Global Luxury Travel Market – Insights
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.
Moreover, 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 to compare 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.
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.
Figure 1. Global Luxury Travel Market Share, By Region, 2017
Source: Coherent Market Insights, 2017-18
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.
Figure 2. Global Luxury Travel Market Share, By Age Group, 2017
Source: Coherent Market Insights, 2017-18
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.
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.
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.
Luxury travel includes an enhancing experience with a combination of most desirable destinations, luxurious and serene accommodations, convenient commute, and a royal traveling experience. Luxury travel can be categorized into adventure & safari, cruise, rail journey, culinary travelling & shopping, customized & private vacations, and celebration.
Among age group, baby boomers segment held dominant position in the market in 2017, followed by millennials and generation X segments, owing to increasing disposable income in the age group. These generations have a continuous source of income as the number of working individuals is continuously increasing. According to the Regional Human Development Report of the United Nations Development Program (UNDP) published in 2016, in 2015, the working-age population was recorded as 0.86 Billion (considering people aged between 15 and 64 years) in India, and will grow to over a billion by 2050.
Increasing adoption of digital media has simplified the processes related to the luxury travel industry. For instance, bookings can be confirmed via online applications or websites and payments can be made through credit cards, debit cards or any other online mode of payment. Social media platforms are useful for the customers as well as for the vendors. Travelers as well as the vendors constantly keep themselves updated with the latest trends related to the luxury traveling. This is attributed to increasing use of internet, smartphones, laptops, and tablets. For instance, the revenue generated by Huawei in 2016 was US$ 79,969 Million and it increased and reached US$ 92,549 Million in 2017.
Key features of the study:
“*” marked represents similar segmentation in other categories in the respective section.
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