It has been well documented that the pandemic has transformed many travellers into high-net-worth individuals and made the super-wealthy even wealthier. This trend will no doubt appease the luxury tourism market as it continues to emerge from the pandemic.
In 2020, more than 1% of adults worldwide were millionaires for the first time. Additionally, this week it was announced that the world’s ten richest men have more than doubled their collective fortunes since March 2020. According to a GlobalData poll (that is currently live with 210 responses), when respondents were asked if their holiday budgets had changed due to Covid-19, 28.6% of respondents stated that their budgets were ‘a lot’ or ‘slightly’ higher than pre-Covid times. This shows that the pandemic has been bountiful for a significant segment of global travellers. Increases in disposable income may have been created through accidental saving due to pandemic-induced restrictions on movement, or through favourable economic conditions that have caused house prices to soar.
Increase in wealthy travellers will bolster recovery
When the pandemic first started to halt tourism flows, the luxury travel market appeared to experience the biggest impact from the pandemic, with travellers’ financial situations worsening as the virus battered the global economy.
However, the luxury leisure market experienced a strong start to recovery as many wealthy consumers, now with higher levels of disposable income, began to travel once again in 2021. This is proven by GlobalData’s Hotels Database. When looking at the US specifically, total hotel revenue from leisure travellers for luxury hotels showed the strongest recovery in 2021 year-on-year (YoY), increasing by 147%. This is a significantly higher percentage increase in comparison to the US budget hotel sub-sector, which experienced a YoY revenue increase of 42%. When looking ahead, total revenue from leisure travellers for luxury hotels in the US is expected to grow at a robust CAGR (Compound Annual Growth Rate) of 25.2% between 2021 and 2024. This could be due to the stiff increase in the number of high-net-worth individuals in destinations such as the US.
Health and wellness will be an area of focus
According to the Knight Frank 2020 Wealth Report, 80% of high earners dedicate their time, energy and money towards their wellbeing, showing that high-net-worth individuals are focused on wellness and may be likely to incorporate this into upcoming trips. Popular Asia-Pacific destinations for luxury wellbeing trips, such as Indonesia and Thailand, stand to benefit from this trend, as they can offer exclusivity and unique natural settings.
The ongoing recovery of luxury tourism looks to be in good stead as the number of high-net-worth individuals continues to grow across the globe. Increasing amounts of disposable income will boost demand for premium products and services. The destinations and companies that can offer the most unique and authentic experiences stand to increase their share in this lucrative market.