A NEW ERA FOR THE GCC’S LUXURY MARKET
With economic headwinds impacting the global economy, we delve into how the GCC’s luxury market is coping
The luxury industry has faced a number of changes in recent years, not least here in the Gulf region. The world has seen rapid digital transformation and constantly-evolving consumer preferences and tastes, resulting in a new competitive landscape online that is continuously being challenged by varying economic trends. And yet, there remains hope for the market.
Overall, growth in the luxury goods industry will continue, as will those in other luxury segments (including cars and experiences). And while there remains apprehensive caution in the world of high-end luxury, the market continues to grow.
According to Bain & Company, the overall global luxury market grew by 5 per cent last year – now valued at Dhs4.96 trillion. Luxury cars, luxury hospitality and personal luxury goods together count for more than 80 per cent of that. While luxury products took a slight dive in 2018, the market was bolstered by cars (which grew at a steady 5 per cent from last year), gourmet food and fine dining (up 6 per cent) and luxury cruises (up 7 per cent).
The current trend in luxury is experiences
The UAE is a major spending hub in the region not just when it comes to luxury products, but luxury experiences. The overall market remained very attractive to consumers worldwide, illustrated by growth in luxury hospitality, and gourmet food and find dining (up five and six per cent respectively).
According to Simon Press, senior exhibition director at Arabian Travel Market, that trend shows no signs of slowing down, with both Saudi Arabia and the UAE expected to witness a significant increase in luxury hotel supply over the next few years.
“The opening of such iconic properties as Burj Al Arab in 1999 and Raffles Makkah Palace in 2010, changed the face of luxury tourism in the GCC, as well as the skylines of its major cities,” he says.
“The region may be working to attract a wider visitor mix, but its commitment to luxury hospitality and tourism will not take a back seat anytime soon.”
This is backed up with data that suggests over the last 10 years luxury properties have increased three-times in the GCC in just 10 years, with 95 per cent operated by international management brands.
Luxury spending, especially in the region’s two largest source markets of China and India, is also on the rise – mainly driven by the increase in high net worth individuals under the age of 35.
According to Amr El Nady, head of hotels and hospitality MENA and executive vice president, Global Hotel Desk, this goes back to the current trend of millennial spending habits.
“The world of luxury is moving towards experiences and steering away from material goods” he says.
“This trend is also going a step further with companies whose previous focus lay outside the travel sector now paying close attention to luxury hotel brands. Their motivation is often to move into adjacent spaces and be able to add luxury hospitality to complement existing luxury brands.”
According to research compiled by Allied Market Research and published by Colliers International, there are a few ways hoteliers can take advantage of the GCC’s luxury segment – including increased boutique hotels that put emphasis on privacy and exclusivity, luxury resorts that can also serve as wedding and honeymoon destinations, more famous or iconic properties in prime locations, and nature and heritage concepts, such as eco-lodges.
“Experiential luxury travel is a key trend in 2019 and hotels are definitely part of the journey,” admits El Nady.
“As millennials are a rising population, the modern-day luxury consumers are increasingly seeking out experiences and placing less emphasis on acquiring material goods. As hotel markets are seeing strong demand for the high end experiential luxury travel they are responding by developing new spaces that cater to offering unique experiences.”
Source: Gulf Business