Premiumization in the travel and tourism industry is everything companies do to enhance their standard products and services to appeal to the up-scale/luxury market. Hyper-premiumization is yet another step to the very top level. It is associated with ultra/high-net-worth individuals who possess large amounts of recreational expenditure to splurge on comfort and indulgences. Travel has become more accessible to all, due to an increasingly globalized world. However, the highest revenues are usually realized through premiumization.
This thematic research report takes an in-depth look at the theme of premiumization, the leaders and challengers involved and the related trends in relation to the microeconomic and macroeconomic environment. Specific case studies are then outlined, assessing how individual companies are focused on premiumization. A unique thematic analysis is then provided, looking at the nations with the highest RevPAR and total RevPAR, along with the top national spenders on retail when on holiday. Long lasting impacts on the industry are outlined along with a set of recommendations for tourism organisations on how to attract high yielding travelers. Lastly, a company’s section is then set, outlining the tourism companies highly involved in premiumization and the nature of their business.
“High yielding consumers want bespoke, personalized offerings due to the exclusivity they require. Encouraging repeat business with existing customers is paramount for luxury brands.” – Ralph Hollister – Travel & Tourism Associate Analyst, GlobalData
This report provides an overview of the impact of premiumization on tourism and clearly defines how it is currently being utilized in the industry.
It identifies the main trends related to premiumization, classified into two main categories: macroeconomic trends and trends in travel and tourism.
This report provides detailed industry and thematic analysis on premiumization.
The main impacts of premiumization on the tourism industry are outlined, along with recommendations for organizations on how to incorporate premiumization to attract high spending consumers.
We highlight companies involved in the utilization of premiumization in its operations, including Emaar Properties and Black Tomato.
Luxury travel has often been centered on the use of premium products and material possessions to create a luxury holiday. Due to the millennial generation and their preference for experiences over material goods, trends such as ‘transformational travel’ have grown in popularity. Luxury travelers today are increasingly drawn to travel as a form of self-actualization and personal transformation. Skift identified travel focused on personal fulfillment as one of its Megatrends, stating that “personal fulfillment is the new ultimate luxury”.
Different perceptions of luxury have developed overtime in contrasting source markets. Luxury travel marketers have now realized that specific motivational drivers need to be focused on when promoting an offering, rather than individual demographics. A ‘one size fits all’ marketing approach now creates little impact for high yielding travelers that place a high importance on personalization.
Credit Suisse’s Global Wealth Report for 2019 reported that aggregate global wealth rose by $9.1 trillion to USD 360.6 trillion, representing a growth rate of 2.6% in 2019, which is a slowdown from 4.6% in the previous year. This annual result is an improvement on the decline experienced during 2014 to 2015, but below the average growth recorded since the financial crisis in 2008. The result still exceeded population growth, so that average wealth grew by 1.2% to $70,850 per adult, meaning that it was another all-time high result.
HENRY’s (high-earners-not-rich-yet) are at the leading edge of the millennial generation and are currently coming into the peak of their income range and career path. What is beneficial for tourism companies operating in the luxury sector is that these high earners are buying for the present moment, not for the long term. They need tech integrated into their luxury purchases; high quality craftsmanship is not enough. What may be frustrating for these travel companies is that many consumers in this sub-segment – and in the millennial segment as a whole – are not absolute luxury consumers. They mix and match with budget, mid-scale and luxury brands to express their personal style.
Reasons to Buy
Understand the impact of premiumization on the tourism industry, using key trends and examples to help you understand how you can adapt and understand this theme.
Assess the strategies that companies are adopting when utilizing premiumization.
Discover key recommendations on how to utilize premiumization to attract high yielding travelers.
GlobalData’s thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying the important themes early, enabling companies to make the right investments ahead of the competition, and secure that all-important competitive advantage.
CEOs and Senior Executives within the travel & tourism should utilize this report to identify if premiumization could positively impact brand image.
Marketing Directors and CMOs within travel & tourism companies can gather an insightful understanding on how they can premiumize offerings.
Kempinski Hotels, Four Seasons, Harrods, Etihad, LVMH, Dream Yacht Charter, Delta Private Jets
Table of Contents
Premiumization trends in travel and tourism
Mergers and acquisitions
Impact of premiumization on the travel and tourism industry
Recommendations for travel and tourism companies
Publicly traded companies
Appendix: Our “Thematic” research methodology