Luxury Travel: It is all about emotions
Shark diving, exclusive resorts, private island and jet rentals, yachts are some of the many luxury products that drive the luxury travel market. Today Luxury traveller is more affluent and seeks for the experiences that no else can afford to pay.
US, Europe and Japan drive this fastest growing segment in the tourism industry with the most affluent people living in these regions. The income of US citizens, Europeans and Japanese has shown a significant increase since 2000 and that reflects to the entire industry.
According to Capgemini/Merrill Lynch Global Wealth Report 2005 in 2004, 8.3 million people globally could be identified as High Net Worth Individuals (HNWIs), an increase of 7.3% over 2003. The increase in worldwide wealth is driven by increased GDP performance. Global GDP grew in 2003 at its fastest pace in over 20 years.
The
Luxury Institute, which tracks the behaviour of luxury consumers, in US reported in 2005 that luxury travel promises to be in high demand for 2005 and beyond. The number of millionaire households in the United States jumped 33% from 6.2 million in 2003 to 8.2 million in 2004. Further research shows that this group plans to spend more freely than ever before, thanks to their optimistic outlook on the economy. International travel is on the radar screen for 25% of this group for 2005, with Europe topping their list of intended destinations. About 15% indicated they plan to take a cruise.
Trends have changed and luxury travellers want to live experiences and not just to get pampered every day in a resort. Suppliers of luxury goods will not only have to stay ahead but to lead the way and hotel operators are adjusting their product to the today’s needs. There are numerous opportunities and challenges and the question is who is going to take the lead in a very lucrative market as luxury travel is.
The last decade the luxury travel market has seen a renewed interest with strong desire for different products and more experiences. The market in a level has managed to react with a variety of luxury travel options.
Baby Boomers generation which is almost near retirement has a great role to pay in the luxury business. Baby Boomers are about to inherit $3 trillion each year over the next ten years. This will be the biggest transfer of money in human history.
It is not the brand is where you travel
The previous decade the luxury market was dominated by purchasing expensive brand goods. Nowadays this trend has changed and is designated by where you go and what you do and not merely by what you own. Many of the today’s affluent consumers, especially in US, want to spend their money in making true their dreams.
The main preferences of luxury travellers - Luxury cruises, Experiential excursions, Luxury resorts/hotels/spas, Vacation home rentals and Yacht rentals - had significantly increased in numbers from 2004 to 2005.
According to MINTel in 2004 the total Luxury goods industry was worth an estimated $134 billion.
- The top 3% of all travelers in the world spend 20% of the total tourism expenditures.
- In 2004 8.3 million people globally could be identified as High Net Worth Individuals - HNWI- (with at least $1million in financial assets)
- In 2004, US and Canada had 2.7 million HNWIs with a total wealth of $ 9,3 trillion.
- For the US: A total of 11 million households represent 40% of all consumer income and a third of all spending in the US economy
- Family income growth in courtiers such as France, Italy and Germany has been more prominent amongst the middle and lower income brackets. However an increase in the number of middle-income household can contribute to a strong increase in demand for luxury goods.
- Japan is the third largest market for luxury goods and services
- Survey among affluent Americans mentioned that they take an average of six personal trips per year
- 82% of affluent American leisure travelers travel to Europe
- Whilst most affluent people are very Internet-savvy, relatively few wealthy travelers use the internet to book a holiday
- There is a large number of websites catering to the upscale travel market
Latest Trends in luxury travel:
- Partnerships between hotel developers and luxury (fashion) brands
- Changing consumer perception of luxury
- Changing demographics of the luxury traveller
- Increase in luxury cultural holidays
- Destination clubs
- Airlines refocusing on the luxury traveller
Popular Destinations:
Europe is the most popular destination for luxury travellers with Caribbean to come in the second place followed by Mexico and Australia. Parts of Africa and the Middle East (especially Dubai) are becoming important destinations for the luxury traveller too.
Future:
The future in the luxury travel seems bright as more people are in the position to spend their money in gaining memoirs. There is a big number of suppliers offering customized trips to their clients in many and unique places around the world. Furthermore, hotels and destinations are shifting policy to attract more luxury travellers. There will be many opportunities for tour operators and hotel chains to enter this lucrative segment but the bet is who will offer something unique. As Bill Fischer, of the Fischer Travel Enterprises said
“People have become smarter, the demands are higher and they know what they want. Clients come with long lists of what they would like to do during their trip.”
Michael Verikios
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Wednesday, July 19, 2006