Premiumization in Travel and Tourism – Thematic Intelligence

Premiumization in Travel and Tourism Thematic Report Overview

Premiumization is subjective, influenced by factors such as age, lifestyle, experiences, and income. Therefore, for businesses to effectively implement premiumization strategies, they must consider their target audience and market dynamics, which in turn allows tourism brands to build loyalty, attract affluent customers and continue to stay reactive to consumer changes in preferences and trends.

Premiumization in the travel & tourism sector is closely linked to luxury travel, including components such as first-class, experience-driven, and unique services.

The Premiumization thematic intelligence report provides an overview of the current landscape. The report will help to understand the premiumization trends within the travel landscape today and how these will escalate soon.

Premiumization – Key Trends

The main trends shaping the premiumization theme over the next 12 to 24 months are technology trends, macroeconomic trends, and regulatory trends.

• Technology trends: Some of the key technology trends impacting the premiumization theme are advancements in AI, the use of robotics, and IoT among others. For instance, the use of robotics is increasing in hotels to improve business operations and customer experience.
• Macroeconomic trends: The key macroeconomic trends explained in the report are the rise in affluent travelers, social media’s impact on consumption, and HENRYs (‘High earners, not rich yet’) impacted by COVID among others.
• Regulatory trends: The rising focus on health and wellness, personalization, and eco-tourism is a part of the regulatory trends impacting premiumization.

Premiumization – Industry Analysis

This section covers the distribution of high-net and ultra-high-net-worth individuals across the globe, the top domestic and overseas source markets for average expenditure, and the destinations responsible for the most expensive hotels. Additionally, use cases are then provided from each part of the premiumization value chain to add context. Finally, M&A activity from the past two years is covered within the theme of premiumization, and a timeline is constructed to show the emergence and evolution of this theme over time.

Distribution of wealth: The US continues to dominate in terms of high and ultra-high-net-worth individuals. When promoting their goods and services, premium locations and travel agencies should concentrate their efforts, to at least some degree, on the US source market because these efforts are likely to have the most impact.

The Premiumization industry analysis also covers:

• Case studies
• Timeline

Premiumization - Value Chain Analysis

The premiumization value chain has three main segments, primary suppliers, secondary suppliers, and third-party suppliers.

Primary suppliers: The industries classed as direct primary suppliers are the most necessary direct distributors in the creation of premium trips. It is imperative that the companies in these industries, or the destination, offer premium services and products that are experience-driven, unique, and provide first-class service. They are classed as primary suppliers as a premium trip cannot be assembled without utilizing them. All high-yielding travelers need accommodation and methods of transportation for international trips. Most importantly, the destination needs to be premium to ensure gratification. The companies in these industries are also the ones that wealthy travelers will spend the most time using during a trip, meaning that premium features become a necessity, such as ultra-comfort and attentive service.

Premiumization Value Chain Analysis

For more insights into the premiumization value chain, download a free report sample

Leading Public Companies

Some of the leading public companies making their mark within the premiumization theme:

• Carnival Corporation
• Deutsche Lufthansa
• LVMH

Leading Private Companies

Some of the leading private companies associated with this theme:

• Black Tomato
• Hong Kong International Airport (government owned)
• IYC

To know more about the leading public and private companies in the premiumization theme, download a free report sample

Travel Intermediaries Sector Scorecard

At GlobalData, we use a scorecard approach to predict tomorrow’s leading companies within each sector. Our sector scorecard has three screens: a thematic screen, a valuation screen, and a risk screen.

• The thematic screen ranks companies based on overall leadership in the 10 themes that matter most to their industry, generating a leading indicator of future performance.
• The valuation screen ranks our universe of companies within a sector based on selected valuation metrics.

• The risk screen ranks companies within a particular sector based on overall investment risk.

Lodging Sector Scorecard – Thematic Screen

To know more about the sector scorecards, download a free report sample

Scope

This report provides:

• An overview of the impact Premiumization has on the travel sector and seeks to understand some of the contributory factors.
• The key trends within this theme are split into three categories: consumer trends, enterprise trends, and industry trends.
• Several case studies analyze the multiple ways countries and companies have responded to the impact of this theme’s growth and what they are doing to grow with this theme.

Key Highlights

The theme of premiumization, and the upscale and luxury markets, now have the opportunity to thrive in an industry that has had to rapidly change to meet new changes in traveler demands. The increased need for privacy, a greater focus on health and wellbeing, a desire to tick off ‘bucket list’ experiences, unintentional saving of money, tendency to take longer trips, the focus on eco-tourism, and increase in millionaires means the theme of premiumization will continue to grow in importance.

Tourism companies operating in the premiumization theme share common features. They offer either unique, differentiated, or exclusive products and services. The theme of premiumization does not necessarily mean that all sectors involved only cater to high-yielding tourists. Tourism sectors associated with this theme offer premium experiences for travelers from a range of socioeconomic backgrounds. This is because of their nature, they either have to, or it makes sense financially. For example, the destination, gastronomy, airport, retail, and attraction sectors allow travelers on a range of different budgets to experience their offerings. However, the level of disposable income available to each traveler will shape what kind of experience and level of personalization they have in these sectors.

Personalization is key in premium offerings, the shift from focusing solely on premium products to emphasis on delivering exclusive and personalized offerings is apparent. Younger generations, like Gen Y that are more active on social media, may seek to capture picture-worthy moments for their online presence. On the other hand, ultra-high net worth individuals may seek truly unique and exclusive experiences. Therefore, smart destinations can help to create hyper-personalized services and products.

Reasons to Buy

• Understand the Premiumization trends within the travel landscape today and how these will escalate in the near future.
• Assess how travel and tourism companies such as tour operators, OTAs, and DMOs are utilizing Premiumization to drive revenues.
• Acknowledge the potential pitfalls of using Premiumization by understanding the social, cultural, and environmental effects on the destination.
• Discover recommendations for businesses involved in Premiumization.
• GlobalData’s thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying important themes early, enabling companies to make the right investments ahead of the competition and secure that all-important competitive advantage.
• All across the travel and tourism supply chain, now have an opportunity to capitalize on Premiumization, and there are notable examples of this. Therefore, all should buy this report to fully understand how this theme will continue to be a key theme in the future travel landscape