Luxury hospitality and tourism emerge as the growth engine of global luxury market
While the global luxury sector is experiencing a period of volatility, one segment continues to defy the trend: luxury hospitality and tourism. According to Bain & Company experts Sami Abdul Rahman and Jack Nolan, the Middle East is at the forefront of this boom.
Bain & Company, a global strategy consulting firm, has tracked the state of the luxury market for over a decade. In its latest report, the firm notes that geopolitical pressures and more cautious consumer spending have put the luxury industry under strain for the first time in years.
Take the personal luxury goods segment, for example. Across categories such as handbags, watches, jewellery, accessories, apparel, and high-end beauty, the market declined from €369 billion in 2023 to €364 billion in 2024.
However, performance across the luxury landscape has been uneven, with one area consistently outperforming the rest: luxury tourism. This experience-driven sector – which includes travel, dining, and leisure – continues to show strong momentum.
Last year, the luxury hospitality market grew by 4%, reaching an estimated $280 billion. Gourmet food and fine dining rose by 8% to $83 billion, while the luxury cruise sector surged by 30% to $6 billion.
“In the global luxury landscape, it is these experience-based categories that are leading the way,” said Sami Abdul Rahman, Partner at Bain & Company.
“Luxury today is no longer just about products, but about how people spend their time and with whom,” he added. “Hospitality, fine dining, and tourism are emerging as the brightest growth engines in the luxury sector. There’s no shortage of demand — the real question is whether supply can keep pace, and whether we’ve defined an effective value proposition to entice first-time tourists and keep them returning.”
What’s behind the trend
Several dynamics are shaping this momentum. Multigenerational travel is on the rise, with families booking larger spaces or cruises to create shared experiences across generations. Longer stays are also gaining traction, driven by digital nomads blending work and leisure, and affluent travellers seeking deeper cultural immersion. These trends are keeping occupancy rates high and daily rates above pre-Covid levels.
Advance booking patterns further underscore demand outpacing supply, with many luxury travellers now securing reservations one to two years ahead. Meanwhile, luxury cruises, once considered niche, are attracting new customers with smaller ships, curated itineraries, and conservation- or culture-focused experiences — fuelling 30% growth in a single year.
“The cruise and experiential segments are redefining what high-end travel looks like. Travellers are seeking immersion, authenticity, and meaningful experiences that go beyond luxury as status and toward luxury as connection,” said Jack Nolan, Senior Manager at Bain & Company.
The Middle East
The Middle East is emerging as a central player in the global experience-based luxury trend. With its focus on opening doors to international tourism and investing heavily in luxury destinations, the region is positioning itself as a hub for experience-driven travel.
The UAE continues to lead in attracting luxury tourists, while Saudi Arabia is rapidly expanding its offerings – from Red Sea resorts to large-scale cultural projects. With its geographic position between Europe, Asia, and Africa, the GCC is becoming a hub for both inbound tourists and regional luxury travellers.
“The GCC is at the forefront of redefining luxury tourism,” said Nolan. “With investments in world-class destinations and a focus on personalisation, wellness, and multigenerational offerings, the region is well positioned to capture outsized growth in the coming decade.”
How industry players should respond
For leaders in hospitality and tourism, Bain & Company’s message is clear: the challenge is not whether demand exists, but whether the supply of properties, services, and experiences can keep up. Operators who lean into personalisation, wellness, and multigenerational offerings will be best placed to capture value. Those who hesitate risk missing a rare growth window.
For governments, the trend calls for investing in destinations, infrastructure, and experiences through local initiatives that elevate cultural and experiential value – encouraging collaboration among local players, communities, and private-sector partners.
For private-sector leaders, it means reimagining customer engagement through creativity, personalisation, and technology-driven excellence.
Abdul Rahman concluded: “Luxury is moving beyond products. It’s becoming about experiences that matter – experiences that feel personal and blend naturally into the way people live and explore the world. Those who act boldly, expanding supply, deepening engagement, and innovating beyond the traditional luxury model, will set the pace for the decade ahead.”
