Skift Take

India is ready for a jump in luxury travel, but it will need to catch up in terms of the accommodations and services that it can offer while also being conscious that local residents, not just multinationals, benefit from this growth.

The luxury sector is expanding rapidly in India with the market forecast to grow from its current $7 billion to $100 billion in just eight years, India’s Commerce and Industry Minister Normal Sitharaman noted at the Luxury Symposium 2017 in New Delhi.

There she emphasized that stakeholders in the growing luxury market, travel and otherwise, should be making sure that local businesses benefit from the growth. She encouraged the industry to discover and promote artisanal products made throughout India.

The same can be said for travel providers as luxury travel is part of this growing market.

India’s luxury travel market has projected annual growth rate of 12.8 percent between 2015 and 2025, according to analysis from Amadeus. This is the highest growth of any of the 25 economies studied. Luxury travel is growing at a much faster rate than overall travel in India, which is forecast to increase just 7.5 percent in the same time period.

As a result, travel providers are asking themselves how they can best foster and be involved in the growth of the luxury sector in and out of India.

Indian Traveler Traits

An estimated 3.6 million Indians currently take a luxury trip abroad each year, however, that could increase as much as 8.6 percent a year, according to MasterCard.

Their arrivals are quickly growing in both nearby countries such as Dubai as well as longer-haul destinations such as Sweden.

“What you see with the luxury Indian travel market is that people still make their own reservations by and large,” explains Pavalli Shah, founder of boutique travel agency Our Personal Guest which focuses on India vacations.

“They go to the usual luxury brands such as Four Seasons, Peninsula, or Mandarin Oriental.”

Shah, part of the Virtuoso Network, says she’s built her business by tapping into their cultural appreciation of a perceived deal.

“They love a deal, no matter how rich they are.”

An Expedia study showed that 56 percent of millennials in India register on online travel agencies specifically for deals and discounts. While some have their doubts that e-commerce will work in the luxury retail sector in India, it is positioned for continual success in travel.

Robert Sinclair-Barnes, strategic marketing director of Amadeus, has another insights for travel providers targeting Indian travelers.

“Appealing to luxury travellers from emerging markets and beyond requires the delivery of a luxury experience from the moment a traveller sets foot in the taxi, until they arrive back at their front door – and every stage of the journey in between,” he told the Financial Times.

Similar to all emerging markets, travel providers have to take into account the cultural and social expectations of the growing upper class when designing services and packages for this demographic.

Inbound to India

Let’s look at the other side of the growing luxury market in India: Inbound travel is also on the rise.

India is expected to welcome 9.5 million international tourist arrivals in 2017, according to the World Travel & Tourism Council’s 2017 India report. Arrivals are expected to almost double to 17.2 million over the next 10 years.

Leisure travel spend from international and domestic travelers account for the majority, or 94.6 percent, of the country’s direct tourism GDP while business travel accounts for just 5.4 percent.

Agra, India was put in the third slot of New York Times’ 52 Places to Go in 2017 and Hampi, India snagged the 11th spot on Travel + Leisure’s similar list.

Shah, however, feels that interest in India, especially from the U.S., has a lot of space to grow.

“India, compared to much smaller countries, has a very small number of Americans. Indians will get excited and say that they are seeing more demand, but you have to look at what numbers it is growing from.”

Shah suggests that a shortage of luxury accommodations and options are part of the problem. There is also a perception that India should be a cheap trip and it is not. It’s also one that can be difficult to execute on your own logistically.

A continual buzz around the theme of experiential travel is sure to have an impact.


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Tags: india, luxury, tourism

Photo credit: The Oberoi Udaivilas in Udaipur, India, is designed after a traditional Indian palace. It includes courtyards, fountains, reflection pools, and gardens for guests to explore. The Oberoi Udaivilas

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