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Not only luxury tourists, middle-class travelers are big spenders, too

Not only luxury tourists, middle-class travelers are big spenders, too

Income inequality and how the travel industry can bring the working and middle classes into the fold were both top-of-mind for travel executives and political leaders at the World Travel & Tourism Council Global Summit in Buenos Aires, Argentina, last week.

Hospitality executives such as Hyatt CEO Mark Hoplamazian have brought more luxury and lifestyle brands into their portfolios in recent years but are also considering how to reach more middle-income travelers. He said the middle class, which he refers to as the commercial or consuming class and consists of more than 3 billion people, includes people traveling for business and also with their families. Although Hyatt is considered an aspirational brand and a bit pricey for many members of the middle class, according to Hoplamazian, the company remains focused on the segment because of its rapid growth.

This isn’t the CEO’s first time talking about this segment, as he said back in 2015 that the Hyatt House and Hyatt Place brands would account for a large chunk the Hyatt’s pipeline in the near-term. But China is also an important market for the hotel group due to its growth and outbound travel. It is the only market with a growing middle class where Hyatt and other companies are expanding their footprints. Latin American revenue-per-available-room, for example, is up 3 to 4 percent year-over-year for Hyatt.

More than five billion people will make up the global middle class by 2030, according to projections from the Brookings Institution, and much of that growth will be concentrated in emerging economies such as China and India. This segment will also spend $29 trillion more per year by 2030, or about one-third of the global economy.

Other hotel companies such as Wyndham Worldwide have spoken about the importance of the middle class, and that shouldn’t come as a surprise given the surge of disposable income that’s at play with much of the middle class.