Pam Danziger - Why the Luxury Market Will Never Be The Same!
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:
• Consumer Resistance to Luxury Indulgence - Danziger explains, "After the past decade characterized by indulgence and wide-spread consumption of all things luxury, many affluent consumers have grown tired of excess materialism. They are saying, 'Enough already!' They are drowning in their material excess and starting to feel guilty.
• (The affluent) “are turning from their old 'shop till you drop' and 'he who dies with the most toys' ways toward a new, more temperate approach. They are starting to think about the impact of their consumerism on the planet and for future generations.”
• These consumers are tired of a disposable culture and are looking to restrict their spending to those products and experiences with a smaller carbon footprint, that represent a more responsible use of resources, and that offer tangible and lasting value."
(Next Issue of Luxury Travel 360—“How all this impacts luxury /affluent travel,” and “ Bringing middle class values to luxury travel decisions”-Face to Face with Danziger)
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.
Issues & Insights 
