Luxury travel is booming according to new research launched at the International Luxury Travel Market in Cannes. In most countries across the world luxury travel is one of the best performing sectors of the travel business with many countries currently enjoying between 10 and 20 per cent annual growth…
Luxury travel is booming according to new research launched at the International Luxury Travel Market in Cannes. In most countries across the world luxury travel is one of the best performing sectors of the travel business with many countries currently enjoying between 10 and 20 per cent annual growth.
The global luxury travel business now comprises an estimated 25 million annual arrivals (3% of total international arrivals) accounting for 25% of international tourism spend – at least US$180 million. On average, spend per trip is estimated at between US$10,000 – 20,000.
The UK has shown the greatest growth over the past decade and Russia, Italy and Spain are expected to be the fastest growing luxury travel markets in Europe in 2007. From the emerging markets China and India will continue to show double digit growth.
The luxury travel boom is being fuelled by the increase in High Net Worth Individuals (HNWI) – those with at least US$1million in net financial assets – and also by the growth in their individual wealth. The number of HNWI grew by 8.3 % in 2006 and their individual wealth grew by 11.4%.* Wealth is concentrating to an even greater extent amongst Ultra High Net Worth Individuals (Ultra HNWI) – those with financial assets worth at least US $30 million – whose number increased by 11.3 per cent in 2006 with their assets growing by 16.8 per cent.
Privacy appears to be top of the agenda amongst this affluent group with private air travel increasingly being perceived as a “necessary luxury”. NetJets claims 40 per cent annual growth and the broker Marquis Jet has doubled its business every year for the past three years. Just one small airport in the UK, Farnborough, recorded a 26 per cent increase in flights in the first quarter of 2007.
Private islands, luxury yachts and exclusive use of hotels or private houses are also highly sought after. In addition, the research reveals that these people are looking for spiritual well-being and unique, authentic experiences. Philanthropic travel and an increased demand for learning were also highlighted as being much in demand. In the mature markets of the USA and Europe there is a move away from conspicuous consumption to a more “low-key” luxury.
There is increasing awareness of climate change amongst this group but luxury travellers have, to date, done less than their less affluent compatriots to adjust their travel habits or offset their personal footprint in any way.
The research reveals that so far, so called “green” initiatives are primarily driven by suppliers and that there is a patent need for improved engagement between the customer and travel supplier.
The Mediterranean was firmly back in vogue this year (two thirds of ILTM Buyers said it was one of their best selling regions for 2006/07) with Italy being named the top destination for luxury travellers across the world in 2007.
Best sellers for 2007/08 were identified as:
- Far East/South East Asia
- India/Indian Ocean
- Mediterranean Europe
- Caribbean/Latin America
- Australia/South Pacific
Baby Boomers (those born between 1946 and 1965) are now the most important age group (in terms of volume and spend) for the luxury travel market but are quickly expected to be overtaken by Generation X (born between 1966 and 1979).
It is Generation X that is driving the significant growth in multi-generational travel. The Trend Setting Millennials (born from 1980 onwards) have much higher expectations and are more confident and better informed than their elders.
Brad Monaghan, Marketing Manager at ILTM comments: “The luxury travel industry is extremely buoyant with businesses across the world reporting strong growth. Our research shows the strength of the mature markets and the potential of the emerging markets. As with most business sectors, our industry’s greatest challenge is how to encourage further debate and initiatives on climate change.”
“ILTM is primarily a place to do business but is also a forum for debate amongst the major players in the luxury travel business. This first luxury travel industry report was commissioned to give our industry a global overview and insight into the size, growth, trends and issues affecting our business.”
The research is based on ILTM Buyers survey plus individual interviews conducted with key industry figures around the world. For more information on ILTM please visit www.iltm.net. The research has been provided to all delegates at ILTM and is available to all participants of ILTM.
* World Wealth Report (Merrill Lynch and Capgemini)
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
