As an increasing number of ultra wealthy clients are spending their wealth on vacations, it has become necessary for luxury hotels, tour operators and concierge services to customise their offerings accordingly based on specific UHNWIs preferences, interests and demographics. Completing rigorous KYC functions and being customer focused is the only way to service UHNWI clients, writes Dr Roselyn Lekdee
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As an increasing number of ultra high net worth individuals (UHNWIs) are spending their wealth on vacations, it has become necessary for luxury hotels, tour operators and concierge services to customise their offerings accordingly based on specific UHNWIs preferences, interests and demographics. Knowing your customers is the best approach to win UHNWI clients.
UHNW travellers seek to differentiate themselves from the crowd; they want individual attention, privacy and something unique. Luxury tourism generally breaks down into three components: accommodation, transport, and activities or experiences. Market opportunities in luxury tourism mainly revolve around UHNWI characteristics and preferences, which changes from person to person and region to region as cultural backgrounds, interests, wealth and personal tastes vary.
WealthInsight’s newly released report, Opportunities in Luxury Tourism: Trends in UHNWI Demographics and Leisure Interests, looks at opportunities in luxury tourism among UHNWIs in North America, Europe and Asia-Pacific based on their demographics and leisure interests from the company’s proprietary, global database of HNWIs. It focuses on the top five countries in terms of UHNWI population in Europe (Germany, UK, Switzerland, France and Sweden) and Asia-Pacific (Japan, China, Singapore, Hong Kong, India) and also looks at the US and Canada in North America.
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Social work a preferred interest of UHNWIs offering significant opportunities for philanthropic holidays
Social work is one of the preferred interests among UHNWIs aged above 50 years, especially for billionaires and centimillionaires in North America and Asia-Pacific. It is also popular among billionaires in Europe. This trend represent significant opportunities for luxury tour operators to offer philanthropic holidays, where wealthy individuals can get involved in philanthropic causes and make a difference while travelling.
It is evident from WealthInsight’s study that high-end tour operators, especially in North America and Europe, are increasingly offering philanthropic holidays. While philanthropic holidays are new as a concept, opportunities for growth in this area are enormous as social work is a common interest of the UHNWIs. As they are looking to spend holidays more creatively, it is worthwhile for luxury tour operators to offer such services, especially when UHNWIs are looking to travel to the emerging markets.
Growing female UHNW populations offer significant opportunities in luxury tourism
Although females accounted for a much smaller proportion of the UHNWI population in 2015, with around 11% in North America and 13% in Europe and the Asia-Pacific, growth in the number of female UHNWIs between 2010 and 2014 was higher than the growth rate of male UHNWIs. WealthInsight’s analysis shows that the female UHNWI population in countries studied grew at a review-period CAGR of 5.3%, as opposed to a CAGR of 4.4% for male UHNWIs during the same period. While growth in the female UHNWI population was highest in Asia-Pacific, at a CAGR of 9.1%, in North America and Europe the CAGRs were 5% and 2.9% respectively.
This growth trend represents significant opportunities in luxury tourism, particularly targeting the female UHNWIs.
Female UHNWIs are also increasingly playing dominant roles in family businesses: more than half of female billionaires in the Asia-Pacific are first-generation entrepreneurs, while less than a quarter of female billionaires in the US and Europe are self-made. As wealthy females have greater control over their careers and finances, they are becoming more selective about holidays, demanding personal and more sophisticated services. This is forcing luxury hotels, tour operators and concierge services to really get to know their preferences. The demand to combine business trips with holidays is rising among female UHNWIs. Luxury tour operators could also include services such as spa treatments, yoga, meditation, health and wellness that are key attractions for female UHNWIs globally.
Married UHNWIs with small and mid-sized families drive demand for family holidays
The proportion of married UHNWIs is high in all regions studied by WealthInsight, with 95% of the UHNWI population in Asia-Pacific and 90% of the UHNWI populations in North America and Europe falling in the ‘married’ bracket in 2015. Most UHNWIs have small or mid-sized families with between one and four children – approximately 96% of UHNWIs in the Asia-Pacific, 92% UHNWIs in Europe and 90% UHNWIs North America have families of this size.
The high proportion of married UHNWIs with small or mid-sized families drive the demand for family holidays over the forecast period. Family holidays are about spending time together, as well as enjoying individual activities such as kid’s clubs, spas and golf. It is therefore important for luxury hotels, restaurants, travel agents and entertainment companies to meet the needs of UHNWIs of different generations when they travel as a family.
