Besides large luxury tourism markets such as China, Japan, South Korea or Australia, two markets that are growing at an unexceptional pace are Vietnam and the Philippines.
Asia–Pacific (APAC) is the first region expected to be resumed and recovered in travel and tourism with many major markets such as China, Japan, Australia, and South Korea, and fast growing markets such as Vietnam, India and the Philippines. ILTM Asia Pacific (International Luxury Travel Market Asia Pacific – the organizer of the luxury travel event for the Asia–Pacific market) has conducted and published an in-depth study on luxury travel. luxury tourism in the Asia–Pacific market last March to explore the region’s contribution to the global luxury tourism sector.
In total, the APAC region contributes an average of 363 billion USD to the total revenue of 1.54 trillion USD in the global luxury tourism industry, with 251 billion USD of which is revenue from luxury travel activities and 112 billion USD in revenue from airline and accommodation services. APAC’s contribution accounts for nearly 20% of the total global luxury tourism revenue and is considered the fastest growing market in terms of economy, which makes it a potential market for luxury tourism.
APAC travelers make an important contribution to luxury tourism
Out of 251 billion USD spent on luxury travel activities, up to 72% of spending on luxury travel activities and experiences (excluding airfares and lodging) from APAC travelers (180.7 billion USD) is on domestic markets, which means APAC travelers still tend to seek luxury travel experiences in their own countries first, especially when international travel is still under lots of restrictions.
Outbound spending on luxury travel activities and experiences in the region and global destinations accounts for 27%, higher than the average outbound spending of global travelers on luxury activities (which is just 23%), a part of which is due to there are not many activities in the APAC region compared to other regions of the world.
Regarding airfare and lodging, 57.5% of APAC’s outbound spending was on the region, which means APAC travelers have been prioritizing traveling to regional destinations over other destinations, and as travel restrictions are eased, they will also start with local and regional trips. However high the inter-region travel demand is, the spending for outbound travel experiences is still low. Therefore, APAC countries should concentrate more on creating a diversity of activities and experiences to stimulate spending of this potential traveler market.
The APAC’s population of HNW travelers (High Net Worth travelers, whose net worth is more than 1 million USD) is only 6.4 million, accounting for only 0.15% of the total APAC population but contributing up to 48% to APAC’s luxury travel. APAC HNW travelers are also listed as having the world’s highest compound annual growth rate of 7.6%, and is expected to grow to 8 million people within the next few years, with the fast populating countries like Vietnam, China, India and the Philippines. For this reason, the APAC HNW travelers is an important target market and their demand should be paid attention to.
Top 5 luxury travel activities with most APAC travelers’ spending
APAC travelers’ favorite activity in luxury travel is F&B experiences with spending of 60.1 billion USD, accounting for 23% of global tourist spending on F&B (which is 261.4 billion USD). Of this 60.1 billion USD, nearly half (28.8 billion USD) is contributed by APAC HNW travelers, mainly on formal dining experiences and bars.
Second, APAC travelers are often more generous in terms of spending on wellness activities. On average, total APAC travelers contributed 5.1 billion USD and APAC HNW travelers contributed 2.4 billion USD, accounting for 21.5% and 10.1% respectively of global visitor spending on wellness. The wellness activities with the highest spending are beauty treatments, health treatments and diet management.
Cultural experience is the third activity on APAC traveler’s spending list with an average of 3.28 billion USD, accounting for 10.5% of total spending on cultural activities by global travelers. In particular, the amount of APAC HNW travelers paying for cultural activities is only 529.4 million USD, accounting for 1.7% of global tourist spending and accounting for 16.1% of the whole APAC spending. The top two cultural activities that APAC travelers love are visiting amusement parks, and zoos & wildlife centers.
APAC travelers also tend to enjoy performing arts and are willing to spend up to 976.2 million USD on these activities. APAC HNW travelers spend 343.8 million USD out of total spending on performing arts activities by global visitors (6.7 billion USD). Activities that capture APAC’s most attention are operas, nightclubs and music tours.
Last on the favorite activity list of APAC travelers is sporting events as they spend 610.4 million USD on average, accounting for 13% of global spending on the sector. APAC HNW travelers spend 167.7 million USD, accounting for 3.6% of total spending for major sporting events, especially top-flight soccer matches around the world as well as in the region.