Visa has found that oldest and youngest affluent earners spend the highest percentage of their wealth on luxury items.
Its latest research revealed that affluent Boomers (those born before 1965) spend four times more of their income on luxury than any other age group.
At the other end of the age spectrum, affluent Gen Zers (those born between 1997 and 2021) also splurge a disproportionate amount of their income in the luxury market.
Revealing the research during the international luxury travel trade market, ILTM, in Cannes last week, Visa Economist Simon Baptist said: “Boomers account for 40% of affluent spend, but they only account for 12% of affluent householders.”
While many of Generation X (those born between 1965 and 1980) are affluent, they account for a smaller share of luxury spend, said Simon. “They have the money, but they are less willing to let it go.”
He said Millennials were similarly reluctant to splash their cash on luxury, but this isn’t apparent with the youngest consumers, who – possibly because they feel they’re never going to get into the housing market and they have less job security – have more of an attitude of ‘I am just going to spend it and enjoy the money now’.
Overall, Simon said now is ‘a really good time for the affluent’. “Over the past five years, the growth rate of mass market global spending on Visa credit cards has been close to zero, but the growth rate on mass affluent cards has been 7% and the growth rate on high net worth cards has been 15%,” he said. “So really all of the growth in consumer spending is coming from high net worth cards and mass affluent cards.”
Spending on affluent cards is about three times higher than spending on non-affluent, with the mass market ‘quite challenged’, but the top end is ‘doing really well’, he added.
“The affluent are spending, and of course they do spend a lot on luxury.”
However, when Visa looked at the luxury spending by resident cardholders in capital cities around the world, it found that, in London, it was slightly down on the same period of 2024 and significantly down compared to the second half of 2024. That said, Simon pointed out that cardholders tend to spend more towards the end of the year, with December the biggest month.
Where are affluent travellers going?
There have been big changes in where luxury travellers are going over the past five years, according to Visa’s research.
The Middle East has become the strongest performing region, while Japan – fuelled by a 40% drop in the value of the yen – has also become much more popular. Meanwhile, inbound travel to North America has fallen over the last 12 months.
Destinations that have always been popular with the wealthy and continue to attract high spending and continue to see growing demand include Mallorca, Rome, Hokkaido in Japan, Madrid, Munich and Lucerne in Switzerland.
Cities such as Ho Chi Minh City in Vietnam, Cape Town and Johannesburg in South Africa, Bogota in Colombia, Cancun in Mexico, Guanghzhou in China, Kuala Lumpur in Malaysia, Manila in the Philippines and Mumbai in India are also beginning to attract more affluent travellers, according to Visa.
Why people are travelling
“People want to travel for a reason,” said Simon. “It is not good enough to have a strong, generally good tourism offering, you have got to have something that is social media-friendly and creates a moment.
“That’s what people are looking for now, a moment that other people can’t get and that they can’t get elsewhere.
“It has got to have some purpose to it.”
