September 23, 2017
 
Luxury Travel

Luxury Travel: Market Outlook and Key Industry Trends. Luxury travel poised for growth; remains unscathed despite turbulent political climate.

In an exclusive two part write-up, we explore the future of luxury travel given that the global luxury market is poised for what industry leaders call ‘explosive growth’ due to the sudden spurt of growth in affluent high-net worth individuals (HNWI) seeking luxury bespoke trips.

Anju Anna Alex

By the year 2022, luxury travel is expected to emerge as the fastest growing segment in the travel industry worldwide. The bullish outlook and the amplified predisposition towards unique, exotic experiences have further intensified the competition in the luxury segment. The digital transformation will also continue to influence and shape our perception of luxury travel. A recent Bain & Co., study had forecasted that 2017 would be a promising year for the global luxury market. The report also cites that by 2025, Millennials and Generation Z will account for 45% of the global personal luxury goods market, highlighting the importance of understanding the millennial psyche and their fascination with luxury.
The mounting geopolitical tensions seem to have very less impact on the increasing demand for luxury. With the Indo-China stand-off seemingly remaining unaltered and with the US- North Korea peace talks coming to an apparent deadlock, one would have imagined an evident drop in international outbound figures. Surprisingly, as per international agencies, the alleged decline in tourist numbers, especially to these countries not only remains largely unsubstantiated but also has witnessed a growth approximating to a dynamic 4% with respect to worldwide outbound trips. Nevertheless, this does not negate the fact that the majority of travellers consider the political climate as a key factor while deciding their destination for travel. Luxury travel too, therefore, remains susceptible to security threats.

According to a report published by Allied Market Research, Luxury Travel Market - Global Opportunity Analysis and Industry Forecast, 2014-2022, the global luxury travel market is projected to reach $1,154 billion by 2022, growing at a CAGR of 6.4% during 2016-2022. The report also cites that, “The adventure and safari segment accounted for about 44% of the overall luxury travel market revenue, by tour type in 2015, as this is identified as the most popular vacation option among young and middle age group travelers.” The report also states that the key drivers of the rising luxury travel trend include people’s affinity towards unique and exotic holiday experiences, growth in the middle and upper class disposable income as well as related expenditure, and the ever increasing human desire to spend more time with family amidst their increasingly hectic lifestyles.

What is even more striking is the trend of increased demand for luxury travel and experiences being even more conspicuous in the emerging economies of China and India. It is pertinent to note that India’s population of “ultra-high-net-worths" is growing at an impressive rate, indicating the potential of the Indian luxury market. Strong market fundamentals have strewn optimism about demand for various travel niches including the luxury travel segment in India. According to Tanushree Joshi, Regional Sales and Marketing Manager – India, Sun Siyam Resorts, “The Indian luxury market is predicted to grow at a rate of 21% with luxury travel growing at approximately 15% in the next 5 years.” The Indian travel and hospitality industry, including the luxury segment, heaved a sigh of relief as the Supreme Court alleviated its verdict regarding the ban on the sale of alcohol within 500 meters of state and national highways. The Supreme Court’s blanket ban had raised many eyebrows among hoteliers and restaurateurs and shook the very foundation of the luxury and leisure industry. Following this, was the imposition of the GST which was a major sectoral reform. The Goods and Services Tax garnered a lot of mixed reactions from the industry professionals and at the outset, stood to face a lot of numerous teething issues which are eventually expected to dissipate with time.

This anticipated growth in luxury travel can be attributed to the burgeoning population of “ultra-high-net-worths" as well as the aspirational middle class consumers with large dispensable income. The conscientious consumer also finds it in his sensibilities, to have a certain predilection towards sustainable luxury and is characterized by the love for authentic as well as customized local experiences. There is also, more than ever before, the need for simplicity. Be it freshly sourced organic meals or eco-friendly toiletries, luxury seekers are asking for uber-personalization with an eco-friendly twist. The Indian consumer has started taking a certain penchant for exquisite spirits, exotic cheeses and even towards cruising as a holiday option. There is also an upswing in the number of private villa rentals thanks to the sense of exclusiveness that they offer. Villas of Distinction®, a premier luxury villa rental company, as part of World Travel Holdings, announced that the most sought after villa vacation destinations for 2017 based on industry insights were Italy, Hawaii, Jamaica, St. John, and Florida. The private jet travel market is trending positively as well alluding to the demand for premium experiences.

As per the Allied Market Research report, the Baby boomers segment is anticipated to hold the highest market share in the overall luxury travel market, by age group, as they have been identified as the highest travel spenders. Amit Kalsi, Founder & CEO, Experiential Travel Journeys Pvt. Ltd. says, “The true UHNIs are Baby Boomers. Other generations by age constitute HNIs and affluent classes. Indian Economy and exposure is growing, so Indian Luxury Market in all segments including Travel is growing and will continue to grow. It’s difficult to put a growth percentage to it since there is no organised research backing this claim. But anyone in this segment will know that it is growing and will continue to grow. I feel that Luxury Travel exists in all generation categories but in various forms, shapes, sizes and bundles. But in order to shortlist a generation, it’s majorly Baby Boomers and Generation X is the true seekers of Experiential Luxury wherein they are more evolved and matured in their choices and definition of Luxury. It’s related to their age, travel history and experiences, changing and evolving mindsets over the years etc.” When probed about who are the main enthusiasts of luxury travel- Baby boomers, Millennials or Gen X; Tanushree states that “I may beg to differ in the categorisation of Luxury Travel. I would rather place them in different brackets especially for island destinations like Maldives as: The Experientialist, The Traditionalist, The Dreamer, and The Opportunist.”

The buzzword of the industry has shifted from MICE to MICE+ luxury. But when corporate entities are trying to work on lean budgets, incorporating the nuances of luxury into corporate travel may not seem like a very bright idea. Despite this, tourism authorities around the world have ramped up promotional campaigns across India, to attract a greater share of the growing MICE with luxury market segment. When asked about the feasibility of integrating both for the busy Indian business travellers, Tanushree says, “MICE + Luxury is a very different ball game specially from India. It means mixing traditional luxury with today’s MICE requirements and presenting the corporate with a concept instead of a typical MICE itinerary. I believe that MICE players across India are now offering different experiences to the business travellers and we have customised MICE itineraries with travel partners to cater to the corporate and their brand vision, for example: local Island experience, mind and soul rejuvenation yoga for the top management at The Sun Siyam Iru Fushi, culinary experiences are a few of the experiences we work towards for our MICE groups. Mainly such MICE are looking for out of the ordinary experience that brings about team building.”

Citing a few examples of the top selling packages in this segment, Amit says, “Going off-the-grid is essentially seeking new destinations and unique experiences and yes demand is growing and Indians are travelling everywhere and experimenting everything. But there is nothing like top selling packages in this category. It’s all very scattered and no one can claim what’s trending since its personal preference and choice. Also in this segment we do not follow trends, we create trends since it’s all about what’s new, exiting, off-beat, unique, exclusive and authentic.”
Amit is of the opinion that luxury travel is all about inspiring ideas and innovation. Anything which is top selling becomes standardised and a mass appeal product which tends to lose its uniqueness and authenticity. He explains that “From Polar regions (Arctic/Antarctica) to Safari regions in Africa like Botswana, Namibia, Zambia, Rwanda etc. (beyond traditional East & South Africa), South America (Chile, Bolivia,Columbia, Peru), Central/Latin America (Costa Rica, Panama) Indo China (Indonesia (beyond Bali), China (beyond Beijing, Xian, Shanghai), Laos, Taiwan, Vietnam, Japan, South Korea, Philippines (beyond Manila, Cebu & Boracay) etc. Experiences like Culinary, Adventure (diving, skiing, surfing, active sports etc.), Wellness, Equestrian Holidays, Cycle tours, mobile camping, river cruising, Private Yachts, Wildlife like polar bears, orcas, sardines, lemurs, meerkats, orangutans, chimpanzees (beyond traditional Big 5 Safari) etc.”....(contd.)

Read Part 2- https://www.voyagersworld.in/article/luxury-travel-rides-opulent-wave-part2

Image Credits: Sun Siyam Resorts, Maldives

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