Luxury travel takes the lead

/ New Delhi
Luxury travel takes the lead

Asia’s emergence as source of luxury travel has been driven primarily by the Asian giants China and India

One of the key segments being targetted by destinations and tourism stakeholders as they look at India for revival of tourism is luxury travel. It was also the only segment that stayed afloat during the pandemic and emerged as a life-saver for many.
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At the height of Covid-19 pandemic, while travel was out of bounds for most people, many would find solace in following the Instagram accounts of celebrities – film stars, business leaders and the like. Practically everyone who was anyone took off in their private jets to go overseas, with most of them headed for Maldives or Dubai that had emerged as haven for the celebrities, who posted their stunning images from there, emerging as the unintended brand ambassadors for the destinations.

Seeing them, and often along with them, thousands of other Indians, too, headed to the plush resorts and private beaches around the world, while waiting for the pandemic to recede and lockdowns or restrictions on work and travel removed. Many destinations, especially those in under eight hours of flying time from India, reported large number of Indian customers, many of them for weeks-long staycations or workations.

As a result, thanks almost entirely to the Indian luxury travellers, several destinations, notably Maldives, Mauritius and Dubai, were able to deal with the collapse of international tourism over the past two and a half years.

“During the pandemic, one of the saving graces were that while luxury segment relatively did not go down, the mass tourism did. So, luxury was the saving grace. Whether there is a recession or a pandemic, the rich never go through a recession so, that’s the fundamental truth of the matter. Their wealth will get reduced because of stock market but you know, during pandemic stock market went up manifold. So, certain large businesses, you know the sectors, made a lot more money than they ever imagined that they would. Overall the luxury market has been quite stable, in fact pandemic helped certain industries to grow,’’ Hemant Mediratta, founder of OneRep Global, a luxury representation firm, tells India Outbound.

Hemant Mediratta, founder of OneRep Global

He goes on to predict a rapid recovery in the number of luxury Indian travellers overseas. ‘‘Because they couldn’t travel, as frequently, as earlier, so the pent-up demand is now driving the growth and they should surpass the 2019 numbers very soon,’’ he says.

Indeed, over the past few months, as India reopened its air space to regular international flights, a larger number of Indians have begun travelling and many of them are retracing the paths of the celebrities and even trying to have themselves photographed in the exact same place and in the same posture as their idols.

They may sound wanna-be, but the Indians aping or wanting to ape the celebrities are also part of one of the most important segments of the Indian outbound travel segment, whose numbers are believed to be rising sharply each year, irrespective of the economic or political situation in India and around the world.

Indeed, most data aggregators have reported that the pandemic has boosted revenues of tourism products focused on luxury travel market as high-net-worth travellers are increasingly turning to products and services that offer high levels of privacy to reduce the chances of virus contraction.

Affluent individuals are likely to demand private buy-outs of large villas or boutique hotels, where a family bubble or group could stay without risk of running into anyone else, says a report.

“During the pandemic there was an uptake for private jets as the rich wanted to travel but not to the regular hotels but may be some exotic villas and they wanted to stay in secluded places with their families, in a sanitised environment,’’ says Mediratta of OneRep Global.

Other companies involved in outbound luxury travel confirm the trend. “Absolutely the pandemic has caused a pivotal shift in the traveller mindset. The two things that stand out most are longer-stay holidays tailored to individual preferences, and last-minute bookings as the last remnants of Covid-19 still continue to linger. Both are new trends and a direct con sequence of the pandemic,’’ says Amit Kishore, founder of Think Strawberries, a tourism representation firm that boasts of a variety of clients, many of them dealing in luxury travel.

Amit Kishore, founder of Think Strawberries

“Travellers are also noticeably more focused at wellness with nature breaks and adventure holidays gaining a tonne of popularity. Innovative products, unconventional experiences, flexibility to cancel/modify bookings, affordable pricing etc. are all factors at play. Other than this, workations have taken big leaps as digital platforms allowed us to understand that business efficiency doesn’t necessarily require physical face time. Several professionals now termed ‘digital nomads’ have chosen to park themselves close to nature in picturesque islands or hills, or are on the move from one exotic location to the next. Travellers are currently displaying an insatiable appetite and ‘revenge travel’ is a trend that is most certainly here to stay,’’ Kishore tells India Outbound.

A report by GlobalData says that pandemic altered travel mode preferences of the luxury market. Due to the infectious nature of Covid-19, people viewed shared modes of travel, such as transit and car sharing, as more risky than individual modes of travel, it says.

“Within air travel, there was a noticeable increase in the use of private aviation relative to commercial air travel. Some of the demand for private flights is also reported to come from passengers who are looking to fly non-stop on routes that have been dropped by commercial airlines that reduced their networks during the pandemic,’’ says the report by the company.

‘‘As an industry, significant effort has been expended in the last year to mitigate and shift the effects of the pandemic. With destinations reopened, there is a good chance that outbound luxury travel from India will see a significant increase,’’ says Lubaina Sheerazi, CEO & co-founder of BrandIt, a tourism marketing agency.

Indians aping or wanting to ape the celebrities are also part of one of the most important segments of the Indian outbound travel segment

No longer a niche

Even in 2012, luxury travel market was considered to be a small niche of the global tourism market. It came certainly with high margins, but the number of travellers was low. And most of them were from the developed world countries, notably the United States and Europe, besides Japan and South Korea in Asia.

Over the course of just a decade, the picture has changed completely and has grown multifold and in 2019, it had reportedly reached USD 1.9 trillion, driven by rising middle-and upper class disposable income and consumer spending, rising demand for accumulating travel memories, and an increase in micro trips. In addition, the growing use of the internet and the presence of social media have also driven the market forward.

‘‘The primary benchmark for the luxury travel market is growing traveller preference for personalised service, reliable transportation, exclusivity, and positive and professional interactions with staff,’’ say travel experts. A major trend that has emerged in the last few years is the preference of people for embarking upon solo luxury tourism to achieve their travel goals without distractions or interruptions solo luxury tourism to achieve their travel goals without distractions or interruptions.

The other major shift that has been observed is the geographic distribution on the origin of travel. While the rich nations or OECD countries remain important players, the largest source market for luxury travel in the world now is Asia Pacific that had 33 pc share of the market, followed closely by Europe with 30 pc.

Asia’s emergence as source of luxury travel has been driven primarily by the Asian giants China and India. In 2019, outbound luxury travel market in India was valued at USD 8 billion and it is expected to climb rapidly to USD 11 billion by 2024, despite the hiccups caused by the pandemic.

High rollers

One significant trend that has emerged from India and which is attractive for overseas players is the high average spend per tourist, which has been rising significantly. Though in the mass market, Indian travellers and travel agents are known as tough negotiators and even hagglers, in the luxury segment, the price is never even discussed as long as the experience is luxurious.

“We are receiving many travellers from India, for whom the price is not important, but the experience is. And they no longer want the ‘Indian touch’ or the Indian experience, but rather look forward to a traditional French experience when they come aboard our boats especially for dinners,’’ Claude Micallef, sales director of Bateaux Mouches, the leading Parisian river cruise operator tells India Outbound.

“Indians are amongst the highest spenders abroad, ranking 40th worldwide. According to European Travel Commission (ETC) Survey June 2020, outbound tourism expenditure from India totalled EUR 18.9 billion in 2018, at a spending of EUR 720 per departure,’’ says Kishore.

Perhaps what is propelling the market and the spend even higher and much faster than before is that there has been a dramatic shift in the travellers’ profile as well. While earlier the Indian travellers were mainly middle-aged or young couples in their late 20s or 30s, today more and more millennials are travelling.

Luxury and meaningful consumption are more important to millennials than owning things and hence the per capita spend is much higher and is rising faster than ever before.

Rolling out the red carpet

No wonder then, destinations around the world are eager to catch the eye of the Indian luxury traveller. “To answer your question- every country is targetting the Indian traveller!” says Kishore, adding that Europe, the Americas, South-East Asia, Maldives, as well as Middle Eastern countries, notably Saudi Arabia that has recently reopened for leisure travellers, are seeing unprecedented demand.

Lubaina Sheerazi, CEO & co-founder of BrandIt

Sheerazi of BrandIt highlights that destinations like the Indian Ocean archipelago of Seychelles and the Gulf nation Qatar are also aggressively seeking Indian luxury travellers. “The tropical paradise islands of Seychelles are making strategic moves to heighten awareness of Seychelles as a luxury destination for the Indian market. Qatar, too, has a plethora of opulent offerings as a destination and is actively working to tap the luxury segment through various marketing activities,’’ says Sheerazi.

In order to enhance their footprint in India, the destinations as well as individual stakeholders have been rapidly evolving their strategies, trying to keep pace with the emerging trends and demand from the consumers.

“As borders continue to open up for Indians, we are aggressively rebranding our clients as safe destinations, conducting strategic marketing campaigns and drawing attention to their unique tourism offerings across traveller segments. All our strategies are customised and are relevant to specific target segments in the Indian market. We follow a robust cross channel strategy to effectively meet that objective. Our USP at Think Strawberries is to bring the destination or product to life with a very vivid imagery designed at striking a chord with the consumer,’’ emphasises Kishore.

“New destinations emerged during pandemic, any destination that accepted the Indian travellers flourished. As a result, Indians experienced a lot more destinations which were not their regular destinations and people went offbeat.

For instance, Ras Al Khaimah. We all knew there was an emirate called Ras Al Khaimah, but that was it. But now look at the destination and the demand for it as it is a great value destination. Similarly, for Maldives, India became the top nationality. Any destination where Indians can go visa free is flourishing now,’’ says Mediratta.

Diversified source market

Another significant shift in the Indian outbound travel market over the past decade is the dramatic diversification of the source markets in the country. Till about a couple of decades ago, an overwhelming majority of Indian luxury travellers, like the broader outbound travel market, came from the four metropolises in the country – Mumbai, New Delhi, Chennai, Kolkata and their surrounding areas.

However, the rapid growth of Indian economy, notably in the 2004-2012 period has seen a number of high-income clusters emerge around the country. It is notable that Asia’s richest man, Gautam Adani, does not stay in any of the four metros, but instead is based in Ahmedabad in Gujarat.

Similarly, the number of Ultra High Net Worth Individuals (UHNWIs) or those with net assets exceeding USD 30 million rose 11 pc from 12,287 in 2020 to 13,637 in 2021, says real estate consultancy Knight Frank.

According to the Hurun India Wealth Report 2021, the number of dollar millionaire households in India increased by 11 pc to 4,58,000 households compared to last year. These households have a net worth of at least INR 70 million or USD 1 million.

The number of Indian dollar-millionaire households is estimated to increase by 30 pc over the next five years to reach 6,00,000 households by 2026.

The new wealth is no longer being generated only in the four metros but literally across the country and these cities, often called as Tier II and Tier III cities, are the hottest emerging centres for luxury travellers and these are also amongst the cities targeted by overseas players to attract luxury travellers.

“Broadly, we target eight of the top source markets for outbound tourism in India, namely, Mumbai, Delhi, Bengaluru, Kochi, Trivandrum, Chennai, Ahmedabad and Kolkata, but with an increasing disposable income, millennials’ positive travel disposition and a large middleclass population, we are seeing huge momentum and growth potential in tier 2 and 3 cities. Many tourism destinations are therefore increasingly eyeing these smaller towns and so we develop tailor-made strategies according to their specific needs,’’ says Kishore.

Sheerazi agrees that the footprint of the luxury travel market has indeed widened across the country and that the destinations are not only aware of it, but also are keeping up with the new trends.

“Destinations are more driven than ever before with staying on top of travel trends, and they have already recognised the potential of luxury travel segments not only in the country’s major cities, but also in tier II and tier III markets in India. Due to thriving cash flow, there is a large emergence of consumers from these advancing clusters, which will be critical to driving the growth factor,’’ says Sheerazi.

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