Travel & Tourism
A rough ride for luxury travel?
December 2008
“In recent years the luxury travel market has outgrown
GDP by a factor of three. There is no evidence to suggest
that the sector will decline at a slower rate.”
Guy Gillon, Head of Travel & Tourism M&A, PwC
“The sector is in for a rough ride, mitigating actions
need to go beyond short term measures and be sufficient
and material enough for a business to navigate through two
to three years of challenging conditions.”
Malcolm Preston, Head of Travel & Tourism, PwC
1. Luxury travel: A recession proof market place?
1.1 Luxury travel has been a booming market
There is an emerging pattern forming as the recession takes hold - those sectors that achieved
the biggest growth during the boom era will experience the hardest falls, and luxury travel is no
exception.
In fact, the luxury sector in its entirety enjoyed double digit growth rates over the last decade.
With credit readily available, an unprecedented portfolio of investment options and
opportunities, and the banking boom, the luxury playground was accessible to a much wider
audience than simply the high net worth individuals (HNWIs). As the rich became richer, those
aspirational consumers who benefitted from perceived affluence from rising house prices and
readily available credit, started to shop in the luxury department.
Travel in this segment has increased significantly. We estimate that the luxury travel market
has grown historically at c.10% p.a. to 2007 (vs. GDP growth of c.3% over the same period,
which the broader travel market has historically tracked) with the UK spend on luxury holidays
reaching c.£5bn p.a. This upward trend has been driven through:
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