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Millennials are shaking up the travel industry with their penchant for authentic, unique experiences and Muslims are no exception to this rule. The size of the Halal travel industry is expected to skyrocket with more millennials entering the workforce and pocketing greater disposable incomes.

That’s one of the key takeaways of “Halal Travel Frontier 2018”, an industry report published by Crescent Rating in conjunction with MasterCard.

Crescent Rating, which first started analyzing the Muslim travel market in 2008, says that there were an estimated 126 million Muslim travelers in 2016. The number is expected to grow by nearly 30% in the next four years, settling on 156 million travelers in 2020.

In 2015, Crescent Rating estimated total purchases by Muslim travelers to be roughly US$145 billion. This factors in expenditure on Halal food, hotels, excursions & experiences, and shopping. The number is expected to rise to a colossal US$300 billion by 2026 – more than doubling in volume in a little over a decade.

A large chunk of this growth is fueled by millennial Muslim travelers in the fast-growing economies of Indonesia, Malaysia, Turkey, and Gulf countries. 60% of the population in Muslim majority countries is currently under the age of 30 – a stark contrast to the global average, which is 11%.

It’s a demographic that players in the travel & tourism space simply cannot afford to ignore anymore.

“Brands would also need to increase their level of empathy and find new ways to better connect with Muslim travelers,” explains Fazal Behardeen, CEO of Crescent Rating. “This will be key in order to both appeal and empower their Muslim travelers.”

What are Muslim millennials looking for?

One of the seminal insights proffered by Crescent Rating is the emergence of the Muslim female travel segment. This particular demographic is gradually becoming a force in its own right with females opting to travel with their friends & family in small to medium-sized groups.

The key purchasing factors for such consumers are “specialized travel products and lifestyle services.” Destinations looking to attract female Muslim travelers are advised to engender a safe and accessible environment that respects the cultural and religious sensitivities at play.

South Africa and Indonesia are tipped to be major travel destinations for Muslims, but Asia as a whole is expected to eat up the largest chunk. The Indonesian government itself has set up an ambitious target of attracting 5 million Halal travelers in 2019, more than double the 2 million that visited in 2016. Other popular destinations are Malaysia, Thailand, and Singapore.

Sporting events in Asia such as the Winter Olympics in South Korea this year as well as the Tokyo Summer Olympics in 2020 are also expected to court significant numbers of travelers from Muslim-majority countries.

Outbound travel markets. Photo credit: Crescent Rating

The potential is undeniable. How can brands cash in?

Muslim travelers tend to weigh in specific factors before reaching a firm decision on a travel destination, according to Crescent Rating. There should be facilities that allow for accessible prayer areas, restaurants & cafes serving certified Halal food, and toilets with provision for ablution. Most travelers will flock to social media or do extensive research on the web prior to embarking on their journey.

At the same time, governments also have an opportunity to help local businesses by offering prayer facilities and Halal food in public locations like airports, railway stations, and places of interest. Taiwan is cited as an example of a country actively working to meet this demand.

Like millennials around the world, Muslim travelers will likely start their buyer’s journey on the web by searching for travel content but most mainstream sites – Booking.com and Agoda, for example – don’t have dedicated listings for Halal-friendly establishments or significant insights on where Muslims might feel comfortable.

“We find that Muslim millennial travelers are like most millennial travelers apart from their uncompromising faith-based needs,” explains Raudha Zaini, marketing manager at Halal Trip, a B2C travel portal for Muslims. “They seek what we call the 3As when they travel – Authentic Experience, Affordable Facilities and Accessible Network – all within the radius of their faith requirements.”

According to the Pew Research Center, the Muslim demographic around the world is expected to grow twice as fast as the overall world population between 2015 to 2060, reaching a projected 3 billion individuals. In terms of consumer spending alone, the global Islamic economy generated US$1.9 trillion in food and lifestyle expenditure in 2015 with projections that it’ll grow significantly to US$3 trillion by 2021.

For brands looking to appeal to a gargantuan demographic hiding in plain sight, they’ll have to focus on crafting their message and developing empathy. That’s key if they’re looking to connect with young Muslims on a personal level. One thing for sure is that the market will continue to expand at a ferocious rate.

So far the rate of adoption has been slow, at best. UK-based retailer Marks & Spencer launched a burkini swimwear collection in 2016 to a spurt of criticism. Despite dissenting voices, the line completely sold out showing there’s real demand.

Other examples are the 2017 launch of the four-star Al-Meroz hotel in Bangkok, the first Halal hotel in Thailand as well as Expedia’s US$350 million in Indonesian online travel platform Traveloka the same year.

But these are tepid responses to a market valued at hundreds of billions. Larger brands can, and should step up to match smaller incumbents like Indonesian halal cosmetics company Wardah, India’s IbaHalalCare, and California-based AmaraCosmetics.

The Muslim population is projected to reach 3 billion people in 2060, increasing at a growth rate faster than the world’s population and set to make up 31% of total population. As their consumer affluence becomes more prevalent, this demographic has become key for certain retail brands trying to grab market share.

In Southeast Asia, where 25% of the global Muslim population lives (1.6 billion), the young female Muslims, also known as Muslimah, present a new opportunity with their religious yet more worldly outlook than the previous generation.

This influential, trend watching group is open to a wider range of fashion, travel and product choices — prompting the Halal industry to move beyond the food sector.

Southeast Asian Muslim preference

Other sectors quickly catching up in Halal industry. Source: Global Islamic Finance Report

 

“Young Muslim women are showing a new set of aspirations and behaviors which represent both opportunities and challenges for brands,” said Chen May Yee, APAC director at The Innovation Group

But they also present new challenges and to better target this tech-savvy audience, companies need to combine trends, digital channels while meeting religious requirements.

Muslimah representation matters

A recent survey by JWT Intelligence’s Innovation Group focused on the Muslimah population in Indonesia and Malaysia, two of the biggest Muslim populations in the region, found that Japanese brands are regarded the highest among the 1,000 individuals surveyed.

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Japanese brands are the most popular among Muslimah in Indonesia and Malaysia compared to brands from other countries. Source: JWT Intelligence’s Innovation Group

It’s not too surprising given that more Japanese brands have geared marketing efforts towards the Muslim population, especially in fashion and beauty.

For example, Uniqlo recently collaborated with Muslim designer Hana Tajima and while textile brand Fukusa launched a silk-kimono hijabi fashion line in Indonesia.

Clothing remains the most popular category, followed by beauty, technology products, travel, and groceries.

Southeast Asian Muslim preference

More Indonesian Muslimah shop online as local players provide more options for them. Source: JWT Intelligence’s Innovation Group, Daniel Abd Halim.

As with the rest of the region, this demographic is showing a higher aptitude towards digital. They are spending at least four hours online every day, and one of the activities of choice is online shopping.

24% of Malaysian Muslimah shop online once a week and 56% do it at least once a month. The number is higher for their Indonesian counterpart, likely because of more Muslim choices provided by local players in Indonesia like HijUp, MuslimMarket, and Wardah.

However, the two cohorts differ on their opinion regarding representation in the ads that circulate in the market. Majority of Muslimah in Indonesia (82%) feel that the ads reflect the reality of the needs of their everyday life, while only 56% of Malaysian Muslimah feel the same — showing the gap for brands to provide more relatable products or experiences for this audience in Malaysia.

Tapping into a multi-trillion industry

The Halal or “lawful/permissible” industry is estimated to be worth around $2.3 trillion worldwide, growing at an annual rate of 20%. The products are not only for Muslims and also gaining more popularity among non-Muslims as a symbol of quality assurance and a lifestyle choice, but in order to capture more customers, brands need to be more than Halal.

Recognizing that Muslims have different experiences and reasons to purchase such as increase in shopping for household or beauty goods during certain holidays, brands can optimize marketing strategies to attract more loyal customers.