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UK Luxury Travel market report

"While high-net-worth individuals should have the means to cope with any negative economic effects caused by Brexit, a sizeable proportion of luxury travellers are actually more concerned with Brexit than the average holidaymaker population. One way to encourage bookings in the next year could be a more flexible range of payment options."

- Fergal McGivney, Travel Analyst

This report is looking at the following areas:

  • Travel agents can prosper in the luxury niche
  • Luxury holidaymakers show more concern over negative effects of Brexit

Identifying the luxury traveller is problematic, given the lack of clear-cut criteria for defining this market. Mintel approached this problem from a number of angles, firstly asking consumers:

"How much, if at all, did you spend, per adult, on the most expensive holiday you've been on over the past 5 years? Please only consider the cost of transport, accommodation, board etc. Exclude any extra spending while on holiday (eg non-inclusive meals, attractions)."

Then:

"How long was the most expensive holiday you've been on over the past 5 years?"

As a further check, Mintel also asked holidaymakers if they had spent £250 or more per night on a hotel stay (including breakfast but not other meals) or stayed in five-star accommodation.

Mintel then combined the responses on levels of holiday expenditure with trip duration to arrive at three luxury traveller categories:

  • Those who have spent £1,000+ per adult on a break of six nights or less.
  • Those who have spent £1,500+ per adult on a stay of seven to 13 nights.
  • Those who have spent £3,000+ per adult on a holiday of 14 nights or more.

These three categories are collated in the group Big-ticket Holiday Spenders.

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Table of contents

  1. Overview

    • What you need to know
      • Scope of the Report
      • Executive Summary

          • The market
            • Figure 1: Average UK weekly earnings including bonuses (seasonally adjusted), August 2014-August 2016
          • UK expected to be strong contributor to HNWI population growth
            • Strong growth in the ultra-luxury cruise market
              • The consumer
                • Just over one in 10 are luxury big-ticket holidaymakers
                  • Figure 2: Luxury holidaymaker groups, August 2016
                • Luxury holidaymakers favour spa treatments, private pools and beaches
                  • Figure 3: Luxury services and elements on most expensive holidays, August 2016
                • Number of luxury elements and services luxury holidaymakers use
                    • Figure 4: Luxury traveller groups, August 2016
                  • The Super Luxury group has a slight male bias
                    • Luxury holidaymakers are more sensitive to the effects of Brexit
                      • Figure 5: Attitudes towards Brexit, by groups, August 2016
                    • Luxury travellers more than twice as likely to have used VR technology
                      • Figure 6: Attitudes towards holidays, by groups, August 2016
                    • What we think
                    • Issues and Insights

                      • Travel agents can prosper in the luxury niche
                        • The facts
                          • Package holidays are popular amongst luxury travellers
                            • Experience is all in the luxury market
                              • Luxury holidaymakers show more concern over negative effects of Brexit
                                • Luxury holidaymakers are more sensitive to the effects of Brexit
                                  • Flexible payments can encourage bookings
                                  • The Market – What You Need to Know

                                    • Still too early to determine the full of effects of the Brexit vote
                                      • Average income for wealthiest fifth of UK households is £62,500
                                        • Seniors will be an important target group for luxury brands
                                          • UK expected to be strong contributor to HNWI population growth
                                            • Oil price remains low benefiting consumers and airlines
                                              • Strong growth in the luxury cruise market
                                              • Socio-economic Data and Market Drivers

                                                • Average income for richest fifth of UK households is £62,500
                                                  • Figure 7: Average UK weekly earnings including bonuses (seasonally adjusted), August 2014-August 2016
                                                  • Figure 8: Average annual household income after tax and benefits, 2008/09-2014/15
                                                • Real wage increase boosts overseas holiday volume
                                                  • Figure 9: Average weekly earnings (AWE) including bonuses (seasonally adjusted), versus CPIH, 2011-16
                                                • UK expected to be strong contributor to HNWI population growth
                                                  • Figure 10: Top 10 nations for HNWIs, 2014 versus 2015
                                                • Oil price remains low benefiting consumers and airlines
                                                  • Figure 11: Brent crude spot oil price (US$ per barrel), November 2013-November 2016
                                                • The Pound falls sharply and remains low following the ‘leave’ vote
                                                  • Figure 12: Pound Sterling’s value against selected currencies, 1 June versus 18 November 2016
                                              • Market Segmentation

                                                • Huge demand for overseas holidays in 2015 and in H1 2016
                                                  • Figure 13: Long-haul, short-haul and total holiday volume, 2010-15
                                                  • Figure 14: Holiday volume, H1 2015 versus H1 2016
                                                • Strong growth in the ultra-luxury cruise market
                                                  • Figure 15: Volume of UK ultra-luxury cruises passengers, 2010-15
                                              • Luxury Travel Specialists’ Launch Activity

                                                • Key players’ revenue from 2008 to 2015
                                                  • Figure 16: Specialist luxury holiday operators, annual turnover, 2008-15
                                                • Kuoni Group sells Kuoni brands to DER Touristik
                                                  • 3i invests £159 million into Audley Travel
                                                    • Abercrombie & Kent acquired by Chinese Zhonghong Holdings
                                                      • New itineraries for Abercrombie & Kent
                                                        • Destinology boosts Saga profits
                                                          • Millionaires’ Holiday Club ITC Travel sold to private equity firm North Edge
                                                          • The Consumer – What You Need to Know

                                                            • Older Millennials are big spenders on holidays
                                                              • Londoners are key targets for luxury operators
                                                                • Luxury holidaymakers favour spa treatments, private pools and beaches
                                                                  • Luxury holidaymaker groups
                                                                    • Luxury holidaymakers are more sensitive to the effects of Brexit
                                                                    • Defining the Luxury Traveller

                                                                          • Figure 17: Luxury holidaymaker groups, August 2016
                                                                      • Holiday Spending

                                                                        • A third of people have spent over £1,000 on their most expensive holiday
                                                                          • Figure 18: Amount spent on most expensive holiday in the past five years, September 2016
                                                                        • Older Millennials are big spenders on holidays
                                                                          • Figure 19: Amount spent on most expensive holiday in the past five years, by age, September 2016
                                                                        • Londoners are key targets for luxury operators
                                                                          • Figure 20: Amount spent on most expensive holiday in the past five years, by region, September 2016
                                                                        • Length of most expensive holiday
                                                                          • Short luxury breaks for the cash-rich, time-poor
                                                                              • Figure 21: Length of most expensive holiday in the past five years, September 2016
                                                                          • Luxury Accommodation Usage

                                                                            • Five-star hotels are proving more accessible to the average holidaymaker
                                                                              • Figure 22: Length of most expensive holiday in the past five years, September 2016
                                                                          • Luxury Services and Levels of Luxury

                                                                            • Luxury holidaymakers favour spa treatments, private pools and beaches
                                                                              • Figure 23: Luxury services and elements on most expensive holidays, August 2016
                                                                            • Number of luxury elements and services luxury holidaymakers use
                                                                              • Figure 24: Luxury services and elements on most expensive holidays, August 2016
                                                                              • Figure 25: Luxury traveller groups, August 2016
                                                                            • The Super Luxury group has a slight male bias
                                                                              • Figure 26: Luxury services and elements on most expensive holidays, by gender. August 2016
                                                                            • Half of Super Luxury travellers have spent £250+ per night on rooms
                                                                              • Figure 27: Use of luxury/high-cost holiday accommodation, by luxury groups, August 2016
                                                                            • Four in five Big-ticket Holiday Spenders used luxury elements/services
                                                                              • Figure 28: Luxury groups, by Big-ticket Spenders, August 2016
                                                                          • Luxury Holidaymaker Profiles – a Recap

                                                                              • Figure 29: Luxury holidaymaker groups, August 2016
                                                                          • Luxury Destinations

                                                                            • North America popular among Luxury Big-ticket Holiday Spenders
                                                                              • Figure 30: Most expensive holiday destination in the past five years, August 2015
                                                                            • Asia may prove to be a popular alternative to the US
                                                                              • Figure 31: Top 10 countries visited, by volume, H1 2015 versus H1 2016
                                                                              • Figure 32: Top 10 countries visited, by value, H1 2015 versus H1 2016
                                                                            • South Africa offers opportunity for luxury travellers on a budget
                                                                                • Figure 33: Selected countries, by volume, H1 2015 versus H1 2016
                                                                                • Figure 34: Selected countries, by value, H1 2015 versus H1 2016
                                                                              • Experiential multi-destination trips for ultra-luxury travellers
                                                                              • Luxury Holiday Booking

                                                                                • Packaged products are popular amongst luxury travellers
                                                                                  • Figure 35: Luxury holiday booking, August 2016
                                                                                • Travel agents can prosper in experience-led luxury market
                                                                                    • Figure 36: How package was booked, August 2016
                                                                                • Luxury Travellers’ Brexit Attitudes

                                                                                  • Brexit and the economic outlook of luxury travellers
                                                                                    • Luxury holidaymakers are more sensitive to the effects of Brexit
                                                                                      • Figure 37: Attitudes towards holiday, by groups, August 2016
                                                                                      • Figure 38: Attitudes towards Brexit, by groups, August 2016
                                                                                    • Making the holidaymaker feel like they are shopping intelligently
                                                                                    • Attitudes towards Holidays by Holidaymaker Groups

                                                                                      • Luxury holidaymakers are economising on travel to trade up on accommodation
                                                                                          • Figure 39: Attitudes towards holiday, by groups, August 2016
                                                                                        • Luxury travellers more than twice as likely to have used VR technology
                                                                                          • Figure 40: Attitudes towards holiday, by groups, August 2016
                                                                                          • Figure 41: Attitudes towards holiday, by groups, August 2016
                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                          • Abbreviations
                                                                                            • Consumer research methodology

                                                                                            Companies Covered

                                                                                            To learn more about the companies covered in this report please contact us.