Non-millionaire travellers now account for more than a third of the luxury tourism market, as younger generations from emerging economies reshape the high-end travel sector.
Analysis by McKinsey reveals that more than a third of the US$239 billion luxury travel market is being driven by travellers who aren’t millionaires, as younger, aspirational consumers reshape the high-end tourism landscape.
The traditional image of luxury travel being the exclusive domain of the ultra-wealthy is rapidly changing.
McKinsey’s latest research shows that ultra-high net-worth individuals (worth more than US$30 million) account for just 15% of luxury travel spending, while very high net-worth travellers (US$5 million to 30 million) represent 16% – leaving a significant portion of the market to less wealthy, yet ambitious travellers.
These aspirational luxury travellers are increasingly young (under 40), they may not own their own homes and and a rising number of them are from Asia.
While traditional luxury travellers – millionaires and above – remain a crucial market segment, with Savanta reporting that 89% plan to spend on luxury travel this year (up 15% from 2023), this figure, too, is bolstered by the burgeoning cohort of 18-34-year-old HNWIs.
The rise of this new luxury traveller demographic appears to be influencing how the sector operates.
According to Flywire, 96% of luxury travellers have used or plan to use a travel agent in the next 18 months, suggesting that even occasional luxury travellers are seeking expert guidance to maximise their premium experiences.
Popular culture is also shaping these aspirational travellers’ choices. Black Tomato reports that 10% of its clients now request “set jetting” trips inspired by TV shows and movies, leading to the launch of several James Bond-inspired itineraries across destinations including Chile, Iceland, and Thailand.
This shift reflects a broader trend in consumer spending priorities, with McKinsey’s February 2024 ConsumerWise Global Sentiment Survey finding that 33% of consumers plan to splurge on travel, ranking it the third-most-popular splurge category – trailing only eating at home and eating out at restaurants.
According to McKinsey, the world’s top ten destination countries are the United States, Spain, China, France, Saudi Arabia, Turkey, Italy, Thailand, Japan and India, in that order.
Together they currently receive 45% of all travel spending, including for domestic travel. According to McKinsey, the United States, Germany, the United Kingdom, China, and France remain the world’s five largest sources of travellers (also in that order).
While still relatively small, the Indian, Southeast Asian, and Eastern European source markets are growing rapidly. New tourists from countries with increasing GDP and spending power fuel this boost.
by Olivia Palamountain | GLOBETRENDER