Travel Megatrends 2018: Asian Travelers Create a Luxury Tipping Point

One need not read seminal studies to see how Asian luxury travelers are growing in numbers and are increasingly impossible to pigeonhole as generic “upmarket” tourists.

Their rise and increased diversification are noticeable to all in the travel space. Many new high-end players seek to serve them, as well as old players who are creating new luxury divisions.

Take Singapore, an Asian market with many seasoned travelers, and one that is seeing growth from specialized outbound luxury players. These could be seasoned overseas operators opening a regional office, such as Scott Dunn, which added Singapore to its two offices in London and San Diego in May. Or they might be well-traveled individuals who team up to create new agencies because they feel they can do better than legacies at offering personalized and experiential trips. One example is Beyond X Boundaries, founded by a veteran from a legacy outbound agency, David Song.

Inbound agencies also are scrambling to cater to a more elusive breed of Asian luxury customers. It’s an important business, as more than 70 percent of Asia’s source markets are from the continent.

In Bangkok, the world’s most visited destination city with 21.5 million international overnight visitors in 2016, specialist inbound agencies are starting to launch new luxury divisions, including Diethelm Travel Group with its Diethelm Design division.

Many are creating new structures to cater to these travelers. Asian Trails Group believes creating a division to handle luxury travelers is pointless, as each luxury market is different, so it designates customer service professionals for each market to approach, quote, and tailor itineraries to suit different needs. Another company, Destination Asia, has specialists to handle VIP and luxury travelers.

The Asian luxury market is changing so rapidly it has blurred clarity. Why are specialist inbound agencies creating specialist divisions and brands? Aren’t they supposed to be specialists already, competing on destination knowledge and personalized service rather than on price, which the mass market does?

The reason is that in many Asian markets, the upper end of mainstream travel is quickly tipping into the luxury category. And many are newly rich millennials whose notions of luxury are different than the old style of five-star hotel, pool villa, fine dining, and private transfer which, as Buffalo Tours managing director Suyin Lee points out, is “where the mainstream division of luxury now belongs.”

This “Insta-generation” is creating a lot of ambivalence about luxury travel. “He or she can ask for the high life today but a simple guesthouse and local life tomorrow,” says Niels Steeman, Asian Trails’ e-commerce and marketing manager.

And those travelers don’t necessarily need inbound agencies for what they want. There are plenty of young Asian online tours-and-activities startups, such as Thailand’s Localalike (whose tagline is “Going Local is the New Luxury”), Singapore’s Backstreet Academy, or Hong Kong’s Klook, and they deliver what these travelers want the way they are used to having it.

About half of Klook’s users book a tour, activity, or attraction upon arrival, and 70 percent do so via mobile. Klook’s president and co-founder Eric Gnock Fah says he wants to cement Klook’s mobile-first and instant confirmation solutions, and create personalized experiences through artificial intelligence, as he predicts demand for spontaneous travel will keep growing.

So 2018 will see a greater dispersion of Asian luxury travel dollars, flowing into both inbound agencies and online platforms, as well as global cities and rural villages, Michelin-starred restaurants and street-side food vendors.

And as the Asian luxury traveler is value-conscious, a lot of the spending will remain in Asia, where prices are lower, service standards are higher, and tourist attractions are as diversified as the Asian luxury travelers themselves. Many of the region’s tourism offices — in Singapore, Thailand, Malaysia, and Hong Kong to name a few — have already switched their focus from quantity to quality tourism.

This year’s Megatrends are sponsored by our partners at AccorHotels, Allianz Worldwide Partners, Hilton Garden Inn, Intrepid Travel, onefinestay, and Upside.