Who will win the billionaires’ space race?

Research

17 Mar 2019

For some, space tourism, or long-haul travel utilising space, is science fiction, but we think in the coming decade it will be a new market for travel/leisure industry. Both have seen a high level of new venture formation (backed by wealthy entrepreneurs) and related government-sponsored programmes. We ask: Who will win the billionaires’ space race?

An $800bn-plus space economy opportunity by 2030E

July 2019 marks the 50th anniversary of the first man on the moon. UBS expects the space industry to grow from $244bn in 2010 to $805bn by 2030E. We explore two sub-segments – space tourism, and space to serve long-haul travel on earth. Space tourism is likely to be a common reality in the not-too-distant future. While space tourism is still nascent, we think it will become mainstream as the technology becomes proven and cost falls. For instance, an expandable space module that uses an outer shell technology which will enable larger accommodation structures to be built in space has already been successfully tested. By c2030, we estimate space tourism will be a $3bn-plus p.a. opportunity growing at double digit-rates.

We see an even bigger opportunity for space to service long-haul travel

There should be an even bigger opportunity for space to service long-haul travel. Although some might view the potential to use space to service the long-haul travel market as science fiction, we think the c800 route pairs on point-to-point flights that take more than 10 hours mean there is a large market to be cannibalised. Even if we assume only 5% of the more than 150m passengers who flew those routes in 2018 are serviced by space, at $2,500 per trip, the opportunity would be worth over $20bn p.a. A potential game-changer in the long term.

A potential game-changer in the long term

None of the hotel companies, airlines or tour operators under our coverage have disclosed plans to enter the space tourism or long-haul opportunity via space, but we think airlines and hotel groups are likely to enter the market over time. Indeed, like many other new disruptive segments (e.g., internet, digital photography), it is not the risk-averse incumbents that are the first movers, but new players. One could ask whether, at that point, it will be too late for incumbents to engage.

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