerging source countries. It is based on a combination of desk research, the findings of the 2007 survey of ILTM buyers, and more than 30 interviews conducted around the world from July to October.
ILTM commissioned this report from bgb research/global travel industry research expert Nancy Cockerell from August – October 2007.
Key points include:
• The high end of the market in most leading source countries has been growing at between 10-20 per cent per annum.
• Luxury travel is much less affected by the economic environment and market volatility, and so suffers fewer peaks and troughs in demand.
• Increased affluence, both in terms of the number of high net worth individuals (HNWIs) around the world and their accumulated wealth, has stimulated demand for luxury travel as it has for luxury goods.
• In line with the increasingly diverse definitions of ‘luxury’ and ‘luxury travel’, luxury travellers vary widely in their travel preferences and behaviour. The more traditional luxury travellers – often part of the ultra-HNWI wealth group – are generally not looking to flaunt their wealth, but seek a unique, authentic experience, with personalisation, privacy, spiritual well-being, and even simplicity, as their overarching goals. While there are many exceptions, luxury travellers in emerging markets, and even many nouveaux riches in traditional markets, are more prone to conspicuous consumption.
• Demographic changes have had a significant impact on luxury travel patterns and behaviour. “Baby Boomers” (those born between 1946 and 1965) are now the most important age group for luxury travel, but “Generation X-ers” (post 1965 to around 1980) are catching them up fast in some countries.
• The so-called “Millennials” (born from 1980 to 2000) are seen as the luxury travel market to watch over the next few years. They have higher expectations than their elders, as well as being more confident and better informed about travel – thanks largely to the internet.
• A group that appears to be growing strongly in terms of luxury travel, but which is difficult to identify, are unmarried or divorced and widowed men and women of all ages who travel with friends.
• Due to the ageing of the population in many countries, family travel has become increasingly popular – including multi-generational travel, with groups sometimes running into 15-20 members. The growing number of young wealthy individuals has resulted in a fall in the average age of luxury travellers.
The Mediterranean is still a firm favourite among Europeans and North Americans, and is attracting increasing attention from the leading Asian luxury markets and South Africans. Italy is the most popular for high-end travel, and is also the most popular European destination for luxury holiday travellers from Japan, China and the USA.
Although France’s Côte d’Azur remains a favourite for Europe’s jet set, there has been a shift away from France to Morocco and other more ‘exotic’ destinations. For long-haul travellers, the Far East/Southeast Asia and the Indian Ocean top the favourites’ rankings. Thailand, China, India, the Seychelles, the Maldives and Vietnam are the individual destinations most frequently cited.
Oman, Mauritius and South Africa – already popular for some markets – are rated as top luxury travel destinations of the future. Egypt and Dubai remain traditional favourites.
Among the most exotic holidays requested by clients are renting an island – Vabbinfaru in the Maldives can be rented for $50,000 a night, for example – and space travel. Virgin Galactic is already selling seats on SpaceShipTwo, scheduled to begin flights from the Mojave Desert to the fringe of space in 2009. Since February 2007, 200 people from 20 countries have agreed to pay $200,000 each for a seat on one of the first flights. And Space Adventures plans to launch the world’s first private lunar mission, at a cost of $100 million per passenger.