Wednesday, June 25, 2025

The world travel leisure sector is experiencing a profound shift. A new Boston Consulting Group (BCG) report foresees leisure travel expenditure jumping from its present $5 trillion to a whopping $15 trillion by 2040. The catalyst for the explosive increase is not global tourism, as most would assume, but instead local travel and the growing number of arrivals from emerging nations such as China, India, and Saudi Arabia.

The “Unpacking the $15 Trillion Opportunity in Leisure Travel” report spotlights, among other things, the huge economic potential that exists within leisure travel but also the evolving dynamics among the travelers themselves, the locations visited, and the methods through which the travel arrangements are made.

According to BCG’s research, the most significant contributor to the expansion of the leisure travel market will be domestic travel. Domestic leisure travel is expected to generate close to $12 trillion by 2040. This forecast suggests that travelers are increasingly opting to explore destinations within their own countries, influenced by factors such as cost, convenience, and a heightened sense of local pride in many regions.

While international travel has traditionally been the centerpiece of global tourism growth, domestic tourism is set to outpace it. This shift in spending is driven by several factors, including improved infrastructure, the growth of local tourism experiences, and a stronger emphasis on sustainability. Regional travel, which includes trips within neighboring countries or territories, is also set to triple to over $2 trillion by 2040. However, international travel, though growing the fastest, will still account for the smallest share of the market at $1.4 trillion.

The world of leisure travel is becoming more diversified, with emerging markets playing a pivotal role in the industry’s growth. In countries like China, India, Vietnam, and Saudi Arabia, the number of travelers is increasing at a faster rate than in traditional tourism powerhouses such as the US, UK, and Germany. These nations are not only contributing to the growth of domestic tourism but also shaping the future of regional and international travel patterns.

Travelers from these emerging markets are expected to drive significant demand for a variety of tourism services, including budget-friendly travel options, family-oriented vacations, and cultural exploration. In fact, a growing number of individuals from these regions are prioritizing travel as a way to explore new cultures, broaden their horizons, and create meaningful experiences for themselves and their families.

One of the most profound changes in the travel landscape is the dominance of younger generations, particularly Millennials and Gen-Zers, who are now the most influential travelers globally. These tech-savvy, socially conscious generations are not only traveling more frequently but also spending more on their trips compared to older generations. They are more likely to book through digital platforms and seek out destinations that align with their values, such as sustainability, authenticity, and adventure.

This shift in demographic preferences is transforming the way travel companies design and market their products. Millennials and Gen-Z are also embracing solo travel, with a significant number opting for solo vacations to engage in cultural experiences, wellness retreats, or personal self-discovery. Solo travel, once considered niche, is now a mainstream phenomenon, with 18% to 39% of travelers reporting that they take solo trips.

The concept of “bleisure”—the blending of business and leisure travel—has grown exponentially in recent years. While it was initially considered a trend fueled by the COVID-19 pandemic, it has proven to be much more than just a temporary shift. In countries such as China, India, Nigeria, and Saudi Arabia, more than 70% of travelers report combining business and leisure trips. This is in stark contrast to the US, UK, and Germany, where the number hovers between 15% and 30%.

This change reflects the evolving work-life balance preferences of travelers, particularly younger individuals who are prioritizing flexible schedules and the ability to blend work and play. The rise of remote working and digital nomadism has also contributed to the growth of this trend, with more individuals seeking to work from exotic locations while exploring new destinations.

While relaxation and spending quality time with loved ones remain central to travel, the reasons behind travel have evolved. Traditional beach vacations, urban adventures, and nature excursions continue to attract tourists, but travelers are increasingly seeking more meaningful experiences. Cultural exploration, health and wellness retreats, and spiritual journeys are rising in popularity. In fact, food tourism is booming, especially among travelers from China, Vietnam, and Indonesia, where culinary experiences are a significant motivator for travel.

This shift toward deeper, more personalized travel experiences is also reflected in the growing interest in wellness tourism. As travelers seek to enhance their mental and physical well-being, destinations offering yoga retreats, meditation centers, and holistic experiences are seeing increased demand. These experiences cater to the desire for self-improvement and personal fulfillment alongside traditional notions of relaxation.

One of the most exciting developments in the travel industry is the widespread adoption of artificial intelligence (AI) tools. Travelers, particularly from emerging markets, are increasingly turning to AI-powered platforms to plan and book their trips. In countries like China, India, Indonesia, and Vietnam, AI is playing a central role in trip planning, with a significant percentage of travelers relying on AI chatbots and virtual assistants to research and book their vacations.

However, while AI is becoming an essential tool for trip planning, travelers still value human interaction. In these same markets, between 79% and 85% of travelers say that human touchpoints remain important, especially for complex travel arrangements. This indicates that while AI is reshaping the travel industry, the human element remains critical in providing personalized, high-quality service.

As leisure travel spending continues to skyrocket, travel companies will need to adapt to these changing trends to remain competitive. The future of travel is not just about attracting more tourists but about catering to the evolving needs and preferences of a new generation of travelers. With emerging markets, digital habits, and the demand for meaningful experiences driving the growth of the industry, the next two decades will undoubtedly reshape the travel landscape in ways that are both exciting and transformative.

By staying ahead of these shifts and embracing new technologies, travel companies can ensure they remain at the forefront of this $15 trillion opportunity. However, as the report from BCG suggests, those who fail to recognize the changes in traveler expectations and behavior risk being left behind.

References: World Tourism Organization (UNWTO), BCG Official Page