Trends in luxury travel

Interest in luxury travel experiences is growing as the world continues to recover from the pandemic, but the market has changed following the years-long health crisis.

7 September 2023

By Melissa Delgado

IT was only fitting that this year marked the return of ITB Berlin after being shuttered since 2020 due to the pandemic. The world's biggest annual travel and tourism trade fair, which was held earlier in March, had obviously picked up on people's growing appetite to get back out there and explore the world after the unprecedented halt in international travel. The Philippines participated in the reopened convention, and one of the takeaways from this year's event was to market the country as a luxury wellness destination.

Considering how luxury travel continues to grow, this is a good move on the government's part. According to a Deloitte paper on luxury travel, one market research survey valued the 2021 global luxury travel market at $638 billion, with a compound annual growth rate (CAGR) of 8.9 percent through 2031.

Besides the strong market of high-net-worth travelers, middle- and upper-middle-class buyers, particularly from Asia, are driving this growth, fueled by years of pent-up demand. Social media posts about exotic locales and unique travel experiences are also bringing more remote destinations to the fore and generating new interest. But as with all other markets, the luxury travel segment has changed in response to the effects of the pandemic and other disruptive forces.

One of the emerging trends Deloitte has picked up on is the rise of luxury travel agents. In one survey, 85 percent of luxury travelers said these travel agents were the best way to book personalized luxury travel, while 74 percent said travel advisers could create a truly "luxury experience," signaling that despite the abundance of online research and booking tools, this specific market was reverting to the traditional way of designing and organizing their journeys. In a highly disrupted world, travel advisers can provide practical advice and detailed knowledge to travelers as they cross borders and are also on call to troubleshoot before, during, and after a trip.

This doesn't mean, though, that luxury travelers are foregoing digital tools as they move around the world. In fact, these jet-setters have a strong preference for the integration of digital and mobile tech into each step of their journeys. Offering virtual reality experience previews of a destination, for example, or Internet of Things-enabled in-room preferences can add to customer satisfaction and allow luxury travel brands to mark each touchpoint with their distinct, authentic brand promise.

One of the hallmarks of luxury travel is that it is personalized, and that expectation is only growing stronger. In a recent survey, 68 percent of luxury travel advisers reported that their clients were taking longer vacations and spending more to help ensure privacy, which includes booking experiences tailored to what they value most. As to what those experiences are, one subset of luxury travelers combines extreme adventure with in-depth cultural touring, i.e., an on-foot Kenyan safari with a highly knowledgeable guide that ends in five-star accommodations with fine cuisine.

Millennial travelers are also fueling the demand for experiential or immersive tourism — for example, travel experiences that provide in-depth physical enrichment, spiritual awareness, or intellectual nourishment. These young movers, who now make up the largest percentage of the world's population, are eager to experience the authentic cultures of the places they visit. Personalized tours with a focus on ancestry, music, history and art are especially popular.

Wellness-focused luxury travel continues to boom, with 80 percent of affluent travelers saying that improving their physical and emotional well-being is more of a focus now than it was three years ago. Within this space, the Philippines has a rich variety of facilities and destinations to offer in the areas of preventative health experiences, women's health and wellness treatments, and integrated wellness plans.

Finally, sustainability is another growing concern for luxury travelers. A recent survey found that 74 percent of high-net-worth travelers were willing to pay more to travel responsibly, a decision on which luxury agents exercise a strong influence as they are trusted to recommend genuinely sustainable travel options. Because of this trend, there is growing interest in incorporating luxury train journeys into itineraries as a low-carbon emission alternative to other modes of travel. Luxury ecotourism is another experience that is growing in popularity, with travelers looking for opportunities to help preserve and benefit land, communities, and wildlife.

It is an encouraging sign that the luxury travel market has picked up on the challenges and disruptions of our post-pandemic world and is adjusting accordingly, particularly in the matter of sustainability. This conscientiousness and appetite for opportunities to give back allows luxury travel brands to offer not just unique, personalized, and lavish travel experiences but also opportunities to address some of the biggest issues we face in an uncertain, volatile world.

As published in The Manila Times on 7 September 2023. Melissa Delgado is an Audit & Assurance Partner and the Clients & Markets Leader of Deloitte Philippines.

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