New research from World Travel Market London 2023, the world’s most influential travel & tourism event, has revealed that “affordable luxury” is becoming more popular – despite the squeeze on many holidaymakers’ budgets.
The report, unveiled at WTM London on 6 November, says “affordable luxury” is becoming more popular “amid promising sentiment overall”.
It explains that this growth area in travel aligns with a broader trend for consumers to seek out new and unique experiences on holiday.
“After the pandemic and restrictions on travel, many have wanted to upgrade their experience…as consumers proactively catch up on missed tourism experiences,” says the report.
Some of this demand may be the result of continued pent-up demand and savings accumulated during lockdowns – and relatively low unemployment rates in most countries.
The report notes: “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 cites United States consumer data from MMGY which suggests that the cost of living is having more of an effect on households with annual incomes under $50,000.
However, those earning more indicated a “high likelihood” of future travel.
Nonetheless, the report warns that some of the post-pandemic drivers of travel demand may have “gone into reverse in recent months”, posing a risk to continued expansion.
It points to persistently high costs and the recovery of sterling and the euro, which is making the purchasing power of the US dollar weaker in Europe.
The price of jet fuel is significantly higher than at the start of the year, putting pressure on air fares.
Meanwhile, the travel industry continues to face supply side problems, amid geopolitical events such as Russia’s invasion of Ukraine – and staff shortages still affect many markets because large numbers of workers switched to other sectors during the pandemic.
Consumers’ personal disposable income is also under pressure as their own transport and other living costs rise.
Despite these headwinds, the report notes: “Higher costs have not yet been a significant deterrent to growth and travellers appear willing to pay higher prices.”
Juliette Losardo, Exhibition Director at WTM London, said:
“Commissioning the WTM Global Travel Report demonstrates our commitment to helping attendees at World Travel Market make informed decisions about up-to-date trends.
“We are witnessing a remarkable resilience as people are still prioritising travel and many are seeking ‘affordable luxury’, such as higher rated accommodation or premium economy and business cabins instead of economy.
“This offers those in the travel industry a chance to help consumers who want simple travel hacks to get more bang for their buck, such as being more flexible with departure dates or finding destinations that offer better value for money.
“Savvy travel firms can capitalise on this tendency for consumers to value comfort over saving money by providing top tips for clients, loyalty schemes or added extras, for example.”
Dave Goodger, Managing Director EMEA at Tourism Economics, said:
“Findings show how consumers have a seemingly insatiable demand for travel despite a complex economic backdrop.
“We hope this report sparks useful conversations over the course of WTM London and empowers tourism organisations to make better decisions about their strategies for 2024 and beyond.”