In brief
This post lists 5 business facts about the race to space tourism.
Space tourism is reviving humankind interest in space conquest. This can be true whether in the positive or negative sense. Numerous reasons were stated for justifying the big investments behind this amazing journey. In this post, we are interested mainly in the business side of space tourism.
First financial numbers show that this market is certainly lucrative and has a nice potential, but definitely not that big. At least not as big as the original businesses of its main investors.
In this framework, we gathered 5 major business facts that may justify, in a rational way, the main business motivations that are behind this new era of space conquest.
These 5 business facts about the race to space tourism are:
- Space tourism is a lucrative business
- Winning public contracts and raise funding and shares
- Building market and tech proof for tackling new and bigger markets
- Brand image
- (much) Longer term investments
On the other hand, space tourism industry is facing two major hurdles that are:
- Security and reliability
- Legislations and regulations
This post was created using the Lean Market Research Methodology.
Let’s start by the big picture
Introducing the battle
The big boys of tech giants are betting heavily on space tourism. During the summer of 2021 we have seen an amazing race to space that seemed like a sci-fi movie that the world is watching in real time.
This time, it’s not a cold war between 2 big nations like it was in the 60s. But it’s an open media contest between 3 major tech leaders. The main communicated motivation behind this crazy race is to seek the best for humankind and to save the planet, which is very beautiful and undoubtedly noble.
We are not here to criticize or question these statements, because they may be true. What is sure on the other hand, is that this amazing race to space tourism has a tremendous business potential.
And this is what is unveiled here through 5 major facts, or “5 amazing business facts you should know about the crazy race to space tourism”.
Some numbers
Building a space tourism business costs money, big money.
Up to $1B per year for Jeff Bezos for instance. Indeed, the boss of the biggest online retailer said that he will inject into his space venture « whatever it takes ».
Concretely, he is financing the blue origin project by selling up to $1B of Amazon stocks each year. This gives a rough idea about how much this business could cost.
Well, before diving into the business facts, let’s first make sure to understand well the different types of the space tourism offer and the main differences between the major players.
In short, for making your next vacation into space, you can choose between the suborbital and the orbital travels.
The suborbital travel is closer to earth, it’s cheaper, at around $250k, and lasts a few minutes. On the other hand, the orbital travel goes much higher and can reach the level of the International Space Station (ISS) for instance. The orbital travel is hence much more expensive, at around $50M, and lasts a few days.
In this framework, blue origin from Jeff Bezos and Virgin Galactic from Richard Branson offer suborbital space tourism. Even if Jeff Bezos’ offer goes relatively higher in space.
SpaceX from Elon Musk aims at covering the orbital level.
It’s trivial that the heavier the travel to space, the more training and preparation it needs. While Virgin Galactic is aiming at simplifying the procedure as much as possible, SpaceX is aiming at bringing the next generation of travelers up to Mars.
First fact, space tourism is a lucrative business
The estimated cumulative value of space tourism during the next upcoming 8 years reaches $14B.
Its yearly value is expected to move from $885M in 2020 to $2547M in 2027 with a nice annual growth of 17%.
On the other hand and from the demand side, a Cowen survey reports that 39% of people with a net worth of more than $5M are interested in paying at least $250k for a Virgin Galactic flight to the edge of space.
If you have an idea about the numbers that big boys like Bezos, Branson or Musk are making with their main businesses, you would say that the business numbers of space tourism are nice, but it’s still peanuts for these guys.
So what can be the bigger business motivation ?
Second fact: Winning public contracts and raise funding and shares
Winning public contracts and raising funding and shares is a solid business motivation for betting on space tourism.
SpaceX for instance won a $2.9B deal with NASA for building the moon lander. This contract was won in front of Jeff Besos’s Blue Origin bid and many other ones.
Winning liquidity for financing other ventures is also a solid business motivation. This is for instance what Richard Branson has done by selling a part of his space tourism company in order to gather funds for his other companies.
In addition, analysts see that space tourism is one of the best candidates in the short term for entrepreneurs with big ideas like Elon Musk for raising money and financing his projects.
That’s the short term business benefit, what if we went a bit longer term ?
Third fact: Building market and tech proof for tackling new and bigger markets
Building market and tech proof for tackling new and bigger markets is a mid term business motivation for betting so heavily on space tourism.
A much bigger market that is 100 times more lucrative than space tourism is air transport, or earth to earth transport, using much more sophisticated technologies than classic airplanes.
In this framework, Virgin Galactic partnered with Rolls Royce for building a supersonic airplane. The supersonic airplane will use many of the technologies that were developed for Virgin Galactic. It aims at reducing the long travel duration by orders of magnitude.
This can be seen as a replacement of the Concorde using more advanced technologies. By developing Virgin Galactic, the technologies are developed and financed partly by space tourism consumers.
In addition, a huge amount of credibility is won in the eyes of shareholders and future investors in mastering such an advanced technology.
SpaceX is betting on the same horse here.
Indeed, one vision of Elon Musk is to build an earth to earth rocket that makes the travel between New York and Shanghai in just 39min.
In this new era of travels, the passengers take the boat to the launch base that is a few miles away from the coast. They then take the space ferry that takes off and goes to space facing less air resistance and attending huge speeds that can reach up to 27000 km/h.
This is more than 30 times faster than a classic airplane !
The rocket lands then in the launch base of the destination, hence closing this amazing trip at a fraction of its classic duration.
Fourth fact: Brand image
If you can think about a more powerful marketing idea, than showing to the whole world that your supremacy makes you able to go up to space, then please share it with us !
Indeed, a solid business and marketing fact is to build an unprecedented Brand image, which goes beyond classic marketing.
Actually, we are speaking here about humanity, history and supremacy !
If you link, in any way, your brand image to these deep values, then you reach a unique status in the eyes of the public.
The space activities are so far reserved to big nations only.
Can you imagine what a brand image this can build ?
Space tourism companies can have epic moments only for them. Moments like the ones when Neil Armstrong said his famous quote « That’s one small step for man, one giant leap for mankind ».
Moments like the first press conference for the first astronauts that stepped on the moon.
Fifth fact: (much) Longer term investments
Space tourism is paving the path for much longer term investments.
Indeed, here we are not speaking about buying lands or even private islands, we are speaking about colonizing planets and seeking for resources from the galaxy !
This is based on the hypothesis that planet earth is not enough anymore.
Numerous big companies were built upon the discovery of some few gas wells. Imagine what could be the impact of who will have a whole planet for his own projects and needs.
Other planets can be used as giant containers for unwanted waste from planet earth like radioactive waste. They can be used as prisons for very dangerous and unwanted individuals. Or even as a backup plan for the human race to survive to massive nuclear attacks or unprecedented natural disasters.
In short, once humankind will have access to other planets, it will certainly find usage of it.
A trivial question at this level is: Is it more worth it to seek for other planets and continue our current exorbitant lifestyles, or is it wiser to question our current way of living and make it more consistent with the capabilities of our sphere in the short and long terms ?
Again, we are not judging here, we are just gathering facts and questioning them.
What next for space tourism ?
After listing the 5 business facts about the race to space tourism, now, What next for space tourism ?
We saw that even if the market size of space tourism is not that big, and that it’s still a niche market targeting a very specific population, this market is highly strategic from a business and marketing point of view.
On the other hand, space tourism is constrained by two major limitations that are security and legislation.
If the space tourism players want to thrive into this business, then they should find relevant and efficient solutions to these two major hurdles.
These players should guarantee that nobody is risking to relive tragic moments like the Concorde drama, the Virgin Galactic crash in 2014 or the Challenger tragedy in 1986.
Whatever you think about space tourism whether positively or negatively, one thing is sure, this unprecedented journey is only at its start and it leaves no one unaffected.
Resources
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