How HNW Travellers Support the Global Economy More Than Any Other Tourist
With travel and tourism in lockdown for the foreseeable future, all eyes are understandably scanning for the source of the inevitable comeback. Though speculation is now rife as to who will be key in jump-starting the economy from its current inertia, recent data points heavily to High Net Worth (HNW) luxury travellers.
Making up only 0.3% of the global population, HNW travellers can be easily overlooked as lacking impact when it comes to the global economy. Often, luxury travel is dismissed as a small offshoot of tourism, existing for the privileged few who are more an anomaly than a force with real economic influence. How then can such a small subset of tourist be the key to reigniting the economy when the time is right?
Well, the power to it lies in reach. While the HNW demographic itself may be small, its wealth and role within the Global Luxury Travel Universe is unquestionably vital.
This Global Luxury Travel Universe is comprised of two main features; that which is directly travel-related and that which is not. There are 105.9m people who are directly employed in the travel industry, including hotels, transport services and travel agents. Indirectly related to this, there is a global luxury travel ecosystem of activities and experiences including food and drink, sporting events and outdoor pursuits that employs approximately 62m people.
This vast and interrelated web is worth $2.05trn overall, a staggering amount that exceeds other global industries in terms of discretional spend and one that is the crux of many businesses and families the world over. With travel bans affecting key locations, the ripple effect of the lockdown not only on the tourism sector directly, but on the industries that relate to it, is both wide-reaching and erosive.
From this lockdown, however, the true value of HNW travellers to the global economy has come to the forefront. Whilst travellers considered not part of the HNW demographic make up a far bigger portion of the world’s tourists, their individual value is far lower and thus far less reaching. By comparison, HNW tourists number globally at around 22.8m and their individual worth is more than $1m. More tellingly, this relatively small branch of traveller collectively controls over $94trn in wealth, which to put in perspective is almost $10trn more than the total annual global GDP.
What’s important to appreciate here, of course, is that it’s not just the inherent wealth HNW travellers have at their disposal, but the reach that wealth has and the behaviours it enables. These high value and high spending travellers not only book longer trips, but they typically do so at premium rates and it’s this amalgamation of traits and tools that results in significant economic influence. The impact then that HNW travellers have across major sectors within the economy is incredible given their disproportionate size.
Take air travel and accommodation for example, its overall combined value is worth $1.41trn globally including international, domestic, business and leisure trips. Of that $1.41trn, 36% of the spend is provided by HNW luxury travellers which is an amazing $507.6bn.
Of course, that’s just the tip of the iceberg when it comes to what travel entails. As mentioned previously, there is also the activities and experiences which make up a global luxury travel ecosystem. Within this ecosystem, we know that approximately 62m people are employed across a range of sectors such as food and drink, cultural activities and wellness. Though it’s not exclusive, these jobs are partially sustained by the contributions of HNW luxury travellers.
To illustrate further, take the food and drink industry, one of the biggest trades within the luxury travel ecosystem. From cafes and bars to fine dining, this is one of the most lucrative businesses in the world and one that’s often dependant on tourism to greater or lesser extents. International travellers contribute 261bn spend on this sector globally, which is approximately 16% of the total. Of this amount, however, a significant $113bn is contributed by HNW travellers alone.
Cultural activities, including museums and amusement parks, are yet another sector hit heavily by the current crisis and yet again one that HNW travellers have a huge impact on. Specifically, international travellers were found to contribute 31bn to this sector each year, while HNW travellers alone were accountable for 2.3bn.
Similar patterns for other travel-related sectors including sporting events, wellness experiences and performance arts have been noted in the ILTM 2020 White Paper that was recently published. The data therein reveals that time and again HNW travellers prove to be essential contributors to the global ecosystem of activities, and that’s not counting the financial support they directly feed into the travel and tourism industry.
So what does this mean for the future?
The world, as we all know very well, currently sits motionless amid the outbreak of COVID-19. A recent ITUC survey conducted across 86 countries, including 15 G20 countries, found that 82% have enforced travel restrictions on those arriving into the country. Evidently, this has a gargantuan effect on travel and in turn the ecosystems that exist around it. Across the top 50 most visited nations an average of 10.9m GDP is contributed by travel and tourism, and with the world at a standstill, it’s clear that when the time is right it will be this industry that the world looks to for the economic boost.
More specifically, HNW wealth and far-reaching spread across multiple interrelated industries has always been a core element of the overall global health of the economy and it’s only now that the vital role they play has become so clear.
With HNW travellers finally identified as a crucial demographic within travel and tourism, it’s reasonable to hope that they will pave the way for the global economic rebirth in the post-COVID-19 world. Travel advisors get ready.