Luxury tourism: an untapped emerging market in Africa

By Danilo Desiderio

As the global appetite for luxury tourism continues to grow, many African countries are striving to tap into this profitable market by offering tailored travel experiences that combine entertainment, relaxation, and exclusivity.

A market analysis from Grand View Research, a U.S.-based firm that specializes in economic trends, predicts that the global luxury travel market will reach a value of US$1.38 trillion in 2023, with a compound annual growth rate (CAGR) of 7.6 percent over the next 15 years.

This growth is attributed to the rising number of wealthy travelers with considerable spending power, a trend that has revitalized the global tourism sector following the downturn caused by the COVID-19 pandemic. The pandemic has heightened awareness of health and safety among travelers, further driving interest in high-end travel options.

Another significant trend noted in the report is the shift in luxury travel from individual pursuits to more group-oriented experiences. A TripAdvisor survey supports this trend, revealing that family-friendly tours have experienced substantial growth, with bookings increasing by over 200 percent in 2021 and a remarkable 291 percent rise among U.S. travelers.

According to the latest World Tourism Barometer from the United Nations World Tourism Organization, international arrivals in Africa in 2023 reached 96 percent of pre-pandemic levels, exceeding the global average of 88 percent. This achievement provides a solid foundation for African nations to consider diversifying their tourism offerings towards premium market segments.

In addition to South Africa, which is included in the Grand View Research analysis, other sub-Saharan countries are working to attract high-spending visitors. Countries like Mauritius, Seychelles, and Kenya, where tourism is vital to their economies, are leading the way. Emerging destinations such as Rwanda and Benin are also making progress in the luxury tourism sector.

Rwanda has established a reputation for providing high-end eco-tourism experiences, while Benin is actively working to carve out its niche. In October, Bénin Tourisme, the national tourism development agency, announced a partnership with the Sofitel Cotonou Marina Hotel & Spa, the country’s first five-star hotel. This collaboration aims to develop exclusive travel packages for both business and leisure travelers eager to explore Cotonou and its surroundings, including participation in exclusive events at Sofitel.

The goal of this initiative is to enhance Cotonou’s status as a premier tourist destination and position Benin as a key stop for luxury travelers. Other African nations can draw inspiration from these efforts to capitalize on the growing luxury travel market.

While luxury tourism is still in its early stages in many African countries and faces structural challenges such as inadequate transportation infrastructure and security concerns, the potential for growth is evident.

A recent study emphasizes that opportunities in luxury tourism must be pursued not only with vision but also with strategic planning and investment.

Danilo Desiderio serves as the CEO of Desiderio Consultants Ltd in Nairobi, Kenya, specializing in African customs, trade, and transport policies. He is a customs and trade expert at the World Bank and a senior associate to the Horn Economic and Social Policy Institute (HESPI).