The global luxury travel market is expected to witness significant growth over the forecast period, owing to increasing number of travelers worldwide. According to the World Travel and Tourism Council, the worldwide investment on luxury travel and tourism was US$ 4,233.3 billion in 2017, which is estimated to reach US$ 6,605.3 billion by 2028.
Future in emerging economies
A recent research on Luxury Travel Market by Coherent Market Insights revealed valuable information about the future of the market. The report says that increasing disposable income, especially in emerging economies, is a major driver for growth of the luxury travel market during the forecast period. According to the Organization for Economic Cooperation and Development, the global middle class populace is projected to increase from 1.8 billion in 2009 to 4.9 billion by 2030. For instance, disposable income in China increased to US$ 5,278.3 in 2017 from US$ 3562.2 in 2012. Moreover, consumer spending in India increased to US$ 270.48 billion in 2018, from US$ 63.67 billion in 2004. Similarly, consumer spending in the U.S. increased from US$ 11,971.9 billion in 2015 to US$ 12,847.82 billion in 2018.
Furthermore, increasing adoption of digital technology is also expected to boost growth of the market. Increasing use of internet and high presence on people on social media platforms also aids in the market growth. Players in the market are focused on capitalizing the social media presence to expand their consumer base and to strengthen consumer relation. Use of internet allows comparing brands and offers several choices. Moreover, the influence of user-generated travel content is more influential over conventional advertising. The appeal for travel storytelling has rapidly increased, owing to platforms such as Instagram and various blogging sites.
Increasing use of internet and social platforms
Therefore, increasing use of internet and social platforms is expected to contribute to growth of the luxury travel market during the forecast period. For instance, according to the India Brand Equity Foundation (IBEF), India’s internet economy was valued at US$ 125 billion in 2017, and is expected to increase to US$ 250 billion by 2020. Moreover, according to the International Trade Administration, China has the world’s largest e-commerce market and is projected to reach US$ 1.6 trillion by 2019. Over 40% of the total global e-commerce spending comes from China.
The global luxury travel market was valued at US$ 201.07 billion in 2017, and is expected to register a CAGR of 6.7% in terms of revenue, over the forecast period (2018 – 2026), to reach US$ 353.16 billion by 2026.
North America held a dominant position
North America held a dominant position in the luxury travel market in 2017, owing to increasing number of millionaires in the region. For instance, according to the OECD (Organization for Economic Cooperation and Development) statistics, US constituted a share of 65.86% among the share of the top 5% of wealth which increased and reached 68.05% in 2016.
Among age group, baby boomers segment held dominant position in luxury travel market in 2017, and the millennials segment is expected to record a significant growth during the forecast period. For instance, the older millennials (aging 25-35) are currently entering in their peak earning years and earning more affluence at unprecedented rates. Therefore, increasing preference of baby boomers and millennials for luxury travel is expected to boost growth of the market.
Millennials are expected to overtake
Moreover, millennials are expected to surpass baby boomers as the largest living adult generation in the U.S. According to population projections from the U.S. Census Bureau, on 1st July, 2016 (the latest date for which population estimates are available), millennials (aged between 20 to 35 years), recorded 71 million and baby boomers (aged between 52 to 70 years) recorded 74 million. In 2019, millennials are expected to overtake baby boomers in population as their numbers are expected to increase and reach 73 million and baby boomers are expected to decline to 72 million. Moreover, generation X (ages 36 to 51 in 2016) is projected to surpass the baby boomers in population by 2028.
Adventure & safari
Among category, adventure & safari segment is expected to hold dominant position in the market during the forecast period, owing to latest trends in adventure luxury travel such as the Virtuoso Active and Specialty Travel (VAST) program, which are international luxury travel networks. Such agencies offer top luxury adventure packages in places including Iceland, Costa Rica, New Zealand, Peru, Cuba, Antarctica, Arctic/North Pole, South Africa, Australia, and others.
Space luxury hotel
Luxurious travel including space tourist flight and space luxury hotel are expected to be launched by 2019 and 2021 respectively. In 2018, a Houston-based company, Orion Span announced plans to offer a zero gravity living in compact Aurora Station at 35ft-by-14ft, where its interior will be comparable to that of a Gulfstream jet and it is projected to accommodate four travelers and two crew members for 12-day stays, 200 miles above the Earth. Furthermore, guests will be charged US$ 9.5 Million each for a night, with a refundable deposit of around US$ 80,000.
Major players operating in the global luxury travel market include, Abercrombie & Kent USA, Absolute Travel, Inspiring Travel Company, TCS World Travel, TÜ ELITE, Cox & Kings Ltd., Travcoa, Micato Safaris, Scott Dunn Ltd., Kensington Tours Ltd., Butterfield & Robinson Inc. and others.