The increasing demand for intelligent travel solutions has led to the development of smart luggage systems that enhance security, tracking, and user convenience. This paper presents the design and simulation of a smart luggage bag integrating obstacle avoidance, GPS–GSM communication, theft detection, and a keypad-based password locking mechanism. Ultrasonic sensors are used for obstacle detection to provide collision avoidance and ensure safe movement, while a GPS module enables real-time location tracking and a GSM module supports remote alert transmission during unauthorized movement or security breaches. Theft detection is achieved by monitoring abnormal luggage motion when the system is in a locked state, triggering instant alerts to the user. The proposed system is validated through simulation to evaluate functional accuracy, response time, and reliability under various operating conditions. Simulation results demonstrate that the integrated system significantly improves luggage security, situational awareness, and user assistance, providing a reliable foundation for future smart luggage solutions with potential IoT-based enhancements.