We followed up last weeks research report from Luxury Institute on how the rich respond to social media by querying CEO Milton Pedraza on some unanswered questions.
Pedraza says he is not surprised that the wealthy have joined sites like Facebook since it opened up to the general public. As he notes, “Adults have always leveraged networking, and networking on line is simply an extension of what they have always done.”
And, while they might be members, Pedraza cautioned that does not reflect on frequency or intensity of use. He says, “The majority of our respondents are not spending time on these sites every day. Also, keep in mind that a full 40% do not network on line at all.”
Mary Gostelow’s April Report on the International Hotel Investment Forum highlighted these remarks from a panel on the business case for being green:
Frank Fiskers, President/CEO Scandic-said Scandic had moved from sustainability as a compliance to positioning the company to benefit. With a huge change in consumer behavior, you are not correctly positioning your company if you do not move in this area.
Ed Fuller, President Marriott International, said the consumer is beginning to speak, saying if you are not responsible, we are not going to use you.
Meanwhile, back in Old New York, four Senior Luxury Hotel Executives, asked about the Move to Green in their properties, at The NYU Tisch Center’s Brener Lecture, responding to a student question from the audience, said quite clearly that there was no demand—not quite a whisper, it seemed—from their guests, and no top management pressure either.
We will follow up with more from The Gostelow Report, and the NYU speakers, at www.luxurytravel360.com
While luxury travel marketers look to current economic conditions –
and there is plenty to consider – other analysts are looking ahead and
finding trends and forces that might turn the entire travel industry on
its head – and in the not too distant future.
What really happens when a global tourism explosion in developing
countries--China, India, Russia, Brazil, for starters—runs into a
massive meltdown in air transportation for all of us?
Insights from two recent articles compel our attention when it comes to fundamental changes in travel: 1) “The Tourism Time Bomb” – (Harvard Business Review
April 2008 and follow up LT 360 interviews with Authors Paul Nunes (an
executive research fellow with the Accenture Institute for High
Performance) and Mark Spelman (global managing director of Accenture’s
strategy practice, based in London.)
These analysts see a world where so many more people are traveling that
“a scarcity of place” will result. That means higher prices, rationing
(perhaps decades- long waiting lists for important attractions). In
turn that may result in the creation of real and “artificial
destinations” in developing areas. 2) “The End of Aviation”: (The New Republic, August 27, 2008)
Here, reporter Bradford Plumer sees a potential “aviation apocalypse”
as high fuel prices and the threat of climate change could result in
dramatic cuts in service and routes, and tremendous changes in travel
patterns. (See story below)
First, Tourism Time Bomb: You Can Already Hear It Ticking
In last week’s interview with Nunes and Spelman, the researchers offered elaboration on their thesis, particularly as it might affect the luxury travel sector. Selected Highlights
• Nunes-
What prompted the article “was not just the intersection of the trend
of growth of income, and travel demand from emerging economies, but
also the recognition of physical constraints on travel and certain
destinations, which is the shocking aspect.”
• Spelman sees parallels with Japan’s economic rise in
the 1970’s. ”But it’s not just about emerging economies, it’s about
interdependence and tremendous opportunity. As the incomes of residents
of China, India, Russia and Brazil grow, people will be looking to
travel well beyond their borders. Their travel ambitions will be global."
• Nunes - “Luxury” will be a relative term for many
new travelers. “We may not consider a bus tour through Europe as
luxurious. But to a newly arrived middle class Chinese person, the
ability to travel to France would be luxurious.”
The latest Wealth Survey out of The Luxury Institute trumpets an explosion of participation by US affluent in online social networks – soaring from 27% in January 2007 to 60% a mere year later.
Luxury Institute CEO Milton Pedraza thinks marketers might be lagging behind that march, saying, “While some in the luxury industry are still debating e-commerce, search and banner ads, the majority of their customers have leaped into the online dialogue.
“Luxury,” asserts Pedraza, “needs to catch up quickly.”
In February of this year we gave high praise to Nancy Cockerell, who led the team that did the research on international travel spend for International Luxury Travel Market (ILTM) in 2007 and arrived at the $200 billion tally for luxury which we found quite credible.
We also talked about democratization of luxury, affordable luxury, massclusivity, and persuaded her to lend her voice to the subject in a future Lux 360 column.
Well, here it is, under the title, Has Luxury Become Too Affordable? We are most pleased to have her as a contributor. (special advisory - Note Nancy’s description of the ‘Chav’ effect, in which luxury goods brands like Burberry’s are trying to reduce sales of their products to the ‘wrong people’)
Has luxury travel become too affordable?
“The democratization of luxury travel is here to stay”, Dana Thomas wrote in her best-selling 2007 book, How Luxury Lost its Luster. But what about luxury travel?
We ended our March 4 interview with Pam Danziger of Unity Marketing with a promise to post some of her ’passionately positive‘ thoughts about luxury travel and some highlights on key trends :Democratization, affordable luxury, and the new power of casual luxury, at www.luxurytravel360.com --
Here are some ‘headers’ to guide you on that bonus journey
*Frigid formality is out, casual is in. Happy to pay the price.
Democratization is real. Comfort in an artificial community.
You can tell a luxury hotel from the curb, But a luxury consumer? Not necessarily.
The U.S. market is a global bellwether of luxury trends We are going more experiential
Luxury is really not about what you have and what you own – it’s more about how you experience life.
We began our recent report on ‘Family Travel Rising’ with the following:
“All the evidence -- whether you are looking at the Amex-Harrison Group study we reviewed in our last issue, or the Ipsos Mendelsohn Affluence Report completed in September, -- shows Family First when it comes to disposable dollars.
We believe family focus is going to be front of mind for a long time to come, long after the punishing economic climate has subsided. Provider brands will be hard pressed to provide much more than kiddie or junior, or young adult activities. Smart travel agents will have to rise to higher levels of creativity and performance on the family front to sustain customer loyalty and earn the benefits of word of mouth in the neighborhood.”
And last week we caught our favorite global traveler-editor-writer-commentator during a quiet moment at home in England, the home of The Gostelow Report. She shared these thoughts:
• The hotel industry has been very slow to realize that this big expansion in family travel was going to happen. We’ve had “connecting rooms and you can put the kids next door”. They moved on to two swimming pools rather than one. One was kid friendly and one was not. But we really haven’t had anything more than that.
• We are seeing more and more bigger family groups. Operators are having a real challenge coping with such groups because it’s not a group per se, but they form their own groups. They want to be private. They want their own thing. .They tend to do their own excursions. They suddenly want a bus to take them all out. So it’s a real, real challenge. And so far the hotel industry has not realized this is happening. Now, it’s not only families. We’re also seeing more and more groups of friends traveling. And the hotel industry is not incentivizing enough – say a pair of DINKs come- Double-Income-No-Kids. There’s no incentive to them at the moment to bring along two other friends or even four other friends. And there’s big potential on the marketing side there.
Everybody knows her, but her bio is worth repeating.
Mary Gostelow, president of Gostelow Travel: Hottest Hospitality News Worldwide, is an inveterate traveler on the road more than 300 days a year. She owns and publishes the definitive Gostelow Reports, monthly market intelligence briefings to the top levels of the hospitality industry. She is the editor of KIWI's online Wow! Magazine, and also sends out a monthly update to top travel professionals worldwide.
At the same time, she is contributing editor to such publications as Elite Traveler, enRoute, Hotels and Le Magazine.
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.
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