According to a new report by McKinsey titled “The State of Tourism and Hospitality 2024,” demand for luxury tourism and hospitality is set to grow faster than any other segment through the rest of this decade. The study, based on a survey of over 5,000 travelers, reveals significant shifts in the profile of the global luxury traveler.
Traditionally, the luxury traveler—defined by McKinsey as someone who spends at least $500 per night on accommodations—has been a fixture in the market.
However, the demographics of this segment are evolving. Approximately two-thirds of the $239 billion luxury travel market is driven by the affluent class. Within this segment, “ultrahigh net-worth” individuals (those worth more than $30 million) accounted for 15% of all luxury travel spending last year.
READ MORE: Cornwall Couple Launch New Luxury Travel Agency Committed to Going the Extra Mile
“Very high net-worth” travelers (worth between $5 million and $30 million) represented 16% of the market, while “high net-worth” travelers (worth between $1 million and $5 million) made up a substantial 33% of luxury market spending in 2023.
Interestingly, the report highlights the rise of “aspiring luxury travelers,” whose net worths range from $100,000 to $1 million. This group contributed 35% of luxury travel spending last year, amounting to $84 billion—more than any other cohort.
The authors of the report emphasize the importance of understanding this non-millionaire segment for two reasons: its significant size and its potential for brands to cultivate enduring loyalty as these travelers ascend to higher income and wealth tiers.
Spending on travel tends to peak between the ages of 40 and 50. However, younger travelers are increasingly willing and able to spend at luxury levels. These “aspiring luxury” travelers are generally under 40, often without astronomical salaries or home ownership.
They afford luxury experiences by allocating a large portion of their wealth to travel. Over four in five non-millionaire luxury travelers are motivated to explore new places, and nearly six in 10 are interested in cultural or historical trips.
Luxury travelers, in general, are more inclined than mainstream travelers to seek novelty and specialty trips. Seventy-two percent of luxury travelers prioritize visiting new destinations, compared to 44% of other travelers.
Geographically, the source market for luxury travelers is shifting. While North America currently hosts the most millionaires, Asia, particularly China, is projected to overtake it by the mid-2030s due to growing wealth in the region.
This wealth increase has spurred a boom in luxury hotel construction, with over 40% of the global luxury-hotel pipeline located in Asia, and 43% of those projects in China.
By the end of the decade, McKinsey projects that high net-worth travelers (worth between $1 million and $5 million) will become the biggest spending cohort, with expenditures reaching $154 billion.
Meanwhile, aspiring luxury travelers will remain a significant force, expected to spend $107 billion in the luxury travel market by 2030. This growth underscores the expanding influence and changing dynamics within the luxury travel sector, driven by a new generation of affluent and aspiring travelers.
READ MORE: Resort Day Passes: Luxury Travel on a Budget
