LUXURY TRAVEL MARKET ANALYSIS

Global luxury travel market was valued at US$ 241.4 Billion in 2022, and is expected to exhibit a CAGR of 7.80% in terms of revenue, over the forecast period (2023-2030), to reach US$ 440.4 Billion by 2030.

Global luxury travel market is expected to witness significant growth over the forecast period, owing to increasing number of travellers worldwide. According to the World Travel and Tourism Council, 2022, the worldwide investment on luxury travel and tourism is estimated to reach US$ 6,605.3 billion by 2028.

Global Luxury Travel Market- Drivers

Increasing disposable income

Increasing disposable income especially in emerging economy such as India is expected to drive the global luxury travel market growth during the forecast period. According to the Organization for Economic Cooperation and Development,in 2022, the global middle class populace is projected to increase from 1.8 billion in 2009 to 4.9 billion by 2030. Consumer spending on travel across India amounted to over U.S. $ 0.27 trillion  in the end of fourth quarter of 2022.

Increasing adoption of digital technology, use of internet, and high presence of people on social media platforms

Increasing adoption of digital technology is expected to boost growth of the market. Increasing use of internet and high presence of people on social media platforms also aids the market growth. Market players are focusing on capitalizing the social media presence to expand their consumer base and to strengthen consumer relation. Usage of internet allows consumer to compare brands, and offers several choices. Moreover, user-generated travel content is more influential over conventional advertising. Increasing appeal for travel storytelling, owing to platforms such as Instagram and various blogging sites is also expected to drive the market growth.

Therefore, increasing use of internet and social platforms contributes to growth of the global luxury travel market during the forecast period. For instance, according to the India Brand Equity Foundation (IBEF), in November 2022, India has experienced a boom in internet and smartphone penetration in the recent years. Driven by the ‘Digital India’ programme, the number of internet connections in India in 2021 increased significantly to 830 million. Out of the total internet connections, ~55% of connections were in urban areas, of which 97% of connections were wireless. The smartphone base has also increased significantly, and is expected to reach 1 billion by 2026.  All this factors helped India’s digital sector, and it is expected to reach US$ 1 trillion by 2030.

Global Luxury Travel Market- Restraint

High cost and less autonomy

Luxury vacations on  foreign land, the reality of luxury is very expensive, and is out of budget for middle class people. Most of tour companies have a pre-existing set of options to choose from while travelling such as from shore excursions to menu plans.  This can be tiresome to a traveller who is accustomed to create their own itinerary. By reducing the cost and autonomy can counterbalance this restraint.

Global Luxury Travel Market- Impact of Coronavirus (Covid-19) Pandemic

Rising tourism  leads to increase in costs as businesses get back on their feet. The pandemic was a had a negative impact on tourism. Travel and accommodation services are the two most important expenditures incurred by a traveller.

Moreover, costs of COVID-19 tests and travel insurance was also added to a tourist’s expenses. Meanwhile, the steady rise in oil prices has a significant impact on the cost of travel. Flight costs, accommodation prices, and other related expenses directly or indirectly affect edoil price rise. Therefore, airfares, accommodation costs, oil, insurance, and COVID-19 tests are the common parameters to get an estimated cost of domestic or international travel.

Global Luxury Travel Market- Segmentation

Global luxury travel market is segmented by category, by age group, by type, and by region. By Category, the market is segmented into adventure & safari, cruise, rail journey, culinary travelling & shopping, customized & private vacations, and celebration. By Type, the market is segmented into domestic and international. By Age Group, the market is segmented into millennials, Wrong market name.generation x, baby boomers, and silver hair. By Region, the global luxury travel  market analysis conducted across North America, Latin America, Asia Pacific, Europe, and Middle East and Africa.

Figure 1. Global Luxury Travel Market Share, By Region, 2022

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Europe region accounted for largest market share of 35% in global luxury travel market in 2022. North America held a dominant position in the luxury travel market in 2022, owing to increasing number of millionaires in the region followed by Asia Pacific, Middle East, Latin America, and Africa.

Figure 2. Global Luxury Travel Market Share, By Age Group, 2022

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Among age group, baby boomers segment held a dominant position in global luxury travel market in 2022, and millennials segment is expected to record a significant growth during the forecast period. For instance, the older millennials (aging 25-35) are currently entering in their peak earning years, and earning more affluence at unprecedented rates. Therefore, increasing preference of baby boomers and millennials for luxury travel is expected to boost growth of the market. Moreover, millennials are expected to surpass baby boomers as the large living adult generation in the U.S.

Global Luxury Travel Market- Recent Development

On February 8, 2023, Abercrombie & Kent, launched 2024-25 Expedition Cruise Portfolio, New voyages, for remote destinations including the North Pole, Saudi Arabia, and the Solomon Islands, as well as added departures to perennial favourites Japan and Greece.

On December 22, 2022, A&K Travel Group Ltd., a global lifestyle and travel company that owns Abercrombie & Kent, Crystal Cruises, and Cox & Kings, announced an equity partnership with Santiago Dunn and his company, Ecoventura, a leader in sustainable travel in the Galapagos Islands. This  partnership foresees an equity investment in Ecoventura as well as the creation of a joint venture, headed by Santiago Dunn in his new role as CEO of A&K South America.

On February 1, 2023, Crystal Cruises, a U.S.-based cruise line  relaunched under a reimagined name and vision: Crystal– Exceptional at Sea. This new era for Crystal begins with an innovative website and branding under the guardianship of the A&K Travel Group.

On October 4, 2023, Abercrombie & Kent (A&K), the multi-award-winning luxury travel company, announced the  inauguration of four new Destination Management Companies (DMCs) in Colombia, Namibia, Saudi Arabia, and Canada.

Global Luxury Travel Market- Major Players

Major players operating in the global luxury travel market include Abercrombie & Kent USA, Absolute Travel, Inspiring Travel Company, TCS World Travel, TÜ ELITE, Cox & Kings Ltd., Travcoa, Micato Safaris, Scott Dunn Ltd., Kensington Tours Ltd., and Butterfield & Robinson Inc.

Market Definition:

The term luxury travel denotes travelling with a great deal of comfort and quality, without any stress or hassle whatsoever. It involves an elevated travel experience with minimum vexation and maximum amenities. Luxury travelers are specific about the things they want in order to have an enriching experience during the course of their vacation. Exclusive cabin class and extravagant hotels are one of the primary things they look for.