This is the first installment of a three-part series of blog articles looking at some of the key trends in luxury tourism and hospitality in 2025.
As the world emerges from the disruptions of recent years, the travel industry is undergoing a profound transformation. Travelers today are no longer content with ordinary vacations; they seek meaningful, immersive experiences that align with their personal growth and their values and aspirations, often preferring boutique hotels that offer unique, personalized service and a commitment to sustainability.
This shift is especially pronounced in the luxury travel segment, where demand is evolving rapidly and redefining what it means to travel in style.
Understanding the changing preferences and demographics of affluent consumers in this market is essential for industry players looking to stay ahead of the curve and cater to the next generation of discerning adventurers.
The number of travelers seeking experiences that transcend the ordinary has shown significant growth. This trend is expected to continue throughout 2025 and beyond, creating opportunities for a wide range of service providers in the travel industry.
From travel agents to hoteliers upscale hotels and tour operators, those catering to this dynamic and lucrative segment stand to benefit significantly.
While defining "luxury" may be subjective, identifying those who actively pursue it is more straightforward. For example, McKinsey categorizes luxury travelers as individuals who spend at least $500 per night on accommodations.
This definition highlights that luxury travel isn’t solely reserved for the ultra-wealthy with millions at their disposal. Instead, it encompasses a broader spectrum of affluent individuals. According to McKinsey, 35% of the luxury travel market is now composed of travelers with a net worth between $100,000 and $1 million.
Notably, the new luxury traveler is not exclusively a retiree. McKinsey’s research sheds light on the shifting age profile of this market:
While baby boomers do represent a significant portion of luxury spending, 80% of the luxury leisure market is in fact made up of people below the age of 60. Spending on travel peaks between the ages of 40 and 60, and younger travelers show an increasing willingness and ability to spend at luxury levels.
As global wealth is projected to increase by 38% by 2027, according to Marriott research cited in a Hotel Dive article, this rise will be mirrored by continued growth in elevated travel spending. Travelers in younger age groups are poised to lead this growth, signaling a shift in the landscape of luxury travel.
Quoted in a recent Newsweek article, Duncan Greenfield-Turk, the founder of Global Travel Moments, noted that budget travel is losing popularity among millennials.
"People in their 30s and 40s are now looking for travel that offers real value and quality rather than just the cheapest options," he said.
Kristan De Graaf, CEO at Elite Rentals Dubai, agreed, telling Newsweek that millennials are now "more interested in comfort, more traditional luxury experiences, and unique experiences," with more "choosing private yacht rentals, high-end hotels, and custom travel packages instead of traditional, low-cost options."
While millennials have long been a driving force in the industry, Generation Z (born between 1997 and 2012) is emerging as a significant player. This generation now represents approximately one-third of the global population and wields an estimated $143 billion in spending power.
McKinsey notes:
People in their 20s make up a smaller share of the luxury market, but acquiring customers in this segment is still important. Their lifetime value can be significant, given the many years of luxury travel that likely lie ahead of them. Offerings for younger populations should be tailored to their interests, which tend to cluster around social experiences, authenticity, sustainability, and digital connectedness.
“As millennials and Gen Z are projected to represent over 60-70% of luxury purchases by 2030, the game plan is being rewritten,” noted Ivana Johnston, CEO of the hotel-tech advisory firm Puzzle Partner. “These discerning young travelers prioritize personalized experiences, sustainability, and seamless omni-channel engagement.”
This generation’s willingness to invest in leisure travel may be partly influenced by the COVID-19 pandemic, which disrupted global travel and heightened the desire for meaningful experiences. A 2022 survey by Booking.com revealed that nearly half (49%) of respondents intended to spend more on their next trip to make up for lost time.
Similarly, an Expedia study found that 80% of travelers aged 18 to 34, encompassing younger millennials and older members of Generation Z, were willing to pay more to upgrade their experiences.
At first glance, all-inclusive resort vacations may seem to conflict with the growing desire for unique experiences. Additionally, all-inclusives are often associated with budget-friendly family travel rather than high-end, luxury experiences.
However, all-inclusives have evolved, and so too have travelers' perceptions of them. In their jointly issued Unpack ’25 report (described as “the data-driven predictions of where people will go and what they’ll do there in the year to come”), Expedia, Hotels.com, and Vrbo combined first-party travel data with global research.
The Unpack ’25 report reveals that one-third of surveyed Gen Z consumers say their view of all-inclusives has improved, with 42% stating that an all-inclusive resort would be their preferred type of accommodation.
In response to this growing demand, major hospitality-industry luxury brands such as Hyatt and Marriott have entered the all-inclusive market — but can it genuinely be considered a luxury category?
According to McKinsey, aspiring luxury travelers do indeed choose all-inclusives “for the ease, convenience, and wide variety of instantly accessible activities they can provide.” Resort operators can cater to the luxury market through exclusive offerings and personalization:
To court luxury travelers, resorts might consider offering dedicated concierge desks willing to go the extra mile in booking unique activities and difficult-to-get reservations. Customized dining options, such as chefs willing to cook any meal on demand, can also appeal to this group. In addition, resorts might offer adventurous experiences such as scuba diving, sailing lessons, or guided hikes as part of the all-inclusive package.
These younger affluent travelers aren’t just seeking traditional notions of luxury; they value authenticity and uniqueness. The distinct preferences of these luxury seekers reflect a broader industry trend toward creating bespoke, immersive, and sustainable travel experiences that resonate deeply with a new generation of adventurers.
We will explore this demand for more unique luxury travel experiences and personalized service in more depth in the next installment of this three-part series of blog articles.
For more on this and other topics — including the importance of the experience economy and the growing role of AI — please read our new report, Redefining Luxury Hospitality.