Six years ago, the annual Merrill Lynch Wealth Management Report declared that Asia has caught up with Europe in terms of its high-net worth population and their wealth. It was reported then that for the first time, the net wealth of Asian millionaires has overtaken that of their European counterparts, showing that they have well and truly recovered from the 2008 GFC.
Fast forward to today and CNN Money reports that Asian millionaires now control more wealth than their peers in North America.
Unsurprisingly, the last six years saw the travel industry experiencing the rise of Asian luxury travellers. And they are not solely just from China.
The recent ILTM Asia (International Luxury Travel Market) in Shanghai produced a report in conjunction with Agility Research and Strategy, a global luxury research and consulting firm. The report, titled “Experiencing Luxury – the Asian Traveller in 2016”, is an attempt to know more about the new luxury traveller from the top countries where they come from: China, Hong Kong, Taiwan, Japan, South Korea, Singapore, Malaysia and India.
The comprehensive 38-page report covers all aspects and gets to know the Asian luxury traveller in-depth but here’s a summary that may be of interest.
Where they spend their money
In terms of future spending plans, travel is at top priority. Within travel, experiences and activities were regarded to be of importance. With the exception of Japan, fine dining experiences in the Asian travellers ranked quite high. Jewellery and premium/ luxury watches were high on the list of Indian travellers, as well as cruising holidays.
Overall, top travel expenditure in the region are, in order of priority: Travel experiences, hotel accommodation, and airline tickets.
Differences in work culture and ethics are evident in this side of the report. Taiwanese and Japanese travellers seem to take the least leisure travel (average of 2 in a year). The most frequent leisure traveller in the region are Singaporeans, taking a little over three leisure trips a year, followed by Indians and Hong Kong nationals.
In terms of international business travel, Indians not only lead the most frequent travellers, but are also the most likely to combine business and leisure in their travels. They take an average of over three international business trips a year, followed by Singaporeans. Meanwhile, South Koreans and Taiwanese have not gone on any international business trips over the past 12 months.
Next Holiday Destinations
In 2015, Hong Kong was the leading travel destination for the Asian luxury traveller, followed by Tokyo and Singapore. For the next twelve months, the top three destinations have changed a little bit with these top three cities in their travel plans: Tokyo, Osaka and Hong Kong.
Those cities are the top average within the region, so dissecting the different countries also show different destinations.
For instance, the Chinese luxury travellers have Maldives, Paris and Tokyo on their travel radar for the next twelve months. Japanese luxury travellers have their eyes set on Hawaii, New York City and Singapore.
Singaporeans are targeting Tokyo, Hong Kong, and Bangkok, while Indian luxury travellers are gearing up to go to Los Angeles, London and Paris.
Travel Preferences / Behaviour
In line luxury travel trend reports, most Asian luxury travellers seek destinations where they can do unique activities and experiences (73%). A large percent (76%) would like to explore destinations they have not been to before. Environmental awareness is increasing as well, with 63 percent of travellers saying that it is important that their travel does not affect the environment negatively.
In terms of accommodation, hotels are still the preference with 55 percent preferring to book 4-5 star hotels, while only 34 percent would opt to rent a house / flat.
And when it comes to activities in destinations, the Asian region seems to be overall united in their priorities. Top in their list to do are: discovering local food and cuisine, followed by theme parks, and outlet shopping.
How They Travel
Despite the rise of low-cost carriers in the region, Asian luxury travellers still prefer full-service carriers with the top three trusted airlines coming out to be: Singapore Airlines, Cathay Pacific and Japan Airlines.
Travellers from India and Japan are more likely to upgrade their air travel to either First or Business class, while the travelling population from Taiwan, Hong Kong and China opt to travel Economy.
About ten percent of the population of affluent travellers in the region have gone on a cruise in the past twelve months, and overall the top three cruise lines in the region are: Star Cruises, Royal Caribbean, and Princess Cruises.
Luxury Travel and Shopping
Majority of the affluent Asian travellers are interested in finding great deals in luxury shopping within their destination.
More than half (56 percent) of Asian luxury travellers prefer to buy luxury items outside of their home cities as they believe there is better selection offered.
Sixty-nine percent say that it is important for them to get the best possible price when buying luxury items, while 56 percent mainly buy luxury brands where they can get them tax-free.
Around half (52 percent) would buy luxury brands when they are travelling, regardless of destination.
The Age of Social Media
The affluent Asian traveller is proving to be very tech-savvy as around 4 in 5 travellers research their travel online.
The top two mediums used for researching their travels are: Booking sites, and online travel review sites. For the Indian and Chinese affluent traveller, travel videos and social media are important factors in their research, while Malaysians use social media for travel research.
Except for the Chinese, Facebook is the most popular medium for travel (mainly hotels and airlines) awareness among affluent Asians. As Facebook is banned in China, the Chinese social platform WeChat is the leading medium for travel influence in the country.
A surprising revelation: Despite rumours that Google+ is becoming obsolete, it still has a strong presence in the Asian market, as it is the second most popular social media channel used by affluent Asians in their travel research.
Takeaway for Travel Brands
Now that the affluent Asian traveller has spoken, what does this mean for travel brands? Some key points are:
Try to meet the traveller’s expectation of luxury. 7 in 10 Asians plan to travel more luxuriously, with Indians and Japanese preferring the pointy end of the plane (First and Business class). Hotel growth in destinations should be steady as majority still prefer traditional accommodation (hotels) versus shared accommodation (Airbnb or rental apartments).
Do not focus only on the Chinese traveller. Though China carries the bulk of affluent Asians in the region just by its sheer population size, Singaporeans are the most frequent travellers, and affluent Indians are more likely to head to destinations outside of Asia.
Offer opportunities for luxury shopping. The Asian traveller, be it affluent, or the regular kind, is generally into shopping, so it’s not surprising to know that the demand for luxury shopping is regularly increasing within the affluent Asian travellers. Shopping and travel often go hand in hand and is a major factor in choosing their travel destinations.
Look beyond the usual tourist activities. Global travellers as a whole are getting more adventurous and are seeking experiences that are unique and new. Travellers from each country have different preferences too. For instance, Chinese travellers have wildlife and on top of their list (nature tours and safaris), while Hong Kong nationals prefer going to Japan to ski.