Luxury Travel - UK - November 2015
“With the recovery in holidays abroad rapidly gaining pace and being led by more affluent households, prospects for luxury travel over the next few years appear stronger. In the longer term the gradual transition of the Baby Boomer generation into retirement over the next 15 years is a major boost for luxury brands.”
– John Worthington, Senior Analyst
This report looks at the following issues:
- Increasing accessibility of luxury travel creates greater need to differentiate
- Appealing to affluent Baby Boomers – the key targets for luxury travel
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Table of contents
Overview
- What you need to know
- Scope of the report
- What you need to know
Executive Summary
- Affluent households leading overseas revival
- Figure 1: Overseas holiday market volume, annual percentage growth, 2009-15
- HNWI market expected to top 1 million
- Figure 2: UK average weekly earnings (excluding bonuses)* vs CPI inflation, percentage change year on year, June 2013-August 2015
- Over-55s the biggest-ticket holiday spenders
- Figure 3: Luxury traveller groups, August 2015
- Long-haul cost reductions likely to boost luxury market
- Figure 4: Most popular destinations for a luxury holiday, August 2015
- Resort lovers and destination explorers
- Figure 5: Most popular luxury holiday types (ranked 1-3), August 2015
- ‘I am a traveller, you are a tourist’
- Figure 6: Personal ideas of what a luxury holiday means, August 2015
- Transport part of the luxury experience for most
- Figure 7: Most important features of a luxury holiday (ranked 1-5), August 2015
- Tailor-making is the USP for luxury specialists
- Figure 8: Willingness to spend on extras on a luxury holiday, August 2015
- What we think
Issues and Insights
- Increasing accessibility of luxury travel creates greater need to differentiate
- The facts
- The implications
- Appealing to affluent Baby Boomers – the key targets for luxury travel
- The facts
- The implications
- Increasing accessibility of luxury travel creates greater need to differentiate
The Market – What You Need to Know
- UK HNWIs to exceed 1 million by 2018
- Affluent travellers spearheading overseas recovery
- Macro-factors boosting premium travel
- Mexico, Cuba and Vietnam fast-growing destinations
- Affordable luxury
- Over-55 boom favours big-ticket travel
- UK HNWIs to exceed 1 million by 2018
Socio-economic
- UK wealth gap grows
- Half of HNWIs live in London
- Top quintile has seen net income fall…
- Figure 9: Average annual household income after tax and benefits, 2008/09-2013/14
- …but UK wages now rising
- Figure 10: UK average weekly earnings (excluding bonuses)* vs CPI inflation, percentage change year on year, June 2013-August 2015
- Oil price slump continues
- Figure 11: Brent crude spot oil price (US$ per barrel), January 2014-September 2015
- Sterling boost for long-haul
- Figure 12: Sterling exchange rate vs selected currencies, annual averages, 2009-14, and spot rate October 2015
- Rising over-55 population should benefit luxury brands
- Figure 13: Trends in the age structure of the UK population, by gender, 2009-19
- UK wealth gap grows
Travel
- Holidays abroad on course for 10% rise in 2015
- Figure 14: Overseas holiday market volume, value and average spend, 2009-14
- Longer domestic breaks also rising
- Figure 15: Domestic holiday market volume, value and average spend, 2009-14
- Luxury travel market – improving prospects
- Package revival positive for luxury brands
- Figure 16: Overseas holiday market volume, independently booked versus package holidays, 2009-14
- Confidence also returning to long-haul
- Figure 17: Volume of overseas holidays, long-haul vs short-haul, 2009-14
- Spain consolidates position as most popular overseas destination
- Figure 18: Top 20 overseas holiday destinations, 2009-14
- Holidays to US and Caribbean poised for recovery
- Mexico is fastest-growing long-haul destination
- North Africa/Middle East struggling but UAE tourism so far immune
- Maldives & Thailand leading luxury destinations in Kuoni report
- Figure 19: Top 20 luxury holiday destinations, Kuoni Annual Trends report, 2012-15
- Mexico, Cuba and Vietnam are rising stars
- Over-55s have highest spend per holiday
- Figure 20: Overseas holidays, number of trips, nights and spend, by age*, 2014
- Figure 21: UK domestic holidays, number of trips, nights and spend, by age, 2014
- APD reforms should help luxury travel
- Figure 22: Air Passenger Duty (APD) rates, April 2014-April 2016
- The hybrid traveller
- The democratisation of luxury
- TUI pushes rapid long-haul expansion
- Selling luxury travel as part of overall lifestyle
- Holidays abroad on course for 10% rise in 2015
Key Players – What You Need to Know
- Leading luxury specialists
- TUI and TC developing more distinctive luxury brands
- Lifestyle hotels target Millennials
- P2P luxury
- Luxury for life
- Dreamliner opens new long-haul possibilities
- Size matters in cruise
- Leading luxury specialists
Luxury Travel Specialists
- Kuoni leads market but has lost revenue
- Figure 23: Specialist luxury holiday operators, annual turnover, 2008-14
- Corporate activity sweeps luxury sector
- Kuoni leads market but has lost revenue
Luxury Product Trends and Innovation
- Mainstream product increasing
- TUI’s upmarket branded concepts
- Thomas Cook revamps Signature brand
- The upscale resort – Le Touessrok Shangri-La
- The luxury lifestyle hotel – Ham Yard & Zetter Townhouse
- Luxury P2P
- Luxury travel as personal celebration
- Attention to the details
- Pet pampering
- Upscale air travel
- High life for over-50s
- Small is beautiful
- Escorted tours
- Cruise
- Expertise
- Short and sweet luxury
The Consumer – What You Need to Know
- Older affluents are big-ticket spenders
- North America is leading dream destination
- Big holiday spenders seek unique, exclusive experience of destination
- Four key luxury features
- Trouble-free travel
- Making it personal
- Older affluents are big-ticket spenders
The Luxury Traveller
- Expensive holiday cost
- Figure 24: Amount spent on most expensive holiday in the past 5 years, August 2015
- Expensive holiday duration
- Figure 25: Length of most expensive holiday in the past 5 years, August 2015
- Upmarket accommodation
- Figure 26: Use of luxury/high-cost holiday accommodation, August 2015
- Luxury traveller categories
- Figure 27: Luxury traveller groups, August 2015
- Luxury traveller demographics
- Expensive holiday cost
Preferred Luxury Holiday Destinations
- Long-haul preferences dominate
- Italy is top short-haul choice
- Figure 28: Most popular destinations for a luxury holiday, August 2015
- Long-haul preferences dominate
Preferred Luxury Holiday Types
- Figure 29: Most popular destinations for a luxury holiday (ranked 1-3), August 2015
- ‘Big-ticket holiday spenders’ are more destination- than resort-focused
- Soft learning a key luxury holiday ingredient for Boomers
- Premium activity break potential
What Makes a Luxury Holiday?
- Living the dream
- Figure 30: Personal ideas of what a luxury holiday means, August 2015
- ‘Big-ticket spenders’ seek adventure plus comfort & service
- Luxury as connoisseurship
- Luxury as inner experience
- Luxury as reward
- Luxury as celebration
- Living the dream
Luxury Holidays – Facilities and Services
- Figure 31: Most important features of a luxury holiday (ranked 1-5), August 2015
- Older affluents expect to travel in luxury
- Men prefer spa to sport
- Men under 45 most likely to seek expert advice
Luxury Holidays – Extras
- Luxury starts at the airport
- Tailor-made luxury
- Figure 32: Willingness to spend on extras on a luxury holiday, August 2015
- Local expertise is worth a premium
- Luxury starts at the airport
Appendix
- Abbreviations
- Definition
- Abbreviations
Luxury Travel - UK - November 2015