Researching The Rich - But Who Really Measures UP?
Ron Kurtz, a principal with The American Affluence Research Center and
a veteran of the luxury cruise industry, has some assertive things to
say about all this measuring. He also shares the results of his latest
survey of how the affluent plan to behave in the next year.
Who’s Affluent Anyway?
“People have different agendas for why they push certain definitions of
the affluent,” says Kurtz. “Some want to define on the basis of income,
others on net worth and still others on investable assets.”
Kurtz comes down squarely in the camp of net worth, believing “it’s a
reflection of cumulative years of income and spending.” He notes that,
“Income can be subject to substantial swings. We are now seeing the
problems with defining affluence on the basis of income as some people
on the fringes are really getting hurt; people with solid net worth are
weathering the storm better.”
“I believe that affluence is by definition a small segment of the
population, asserts Kurtz; “I don’t believe in the concept of mass
affluence and think that we should be selective. That’s why I chose the
top 10 percent as being reasonably selective – and that is where you
find the largest concentration of wealth. People earning $100,000 to
$150,000 a year are not affluent.”
How the Downturn Is Affecting the Outlook of the Affluent on Travel
Kurtz recently completed his spring 2008 survey . As always, he asked
467 subjects what their outlook is for the next 12 months as far as
business conditions, the stock market, their own household income.
Overview of Top 10 Percentile of U.S. Households
99 to 100 percentile
95 to 99 percentile
90 to 95 percentile
Number of Households (millions)
1.1
4.5
5.6
Minimum Net Worth(millions)
$6.00
$1.39
$0.83
Average Net Worth(millions)
$15.3
$2.7
$1.1
Average Annual Income (thousands)
$982
$248
$120
Kurtz has the number of respondents saying they will take a
cruise in the next 12 months falling to 14% from 22% last fall – the
latest number being the lowest ever in Kurtz’s more than six years of
surveys.
Last fall, the AARC index was at 103 on the question of spending
more, the same or less for international vacation travel That number
fell to 95 this spring; the numbers for domestic vacation travel were
116 last fall, 112 this spring.
The indexes for both Leisure and Vacation Travel Spending were
down from the Fall 2007 survey by five and six points, respectively.
They are both also at their lowest levels since the Spring 2003 survey.
“People are moving away from international travel,” concludes Kurtz.
Melissa Bradley’s On My Mind message in the Sept-Oct issue of Indagare—family focused travel--just happened to be what was on my mind as I reviewed some of the most recent surveys on consumer travel behavior in a struggling economy.
In the November 3rd issue, covering the Latest Quarterly Survey from American Express Publishing/Harrison Group on Affluence and Wealth in America, is a most informative visit to spending in a troubled economy.
One thing that struck us, as we listened to the October 2 presentation, was how the term affluent covered so much territory - There is “ Bedrocks” Affluent, “Upper Middle Class” Affluent, “Pinnacle” Affluent, “Super” Affluent and finally, just plain Wealthy – all together, some 20 million households.
But Lux 360 Found a Brighter -and we think, Sensible Side-
From Harvey Chipkin’s report in the British online Hotel Report-a paid service from William Reed Business Media- http://www.wr-bi.co.uk/ - Reproduced here with publisher permission
At the first industry wide meeting following the fall financial meltdown and the recent presidential election, the consensus seemed to be that, yes, the industry faces a historically challenging situation that will last for awhile. But there was also a feeling that lodging is in a better position than other industries – and, happily, a few silver linings were perceived as well.
We’ve all heard the bad news over and over: global liquidity drought, drops in rate and occupancy, a dismal outlook for employment, and a possibly extended recession. But some leaders managed to find ways to take – if not a positive view -- at least a more nuanced one. Following are a few comments about why weeping and gnashing may not be the only appropriate attitudes.
Steve Joyce, who recently became CEO of Choice Hotels International, said he has been “the only optimistic person in the room at a number of events over the last few weeks.” I strongly believe,” said Joyce, “that there is a paralysis factor and that you can’t base projections on two weeks of hysteria.”
“Forecasts in this environment,” he continued, “are entertaining but not much use.”
Other ‘smart marketer’ insights from Joyce, Mark Lomanno of Smith Travel Research; Peter Yesawich, CEO of The Y Partnership; Michael Kaufman, Chairman of National Restaurant Association; Patrick Ford, CEO of Lodging Econometrics; and Roger Thomas, Steve Wynn’s design guru for many years.
Nat Ives, in Ad Age Online Sept 6, cites new data from Ipsos MMR which assures that well-off readers read print publications just as much now as they did 5 years ago.
Also, survey respondents making more than $100,000 annually said their average hours online had grown to 22.1 each week from 10.7, while the time they said they spent watching TV sunk to 18.6 hours from 23.7 in the 2003 survey. Read the full Ives story at http://adage.com/mediaworks/article?article_id=130685. Lux 360 attended the client briefing this week and will provide additional perspective in our Sept. 30 issue, interviewing Ipsos MMR President Bob Shullman.
Issues & Insights 
Ron Kurtz, a principal with The American Affluence Research Center and
a veteran of the luxury cruise industry, has some assertive things to
say about all this measuring. He also shares the results of his latest
survey of how the affluent plan to behave in the next year.
