The luxury hotel industry has undergone a significant transformation with the advent of technological innovations. Luxury hotels no longer just offer premium facilities and services. They also aim to enhance the customer experience through technological innovations, exclusive services, and new ecological practices.
According to Fortune Business Insight, the global luxury hospitality market, valued at $140.28 billion in 2023, is expected to grow from $154.32 billion in 2024 to $369.36 billion in 2032, with a compound annual growth rate of 11.5% over the forecast period 2024-2032. North America dominated the luxury hospitality market in 2023, with a 32% market share.
Growth Drivers of the Luxury Hotel Market
The tourism industry has seen continuous growth over the years globally, with increasing numbers of domestic and international trips. According to the World Tourism Organization (UNWTO) report on the impact of COVID-19 on international tourism, published in 2023, over 1.28 billion tourists traveled worldwide in 2023, an increase of 34% compared to 2022.
The hotel industry has undergone a significant transformation with the integration of luxury services and advanced technologies such as automated text messaging, contactless payments, chatbots, and virtual reality hotel tours. Luxury accommodation packages, offering premium rooms with exclusive services, attract high-end customers who tend to extend their stay. This trend has contributed to a significant increase in revenue for establishments that adapt to these expectations.
The emergence of online accommodation booking services has further boosted the market’s prosperity. For example, in 2021, Marriott International launched another version of its mobile app, Marriott Bonvoy, with new features such as better booking options, enhanced personalized experiences, and customizations for earning and redeeming points. Accor Group has also undergone a technology-driven transformation by creating a Digital Factory this year, with the aim of improving digital experiences for customers. Consequently, the increased demand for premium services from luxury hotels with enhanced booking functions is expected to consolidate the luxury hospitality market share.
Moreover, high-end hospitality companies are thriving due to the constant bookings by business executives at luxury airport hotels or centrally located city hotels. As a result, the growing number of wealthy populations and high-end business travel is expected to boost this market.
Adoption of Green Practices is the New Trend in the Luxury Sector
Hotel owners are focusing on providing services that do not harm the environment due to consumers’ shift towards a more “natural” lifestyle. In March 2023, the World Travel & Tourism Council (WTTC) launched a verification system that provides an environmental framework for accommodation providers worldwide. It includes a set of criteria that all hotels should adopt to promote responsible and sustainable travel and tourism practices.
Additionally, the Five Star Alliance, a globally recognized site for luxury hotel bookings in 140 countries, has recently listed several environmentally-friendly luxury hotels worldwide. Among them are Banyan Tree Bintan (Indonesia), Four Seasons Vancouver (Canada), Hyatt at Olive 8 (United States), Shangri-La Hotel Bangkok (Thailand), and The Oberoi Vanyavilas (India), among others. These hotels are ranked based on several factors, including the use of locally available materials, hiring local labor, and adopting sustainable business practices.
What Could Hinder Market Growth?
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