The global luxury travel market is estimated to be valued at $1,369,120.7 million by 2028, surging from $461,741.6 million in 2020 at a noteworthy CAGR of 8.8%.
Impact Analysis of COVID-19 on the Luxury Travel Market
The global market for luxury travel is estimated to experience a negative impact amid the COVID-19 pandemic. The growth declined amidst the pandemic owing to cancellation of domestic and international flights due to unprecedented lockdown imposed across several countries, shutdown of hotels and travel destinations, and ban on social gatherings. The social distancing measures, self-or mandatory quarantine, stay at home initiative, and work from home facilities have created a pressure on luxury travel industry that resulted in huge revenue losses. All the travel related sectors such as retail, shopping, hotels, lodging, catering, and entertainment were closed which led to a decline in demand for travel to curb the spread of the COVID-19 virus. In addition, many hotels including the 5-star hotels have turned into quarantine centers. Also, the operating cost of hotels, airlines have increased due to increase in social distancing norms, sanitization and hygiene related expenses. All these factors have negatively affected the luxury travel market during the pandemic.
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Various government initiatives and technological advancements to build more resilient tourism economy will support the luxury travel companies amidst the pandemic. As stated on December 14, 2020, in the Organization for Economic Co-operation and Development (OECD), various initiatives are launched to rebuild the tourism industry and to make it more sustainable. Some of these initiatives include restoring the traveler’s confidence, supporting tourism business to survive and adapt to the changes, promoting domestic tourism & providing safe return of international tourism, extending co-operation within and between the countries, providing clear information to the travelers and business, and various others. In Hong Kong, the government has announced cash subsidies ranging from HK$20,000 to HK$200,000 to all the licensed travel agents from the tourism sector. All such initiatives are estimated to create lucrative investment opportunities in the luxury travel market in the upcoming years.
Global Luxury Travel Market Analysis
The enormous growth of the global luxury travel market expected in the forecast years is mainly attributed to growing popularity of social media and inclination towards exotic holidays to refresh body, mind, and soul. Luxury travel has gained huge popularity in recent years as it offers luxurious accommodation, safe travel, convenient transport facilities, and authentic travel experience. In addition, business class travel, or private jet planes, special menus, spas, private yacht, and private island rentals are some of the top attractions of luxury travel. More and more people want to unplug from their daily routines and experience new things which has increased the popularity of luxury travel. Furthermore, the growing popularity of social media platforms that help people in finding the best travel destination by interacting with people who have already visited that place and by checking the reviews is estimated to drive the market growth. Also, the demand for cruise/ship expedition, adventure travel, safari, and celebration have increased rapidly which is anticipated to create a positive impact on the luxury travel market growth during the forecast period.
The socio-economic factors, along with natural parameters such as outbreak of COVID-19, have led to major financial disruptions and decline in demand for travel as people prefer staying at home to avoid getting infected by COVID-19 virus. This is a major factor estimated to hamper the market growth during the forecast period.
The technological advancements and latest trends are estimated to generate huge opportunities in the global luxury travel market during the forecast period. Some of the newest trends include voice search & voice control feature offered by smart speakers powered by Artificial Intelligence (AI) and contactless payments in case when travelers don’t have access to their cash or cards. The advancements in Virtual Reality (VR) also are predicted to help the tourist to gain virtual experience or tour of the restaurants, hotels, landmarks, specific events, and others. Also, the use of Internet of Things (IoT), in hotel rooms to provide the visitors with a device that is connected to everything right from lights, air conditioners, luggage cases, and others are estimated to drive huge growth opportunities in the global luxury travel market during the forecast period.
Global Luxury Travel Market, Segmentation
The global luxury travel market is segmented based on tour type, age group, traveler type, and region.
Tour Type:
The tour type segment is further classified into customized and private, adventure and safari, cruise/ship expedition, small group journey, celebration and special events, and culinary travel and shopping. Among these, adventure and safari sub-type is anticipated to have dominant market share and surpass $543,892.0 million by 2028, growing from $189,843.8 million in 2020. The adventure travel includes various activities such as cycling, rafting, camping, kayaking, rock climbing, and others that helps in refreshing your mood and strengthening your immune system. The adventure and safari tours help in reducing the stress by spending more time in environment, nature can rejuvenate your soul, to experience awe-inspiring scenery with natural habitat. Also, there are plenty of stunning photographic opportunities with people, wild animals, and different places which is estimated to create a positive impact on tour type sub-segment of the luxury travel market in the upcoming years.
Age Group:
The age group sub-segment is further classified into millennial, generation X, baby boomer, and silver hair. Among these, the baby boomer sub-segment is estimated to generate a revenue of $517,801.8 million during the forecast period. Baby boomers refer to the people born between 1946 and 1964. The people from this age group consist of the population that is in the retirement stage hence they have greater flexibility with the travelling plans and they can go on a long holiday. Along with time, they also have a budget to travel that enables them to spend more on their trips which is estimated to drive the demand for age group sub-segment of global luxury travel market in the upcoming years.
Traveler Type:
The traveler type segment is divided into absolute luxury, aspiring luxury, and accessible luxury. Among these, the absolute luxury sub-segment is anticipated to have dominant market share and surpass $757,089.2 by 2028, growing from $253,468.1 million in 2020. The absolute luxury sub-segment offers various benefits that includes priority check-in, lounge access, fine food, on board service, enhanced entertainment features and many more which is anticipated to create a positive impact on the traveler type sub-segment of the luxury travel market during the forecast period.
Region:
The luxury travel market for the Asia-Pacific region is projected to witness fastest growth. This region generated a revenue of $120,787.1 million in 2020 and is further projected to reach up to $447,151.1 million by 2028. The growth in this region is attributed to rise in middle and upper-middle class populations as well as double income household that have disposable income to spend on luxury travel. In addition, technological advancements that facilitates ease of booking the tour, hotels, restaurants along with easy cancellation policies is estimated to drive the demand during the forecast period. In addition, this region hosts large number of attractive travel destinations. For instance, in China, one can explore Great Wall of China and cruise of the Yangtze River, Japan is famous for tranquil landscapes and bustling cities, Mongolia is known as land of Nomads, Singapore is known as city in garden, India is famous for its rich cultural heritage that comprises of forts, holy temples, tea gardens, Himalayas, beaches, hill stations, lakes, and more. All these factors are estimated to drive the demand for luxury travel in Asia-Pacific region.
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Key Players in the Global Luxury Travel Market
Some of the leading global luxury travel market players are
- Abercrombie & Kent USA, LLC.
- Cox & Kings Ltd.
- Butterfield & Robinson Inc.
- Scott Dunn Ltd.
- Kensington Tours Ltd.
- Micato Safaris
- Thomas Cook Ltd.
- Meredith Corporation, LLC
- Travcoa Corporation
- TUI AG.
Along with the company profiles of the key players in the market, the report includes the Porter’s five forces model that gives deep insights into the competitive environment of the market.
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