Lakhasly

-LUXURY TRAVEL REMAINS BUOYANT

At the start of the start of the recovery from pandemic restrictions in 2021, the luxury travel segment was set to be one of the first to return to previous levels of success as many consumers finally had the chance to use their savings and indulge and celebrate after life in lockdown.In a Virtuoso survey, around three-quarters of high-end travellers said they were willing to pay extra to make their trips more sustainable.Just as the broader Travel & Tourism sector is placing greater emphasis on sustainability, many luxury travellers are also determined to reduce their environmental footprint.Though a broad category, luxury travel generally includes components such as private jets, yachts, premium flights, and five-star hotels.Euromonitor estimates that global sales of luxury hotels expanded by an average rate of 39% in 2022, with stronger growth rates in the Middle East and Africa (53%) and Western Europe (45%).A Skyscanner survey also reported a strong demand for premium cabins, particularly in markets with higher GDP per capita.International travel is the more popular choice for luxury travellers who book premium flight cabins, as nearly 82% of business and first-class flight bookings on Trip.com in 2022 were for international routes.The demand for luxury hotels has been accompanied by a strong demand for premium flights.Recently, hyper-personalisation has become important to luxury travellers too.

-LUXURY TRAVEL REMAINS BUOYANT

At the start of the start of the recovery from pandemic restrictions in 2021, the luxury travel segment was set to be one of the first to return to previous levels of success as many consumers finally had the chance to use their savings and indulge and celebrate after life in lockdown. However, with each shift in our economy, demand for luxury travel can shift too. With today’s financial pressures, will the sector continue to thrive?

In previous years, the luxury travel segment has benefitted from the spending power of its customer base. Though a broad category, luxury travel generally includes components such as private jets, yachts, premium flights, and five-star hotels. Recently, hyper-personalisation has become important to luxury travellers too.

Despite the current global financial challenges, the luxury travel market has proven resilient. On Trip.com, the number of bookings for five-star hotels grew by 19% in the first three quarters of 2022 compared to the same period in 2021, taking it just 7% below pre-pandemic volumes. Euromonitor estimates that global sales of luxury hotels expanded by an average rate of 39% in 2022, with stronger growth rates in the Middle East and Africa (53%) and Western Europe (45%). It also forecasts that luxury hotel sales should reach around US$ 92 billion by 2025 compared to US$ 76 billion in 2019 (in current prices). In comparison, budget hotel sales globally grew by 23%.

The demand for luxury hotels has been accompanied by a strong demand for premium flights. According to ForwardKeys data, passengers in premium flight cabins were around 60% below 2019 levels in the first quarter of 2022. By the end of the year, premium bookings for the first three months of 2023 had soared and so were only 16% below volumes for the same period pre-pandemic.
A Skyscanner survey also reported a strong demand for premium cabins, particularly in markets with higher GDP per capita. For instance, around one in three travellers in the US, Saudi Arabia, and the UAE said they were likely to fly in first or business class, compared to the global average of just one in five.
International travel is the more popular choice for luxury travellers who book premium flight cabins, as nearly 82% of business and first-class flight bookings on Trip.com in 2022 were for international routes. This share increased from 68% in 2021 and is even higher than the 79% share in 2019.

Just as the broader Travel & Tourism sector is placing greater emphasis on sustainability, many luxury travellers are also determined to reduce their environmental footprint. In a Virtuoso survey, around three-quarters of high-end travellers said they were willing to pay extra to make their trips more sustainable. Crucially, luxury travellers also have the purchasing power to afford to make their sustainable travel intentions a reality.