Growing demand for luxury tourism puts Latin America's potential to the test

15-08-23

The recovery of luxury tourism has been diametrically opposed to that of traditional tourism in the world and also in the region. While the latter is only this year on the way to making up for what was lost during the pandemic, according to the World Tourism Organisation (UNWTO), the former has already recovered and even continued to grow.

This is the diagnosis shared by the executive president of the Brazilian Association of Tour Operators (Braztoa), Fabiano Camargo.

The association's top representative analysed the behaviour of post-pandemic luxury tourism and projected double-digit growth for the sub-sector this year, supported by increased business travel and the search for distinctive experiences which, in any case, would not be without challenges on the supply side. 

Camargo pointed out that, according to estimates from the luxury industry, the activity would have grown by close to 100% last year in the region, with several Latin American countries being particularly attractive for this type of tourist profile which, according to the expert, "is for short trips, but full of experiences". 

These types of travellers "don't come just for the hotel". "They want unique experiences that connect them with the environment, different lunches and high-end wines. The luxury tourist takes a helicopter to shoot a video from the heights of one city to have lunch in another. That is the profile of the luxury tourist visiting the region," he explained. 

In fact, an EMR study on the luxury yachting market, echoes Camargo's characterisation. It expects the sector in Latin America to grow at a compound annual growth rate of 7.16% between 2023 and 2028. This specific market moved US$ 400 million in 2021, which is the latest figure that the research firm handles.

"The increasing inclination of people to participate in marine recreational and leisure activities, and the growing number of high net worth individuals also stimulates the growth of the market," the publication says. 

By way of reference, Camargo said, at the last International Luxury Travel Market Latin America the growth of this industry was recognised especially in Brazil, whose country is on the list of those generating the greatest attraction, along with Mexico, Peru, Chile and Argentina.

"When we talk about luxury tourism products, we see that there is an attractive offer in Ushuaia, El Calafate and Mendoza in Argentina; in Chile, Patagonia and the entire wine region stand out. In Peru, the offer is much greater thanks to the Belmond hotel chain, and in Mexico we see a much more advanced industry with a wide range of services," he said. 

Colombia, meanwhile, is an economy that is just beginning to unlock its potential in this segment. 

And although the expert pointed out that there are no specific statistics on how much this particular segment contributes, he exemplified by saying that, in the case of Brazil, tourism in general represents around 8% of GDP and that there is evidence of the impact that the luxury division can have on an economy. 

"We have seen clear cases of regional economies where luxury tourism is starting to be boosted. Resources definitely skyrocket, consumption does too, and in the end this regional activity is boosted. That is the main impact of luxury tourism on countries," Camargo explained. 

But as the industry grows, so do the challenges on the supply side. According to the expert, there are still significant gaps in the region compared to other more developed jurisdictions, such as Europe, which has a solid offer in this sector. 

Based on the fact that "there is a lack of luxury products in the region", Camargo said that the quality of service is undoubtedly the biggest current challenge.

 "With the pandemic, care has deteriorated, not only in terms of health but also in terms of the behaviour of the workforce. We have seen how, for example, there are workers who do not accept night shifts, and that, seen from experience, is a challenge". 

To this he added the forecast of fewer aircraft to transport a growing demand as well as the need to move forward in adapting and developing new infrastructures.