--Affluent travelers gather worldwide attention today. Wealthy individuals, having at least US$1 million in net financial assets, are estimated to account for up to 25% of total expenditure (approximately US$180 billion) on travel abroad (ILTM Industry Report 2007). What are the latest trends of luxury travel market? What types of luxury travelers are currently visiting Japan?

Typically, High Net Worth Individuals (HNWIs) are defined as having investable assets in excess of US$ one million. According to the 2007 annual World Wealth Report from Merrill Lynch and Capgemini, the number of HNWIs worldwide reached 9.5 million in 2006, marking +8.3% over the level recorded in 2005. With the rapid growth of assets and wealthy individuals, it can be assumed that demands for high-end, luxury travel are likely to expand. "ILTM Industry Report 2007" estimates the size of the luxury travel market to be 3% of total international tourist arrivals worldwide. Based on data collected by UNWTO and national statistical agencies, the Report approximates that in 2006 a total of 25 million affluent travelers spent around US$180 billion on luxury travel, or US$7,200 per international arrival.

The ILTM Industry Report also highlights that the recent increase of young wealthy individuals brings a fall to the average age of high spending luxury travelers. While Baby Boomers (those born between 1946 and 1964) are leading the luxury travel market, Generation X-ers (those born between 1965 and 1979) are rapidly catching them up.

*Luxury Travelers Visiting Japan

Most of luxury travelers visiting Japan today are from the USA, Europe and Asia (particularly from Hong Kong), belonging to Generation X thus being around 30-40 years of age. Such visitors include company executives and business persons at film, fashion and sports industries, meaning that majority of them come to Japan on business purposes. In other words, Japan has not yet been well recognized by foreign affluent travelers as a leisure destination.

According to an interview survey result to several internationally branded hotels in Tokyo, many of wealthy hotel guests with business purposes are repeat visitors to Japan. Coming to Japan for many times, such visitors would rather avoid whatever being too touristic. Instead, they show high interest in places and experiences that would provide opportunities to see Japan's latest trend or everyday life. This is quite in contrast to luxury travelers coming to Japan for the first time, because these visitors would prefer Japanese history and tradition . However, both repeaters and virgin visitors to Japan commonly expect unique, private and authentic experiences, putting a value even to invisible things. They are willing to spend money on whatever services and experiences that they find of good value to them.

Luxury travelers consider Japan as a wonderful destination for business but not yet for leisure activities. Luxury travelers today in general seek experiences that are new, extraordinary and exclusive. A key challenge for the Japanese tourism industry will be how to supply products and services that could highlight exclusiveness in order to meet luxury travelers' growing demands worldwide.

In the meantime, luxury travel market is not dominated any more by traditional Western markets such as the USA and Europe. The report further analyzes Russia and China, the newly emerging source markets into the world of luxury travel.

References:
ILTM Industry Report 2007
Merrill Lynch, World Wealth Report 2007
TRAVEL JOURNAL, April 28, 2008

Figure: HNWI Population, 2004- 2006 (by Region)
(In Millions)