The size of the luxury tourism market is expected to grow at around 16% CAGR from 2021 to 2027, according to research by Global Market Insights.
During this time, rising disposable income worldwide will boost the industry which is currently worth more than $15 billion US.
For example in the EU, gross household adjusted disposable income was equal to around 72.7% of the value of GDP in 2019.
Growing literacy rates and improving economic conditions have led to this rise in both developed and developing economies.
Tourists are spending more on luxury and convenience to ensure comfortable yet high-quality tours to international destinations.
The new generation of demanding and well-educated travellers will support the growth of the luxury tourism industry.
Factors driving the boom are millennials in North America, popular cruising holidays in Europe and Asia Pacific, and baby boomers spending more on luxury tourism in Europe and North America.
Other drivers include the rise in affluent consumers in Asia pacific, the shift towards customised holidays in Latin America and the demand for unique safari experiences in MEA, the study found.
Potential challenges include the rising political turmoil in the global market and the fall in travelling activities due to the pandemic.
Luxury tourism market: growth areas
Singapore’s luxury tourism market is set to register more than 22% CAGR through 2027, with the growing popularity of its safari park contributing to market expansion.
The night safari is a prominent attraction in the country, attracting more than 1.1 million tourists every year.
Market demand will also be propelled by the rising number of solo travellers seeking a luxury adventure.
In 2020, Europe’s solo luxury tourism market size was worth around US $2.5 billion and the number of searches for “solo travel” increased 131% on Google from 2016 to 2019.
US demand for luxury tourism services from millennials is expected to grow more than 17% from 2021 to 2027.
Meanwhile, the rise in international tourists will fuel the luxury market revenue in Europe.
The market will gain traction with the growing popularity of beach destinations in countries such as Italy, France, and Spain.