Global Luxury Hotels Industry: Steady Growth in North America Topped off by Promising Prospects in Emerging Markets
As one of the prime standard bearers of conspicuous consumption, luxury hotels comprise an industry reliant entirely on external factors. The rising demand for luxury travel, due to the increasing purchasing power of consumers in developing and particularly developed countries, has thus been a crucial driver for the global luxury hotels industry in the past few years.
While the luxury hotels industry has thrived in conventionally popular tourist destinations, the remarkable aspect of its rapid growth in the recent past has been its strong entry into locations on the cusp of “breaking out.”
Q. How have emerging countries played into the growth of the luxury hotels industry?
In September 2016, Croatia’s Luxury Hotels Group, an initiative launched by the country’s Chamber of Economy, announced a tender for creating suitable and unifying branding, a mark of the rising acknowledgement of the immense boost luxury tourism can provide to an emerging country’s economy. The group comprises around 15 luxury hotels in Croatia and primarily targets more developed Western markets such as the U.S. due to their higher disposable income.
Such initiatives are likely to become common in more emerging countries, particularly in Asia Pacific, in the coming years, ensuring steady growth of the global luxury hotels industry. According to Transparency Market Research (TMR), the global luxury hotels industry is likely to exhibit a steady 4% CAGR from 2015 to 2021, with the market’s valuation growing by almost a third over the same period. The market, valued at US$148.6 bn in 2014, is expected to rise to a valuation of US$195.2 bn by the end of 2021.
The luxury hotels industry in emerging regions is focused primarily on expansion at present and is likely to exhibit rapid growth in the near future due to the vast unmet potential and increasing government support due to the tourism sector’s economic benefits to the state. It is a different story in developed regions, though, where the luxury hotels industry is not only expanding but adapting to the unique needs of the modern high-income class.
Q. How is the luxury hotels market in the developed world reacting to these developments?
While the luxury hotels industry has discovered new promising avenues in recent years, this hasn’t eliminated the industry’s reliance on traditional high-income regions such as North America and Western Europe. According to TMR, North America held the leading share in the global luxury hotels market in 2014 and is likely to retain its dominance through the forecast period, with a solid 5.4% CAGR expected of the market in the 2015-2021 forecast period.
A week before the Croatian Luxury Hotels Group’s announcement, a new mobile app called One Night was launched by the makers of One Night Standard, an earlier app that offered booking services for the Standard chain of hotels in New York, Los Angeles, and Miami. One Night, which will allow bookings in non-Standard hotels as well, represents a vital milestone in the history of the luxury hotels industry, as it is the first ever mobile app created specifically in order to highlight the items on offer in luxury hotels rather than to highlight the experience of past users.
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While prices are available on One Night, the app focuses primarily on an “Experience Guide,” which displays and elaborates on the activities on offer in and around the hotel. The prices, according to the designers of the app, are likely to be a secondary concern for the targeted user base of the app. One Night has currently partnered with several hotels in New York and Los Angeles, and plans to expand to Chicago, San Francisco, Miami, Las Vegas, and Austin over the coming years.
Allied to collaborative efforts that would help leading luxury hotel companies establish a foothold in emerging markets, developments such as these are crucial in ensuring the luxury hotels industry in developed regions evolves according to the changing needs of the time.