The latest research unveiled at World Travel Market London 2023, the most influential travel and tourism event worldwide, indicates that “affordable luxury” is gaining momentum, even in the face of budget constraints for many travelers. In collaboration with distinguished researchers from Oxford Economics, the exclusive WTM Global Travel Report reveals that consumers remain steadfast in their determination to travel, and a significant number continue to prioritize upscale travel options.
The report, presented at WTM London on November 6, highlights that “affordable luxury” is on the rise, aligned with the broader trend of travelers seeking new and unique experiences during their vacations.
The report notes that, after enduring the pandemic and travel restrictions, many individuals have expressed a desire to elevate their travel experiences as they proactively make up for lost tourism opportunities. Some of this demand can be attributed to the ongoing pent-up desire for travel and savings accumulated during lockdowns, coupled with relatively low unemployment rates in most countries.
According to the report, “Consumers unaffected by economic downturns are likely to continue opting for luxury destinations. Meanwhile, those in lower income groups might increasingly feel the impact of squeezed personal incomes and seek out more budget travel options or reduce their travels overall.”
The report references United States consumer data from MMGY, indicating that the cost of living is disproportionately affecting households with annual incomes below $50,000. In contrast, those with higher earnings have expressed a “high likelihood” of undertaking future travel.
However, the report also raises concerns, suggesting that some post-pandemic drivers of travel demand may have reversed in recent months, posing a risk to continued expansion. The persistent rise in costs, the recovery of currencies like sterling and the euro, making the US dollar less powerful in Europe, and soaring jet fuel prices all impact travel affordability.
Moreover, the travel industry grapples with supply-side challenges stemming from geopolitical events like Russia’s invasion of Ukraine, along with staffing shortages in various markets due to a significant number of workers transitioning to other sectors during the pandemic. Additionally, consumers face rising personal disposable incomes as their transportation and living expenses increase.
Nevertheless, the report points out that higher costs have not yet acted as a significant deterrent to growth, with travelers displaying a willingness to pay higher prices for elevated experiences.
Ms. Juliette Losardo, Exhibition Director at WTM London, stated: “Commissioning the WTM Global Travel Report demonstrates our commitment to providing attendees at World Travel Market with invaluable insights into the latest trends. We are witnessing remarkable resilience as people prioritize travel, with many seeking ‘affordable luxury,’ such as higher-rated accommodations or premium economy and business cabins instead of economy. Savvy travel companies have an opportunity to assist consumers looking for simple travel hacks to get more value for their money, like offering flexibility with departure dates or identifying destinations that offer better value.”
Mr. Dave Goodger, Managing Director EMEA at Tourism Economics, added: “The findings illustrate consumers’ seemingly insatiable appetite for travel, despite the complex economic landscape. We hope this report sparks productive discussions throughout WTM London, empowering tourism organizations to make informed decisions about their strategies for 2024 and beyond.”
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