The trauma is finally starting to fade. Folks are beginning to find their way back out onto the open road… even if only for a weekend. They’re finding old and new friends, getting out of town for face-to-face socializing and rediscovering their appetite for indulgence. To be sure, this is still a heavily guarded recovery. Today’s really good news — a luxury travel boom that’s starting to sprint ahead — is one of the first signs that after almost a year of economic struggle and cautious behaviour, folks are ready to get serious about splurging again. In fact, American luxury travellers are expected to spend an average of $3,940 on travel, compared to the average traveller who will only spend $2,183, according to MMGY’s Portrait of American Travelers survey.
It’s certainly looking good. Luxury travel is set to become the next big thing for the global economy, with travellers showing more and more interest in high-end travel this year. In Australia, for example, Google search interest in the phrase “luxury travel” has been climbing over the last few months. We’re looking at signs that luxury travel is going to rebound more quickly than any other travel sector after this pandemic.
Consider businesses like Ultimate Driving Tours (UDT), which is experiencing a surge in demand for its luxury experience offerings as well as witnessing a shift in consumer tastes.
“Luxury travellers are already making bookings for 2021 and beyond, and their bookings are shifting towards more immersive and tailored travel, away from crowds and big cities. Furthermore, luxury road trips and premium driving-based experiences are emerging as a top preference for travellers”, said Founder of UDT, Anthony Moss.
While it might appear frivolous, there’s a lot of money involved in luxury travel. The Asia-Pacific region alone contributed to $363 billion of global luxury travel in the year preceding the pandemic and this only accounted for 17.8% of global expenditure, according to Barton Consulting.
Signs of Growth
China seemed to have led the charge in this post-pandemic era, with a boom in domestic travel over the past several months. Now, as international travel becomes more likely, the Chinese have expressed their readiness to cross borders in a recent March survey by Vogue Business, which showed that more than 40% of luxury consumers were likely to travel internationally than non-luxury consumers over the next three months.
Americans also seem giddy about wanting to indulge, with American luxury travelers expected to spend an average of $3,940 on travel compared to the average American who will only spend $2,183, according to MMGY’s Portrait of American Travelers survey. In fact, there’s a lot of pent-up demand for luxury travel in 2021, with 61% of travellers planning to spend more than usually would in 2021 compared to 2020, according to American Express Trendex.
WIth border closures meaning a sluggish international travel industry for Australia, the desire to travel amongst Australians is still very much there. Australia’s domestic travel industry hit a significant milestone recently, hitting more flights than it was this time last year. Now with around 1,800 domestic flights a day and slowly climbing, luxury travellers are hungrier than ever to cross international waters and scratch an itch that domestic travel can’t fix.
The Coffers Are Full for High-Earners
The world’s savers are now $5.4 trillion richer than they would have been if it weren’t for the pandemic. This pile-up of savings amongst households is one likely reason that a luxury travel boom is imminent. And from this huge pile-up, a hefty chunk of that is held by high-income households, according to a Goldman Sachs report.
Australians contributed to around $200 billion of these savings throughout 2020, leading to the household savings rate skyrocketing to some of its highest levels in over 40 years. Now, Australians are starting to loosen the purse strings a little, with these high saving levels translating into higher-priced trips. Flight Centre, Australia’s largest travel agency brand, reported that its retail luxury travel brand has seen average transaction sizes for domestic holidays that were significantly higher than numbers seen pre-Covid.
This content was originally published here.
