A recent study by travel firm Arival has revealed a widening wealth gap in the experiences sector where affluent travellers, particularly the young, are spending significantly more while middle-income travellers are cutting back.  

According to the report by Arival, this trend  underscores the increasing disparity in travel spending and signals a potential long-term shift in the industry’s dynamics.

It says that the implications of this growing divide could be significant for the experiences sector.  

The report raises the question over whether this a cyclical trend, or something more, hinting at the possibility of a fundamental change in the travel landscape with lasting consequences.

As middle-income travellers tighten their spending, the industry may become increasingly reliant on a smaller, more affluent customer base.  

This could necessitate a strategic shift for many operators, adapting their offerings to cater to the unique preferences and expectations of high-net-worth individuals.

As per the key findings of the report, the younger affluent demographic with ages between 18 to 44 represents two-thirds of all affluent travellers and drives an even larger share of bookings and spend, particularly for activities.

The report says that younger affluent travellers spend significantly more on each trip, nearly USD 5,000 compared to middle and lower-income travellers, who spend an average of USD 3,597 and USD 2,305 respectively.

The statement adds that middle-income travellers, once the backbone of the industry, have significantly reduced their spending, perhaps reflecting broader economic pressures and a shrinking middle class.  Arival‘s report reveals that middle-income households now represent 51 pc of travellers, down from 58 pc in 2019.

According to the study, travellers with annual household incomes of USD 150,000 or more have dramatically increased their share of spending on tours, activities, and attractions, now accounting for nearly half or 46 pc of the market.  

Notably, they represent just one-fifth of all experiences travellers, yet they account for nearly a third of all bookings.

Douglas Quinby

It adds that the growing wealth gap poses both challenges and opportunities for the experiences sector, potentially necessitating a shift towards catering to the preferences of affluent travellers.

“The shift in traveller demographics, the rise of the affluent traveller and the pullback of middle- and lower-income travellers, may be more than just the result of another economic cycle. It could signal a bigger, more fundamental shift with enormous long-term implications for our industry,” says Douglas Quinby, co-founder and CEO of Arival.

“Travel may come to rely on more and more dollars coming from a smaller subset of travellers.  Fortunately, these travellers are especially hungry for experiences, however, their preferences may differ from the general traveller, meaning some operators may need to adapt their offerings to attract these travellers.  The largest traveller segment, the middle-class traveller, may be increasingly vulnerable during downturns and more price sensitive even during upswings,” Quinby adds.