India’s Gen-Zs to drive domestic travel market, set to become the 4th-largest globally

India's GDP growth of over 6% annually drives a projected 9% yearly increase in travel spending

June 5, 2024

India’s domestic travel market could surpass Japan and Mexico by 2030, becoming the world's fourth-largest

Domestic air passenger traffic is expected to double by 2030, aided by state-subsidised initiatives connecting underserved airports

Intraregional travel within Asia, currently 60% of international trips, is projected to reach 64% by 2030

The luxury travel market has significantly increased, with 35% of travellers net worth between $100,000 and $1 million

According to a new McKinsey report, India’s robust GDP growth, averaging over 6% annually, is expected to drive a significant 9% increase in travel spending each year. This growth positions India’s domestic travel market to surpass those of Japan and Mexico, potentially becoming the world’s fourth largest by 2030, as highlighted in ‘The State of Tourism and Hospitality 2024’. Domestic air passenger traffic in India is projected to double by 2030, partly due to a state-subsidised initiative to connect underserved domestic airports. This initiative shifts the focus of development from major metropolises like Mumbai and Delhi to rapidly developing smaller cities such as Chandigarh and Hyderabad. Following a 75% decline in 2020, travel is anticipated to fully recover by the end of 2024, according to the report.

Despite the greater travel distances between Asian countries, Asia’s intraregional travel market is starting to resemble Europe’s. Intraregional travel accounts for about 60% of international trips in Asia, expected to rise to 64% by 2030.

A survey of over 5,000 travellers revealed varying preferences, generational divides, and emerging traveller archetypes. Two-thirds of respondents expressed a greater interest in travel now than before the COVID-19 pandemic, a trend consistent across all age groups and nationalities. The survey indicated that travellers plan more trips in 2024 than in 2023. Despite economic uncertainties, travel has become a priority, with younger travellers particularly enthusiastic about international trips. Only 15% of respondents indicated they were cutting back on trips to save money. In 2023, millennials and Gen Zers averaged nearly five trips, compared to less than four for Gen Xers and baby boomers. Additionally, millennials and Gen Zers allocate around 29% of their incomes to travel, compared to 26% for Gen Xers and 25% for baby boomers.

The luxury travel market is undergoing a significant transformation, with over one-third of its composition now being travellers with a net worth between US$100,000 and US$1 million. Notably, 80% of luxury leisure travellers are under the age of 60, indicating a shift in the demographics of luxury travel. Aspiring luxury travellers have distinct preferences, making it crucial for the industry to understand this segment. The report highlights the significance of loyalty programmes for luxury travellers, with 68% of them considering it when choosing accommodations, compared to 41% of mass travellers.

Source: Economic Times

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