As the travel industry recovers, one more indication that luxury is a smart market for advisors to focus on.
A new report from Research Dive shows that the global Luxury Travel Market is expected to generate almost USD $1.37b in revenue with a compound annual growth rate (CAGR) of 8.8 per cent from 2021 to 2028.
The report says that this growth will be driven by technological advancements in the industry, such as increased convenience of booking, the ability to see all accommodation options and deals, as well as contactless payment.
COVID’s Impact
Research Dive does acknowledge the pandemic’s impact on even this highest segment of the travel marketplace, and notes that further waves or other international crises may dim luxury travel’s prospects.
Changes to travel overall - including travel restrictions, vaccination, testing and masking requirements - the report says that the luxury travel market faces other demands unique to its clientele.
For example, high-end guests are increasingly expecting changes to product that include contactless check-ins and check-outs as “travellers want to feel safe while travelling with emphasis on hygiene.”
In addition, guests may prefer to stay in private rooms in an “isolated environment” instead of more congregate settings or exploring. Research Dive notes that guests also prefer new methods of catering, such as a private chef and a butler for daily cleaning.
Biggest Growth Opportunity
The study notes that luxury travel’s cruise/ship expedition sub-segment is expected to grow at the fastest rate, generating a revenue of USD $115m by 2028, as reported by Caribbean News Digital. This is due to the “soft adventure experience” of expedition cruising, which allows travellers to explore places often inaccessible by land.
The same report also notes that Baby Boomers are expected to dominate the luxury travel market by 2028, as that group is able to travel for longer and has more flexible schedules as they continue to wind down full-time employment or retire. The report says that age group spent USD $180m in luxury travel just in 2020 - mid-pandemic.
At the top end of the luxury travel market, the ultra-premium “absolute luxury” sub-category accounted for around USD $253m in 2020, and is expected to generate the majority of luxury travel’s market share by 2028 due to its enhanced, high quality offerings for guests.
You can read the entire study here.
