Ron Kurtz provides impressive data, and key insights from new AARC Research
In this innovative study by The American Affluent Research Study, respondents were asked to specify the most, and the least they would imagine spending for various vacations—Caribbean Resort in Winter, European Cruise, Hotel Room in NYC . We summarizes some of those captivating price points later in this feature, but we quickly decided to fast-forward to CEO Kurtz’s 5 key implications of the AARC study. Here they are:
The affluent market, as defined by the wealthiest 10% of US households, is composed primarily of people with middle class backgrounds who continue to pursue a somewhat middle class lifestyle with middle class values. They spend conservatively and save carefully.
The market for the higher priced products/brands in the true luxury category is composed of a very small number of US households. It is probably the approximately 1 million households (top 1%) with a minimum $6 million net worth. Most of these people are also in the approximately 1 million households (top 1%) with an income of $500,000 or more per year.
This is a very difficult market to reach with conventional media, including the most upscale print publications, on a cost efficient basis. The cost per thousand qualified subscribers is staggering even for the most effective publications. This is why partner promotions with other upscale marketers, the internet, referrals from existing customers, and direct mail are among the best tools for marketing to this small audience.
The just released (October 17) Global Hospitality Report from HVS begins gently enough with the query:
What is Luxury?
How the luxury hotel product has changed over the years,
Demand Drivers in Luxury Hotels
Role of High Net Worth Crowd as Luxury Consumers
Emerging Economies in Luxury
Not until the last four pages do we come to What Credit Crunch? More Luxury for New Money. Following are highlights from those pages, followed by excerpts from an interview a few days ago by Harvey Chipkin with one of the authors, Arlett Oehmichen, associate director of HVS in London. – who updated the outlook because of the tumultuous changes in the few weeks since the Report was issued.
Latest Research Top Lines from Amex Publishing-Harrison Group September Survey
Over 71 percent of America’s affluent and wealthy consumers (10 percent of American families) said the real estate and banking crisis has affected their sense of financial security and the value of their assets, according to new research by American Express Publishing and Harrison Group. Nearly 6 in 10 survey respondents are now worried about running out of money, including 48 percent of America’s wealthiest families (up from 35 percent in April).
In early September Unity Marketing’s CEO Pam Danziger sent this bulletin to her subscribers:
For Luxury Marketers, Manufacturers, Retailers, Advertising Agencies, Investors and the Press…
Why the Luxury Market Will Never Be the Same
“Once the current economic crisis is over, luxury consumers will have undergone
changes that will profoundly affect the way luxury marketers do business
-- Going into the vital fourth quarter, luxury marketers are facing the toughest business environment in recent past. Spending by affluent consumers on luxuries is down and their expectations for future luxury indulgence is weak. Most pundits agree that the luxury market will eventually rebound from the current 'luxury drought,' but in the meantime the luxury consumer market is undergoing fundamental and structural changes. “ “Changes will be so wide-spread and far-reaching”, Danziger said, “ that the consumer climate marketers will face after the recovery will be very different than the one they dealt with before the current luxury drought. It also means that tried-and-true marketing and branding strategies that worked before may not work after wards.” We were privileged to tune in to a private luxury client webcast that followed later in the month on the subject “Finding the Silver Lining: Rainmaking in the Coming Luxury Drought”. Herewith a few nuggets in that compelling Danziger style:
Busting Online Travel Myths, Predicting Future of Agencies, Sorting Out Confusion – all at a forum led by analysts from PhoCusWright experts on online travel.
PhoCusWright has been following the trajectory of online travel since its inception. At a recent forum in New York, executives took at a look at trends and found: 3 Forces For a Perfect Storm
PhoCusWright CEO Philip Wolf sees three forces creating the “perfect storm”
1) Travelers Choice of Empowerment – with millions of consumers clicking million of times on millions of sites
2) A proliferation of business models that are blurring together: media sites for travel information; referral sites for referring to booking sites; booking sites; and itinerary sites that keep track of personal itineraries – all taking on elements of one another.
3) Traditional Value Chain Disrupted: It’s hard to tell who’s who anymore. Transaction sites look like advertising sites; search portals look like online travel agencies (OTA’s); supplier sites look like social media sites.
Ipsos Mendelsohn and American Express Publishing-Harrison Group OfferFreshInsight on Consumer Behavior in 2010
According to new studies from two blue-chip research sources, Ipsos Mendelsohn and American Express Publishing - the affluent are not only ready to travel -- they are frequently going to spend more on it. While the Ipsos study focused on intent and American Express Publishing on mindset, they both point to a surge in affluents taking to the road (Amex sees an increase of 6 to 8% in spending on all luxury categories).Interestingly, both studies agree on a positive attitude despite lingering concerns about the economy. Here's a look at the highlights of both 2010 studies.
LuxuryTravel 360 has long looked to the affluent as a burgeoning market in business and leisure travel, fueling growth in more affordable, common sense luxury - less glitz and glamour, but ready to pay extra for memorable family experiences and genuine local culture.
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