A goldmine for few and alien to many, ‘luxury tourism’ is one segment that is expected to play a major role in the recovery of tourism. Let’s find out what these ‘elite travellers’ want and what this ‘elite industry’ has on offer for them?
As simple as it sounds, ‘luxury tourism’ as a segment has complex layers of essential elements. In far-flung destinations or most metropolitan cities, it is a product or service that is offered to all but not all can afford it. Differentiated, unique, exclusive and something that does not respond to the demand, it does not satisfy the desires of the masses nor seeks positioning. Likewise, in terms of tourism, the emphasis is on value rather than price, which is evaluated through consumer experience. The ongoing pandemic negatively impacted the luxury travel market due to stringent lockdown measures and the closing of national borders in several countries globally. However, with relaxation in lockdowns coupled with massive vaccine rollouts, we are witnessing the ritziest holidays of all times by the affluent circles across the globe.
Beyond the cliché ‘Luxury’
Let me throw a general question, how many times, in how many places, have you ever seen brochures, catalogues, and advertisements for luxury packages? No marks for guesses here! Luxury needs specialisation, it needs knowledge and above all the understanding of the basic word ‘luxury’. Luxury tourism opens itself to a new playground where the exclusive and unique will symbolize something which is unexplored, unspoiled, inaccessible by many, tucked away from the mass and with the ability to deliver unique experiences. This tourist will look for emotional, experimental and, if possible, non-Google search trips and destinations, moving away from what everyone wants and taking advantage of new trends allowing them to have a distinct space to enjoy it. It is here that the luxury tourist reconceptualises its search and commitment to unique natural destinations, products and services with standards that respond to sustainability (green planes and sustainable hotels, eco-friendly cars, etc.) with the aim of consuming less unnecessary goods and services.
Among the many, the recent decades have witnessed an upswing of one particular activity that has excelled in luxury travel; shopping tourism. The government organizations world over are taking measures to develop the travel industry which will facilitate economic development and also support the industry. Government administrations are initiating fresh infrastructure development such as the erection of new museums, entertainment venues, parks and shopping centres to attract tourists.
Identifying elite customers
Customised and private vacations have witnessed a surge in demand as they ensure high comfort and luxury to the elite class. People with extremely high disposable incomes prefer to enjoy vacations customised to their distinctive preferences. The agenda while undertaking a trip for the elite is to experience luxury, witness exotic destinations first-hand, and relish their authentic culture. Distinguished personalities generally prefer to undertake customised and private vacations to ensure privacy throughout the journey, without interruptions, annoyance or harassment caused by the paparazzi. There is an increasing demand for tailor-made private vacations that warrant more flexibility and freedom. Millennials and generation X are reshaping the foundation of the luxury travel industry due to social media influence. If statistics corroborate facts, around 72 per cent of millennials prefer to splurge their money on experiences over material objects and account for over 20 per cent of all international tourists.
Who can sell and to whom?
Demand facilitates supply, but when the demands are specific and customised they require exclusivity and finesse. The surge in the luxury-oriented sector has observed the emergence of tour operators and travel agencies dedicated to serving this sector. This category of individuals is also in demand with several destinations that are looking for necessary means to have their audience, while specialising their services and tourist products, personalising them to the preference of each patron with their origin market as a reference. In the past, luxury was all about a fancy hotel. But, luxury today has moved beyond fancy accommodations; luxury now symbolises more privacy, more hygiene, more personal experiences and more of everything exclusive. Travel agents will need to be on their toes while preparing for tailor-made trips as per the client’s preferences, an experience which is unique even to the luxury segment. As per the Travel and Tourism Statistic, around 83 per cent of people use the internet for luxury travel planning, whereas 40 per cent of people prefer travel agencies for conceptualisation.
The future of Luxury tourism can be assessed from this report by Global Market Insights Inc, which suggests the market valuation of luxury tourism will cross $45 billion by 2027. The market growth can be attributed to the improving economic conditions globally, thus encouraging tourists to spend more on luxury travel. The luxury travel market’s most prominent driver is the burgeoning spending power across the globe. As per Investopedia, around 22.8 million people fall under the high net worth income category and contribute over 30 per cent to the global annual spending on travel. Apart from this, shifting preference towards sustainable travelling drives the market growth. As recorded by UNWTO, international tourism arrivals grew by 7 per cent in 2017, which are about 1,322 million arrivals. In 2019, Virtuoso, Ltd registered a 12 per cent growth in total sales, which was over USD 23 billion, up from USD 12.5 billion in 2013.
More ancient, more opulent
Rich cultural heritage and developed adventure activities are one of the reasons for the boom of luxury travel in the Asia-Pacific region. Among the Asia-Pacific region, China has emerged as the growing market for luxury travel in recent years and is also a top spender in international tourism. The region witnessed an upsurge in business tours, a result of strong industrialisation and favourable FDI policies, further boosting the luxury travel market sector. Germany, France, and Spain are at the forefront of the regional luxury travel market due to their rich cultural heritage.