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.
A large portion of the sales in the US of true luxury products is made
to international visitors. As a result, this, together with the
anecdotal research of the media about the sales of very high priced
luxury goods, gives a false impression of the actual size of the US
affluent and luxury markets.
Surveys that attempt to measure spending on “luxury” items are useless,
at best, and dangerously misleading, at worst, if “luxury” is not
precisely defined by specific price points. The same appears to be true
for surveys that attempt to identify “luxury” brands without specifying
price points to define “luxury”.
Luxury Price Points Data in Travel
* Caribbean Resort In Winter: For men the median value was $300 a night while it was $250 for women. The highest price was $3,000 (men) and $1500 (women) while the lowest were $50 (men) and $80 (women.). Only a third named the brand they would most likely purchase with Marriott (20%) and Ritz-Carlton (9%) the two most frequently mentioned.
* Hotel Room in New York City: The median value was $300 for both men and women; the highest price was $1,000 for men and women while the lowest was $50 for men and $100 for women. Again, a third mentioned the brand they would most likely purchase with Marriott (27%) and Hilton (18%) most frequently mentioned.
* European Cruise: Median value for men and women was $300 per night per person; lowest price was $80 (men) and $100 (women) Highest price was $10,000 (men) and $20,000 (women.) Less than a quarter named the cruise brand they would most likely purchase. Among the most frequently mentioned were Royal Caribbean (18%) and Princess (17%).
The Affluent Market Tracking Study is a national survey representative of the wealthiest 11.2 million households; average income of survey participants is $304,000 and net worth, $3.1 million.
Kurtz points out that the word “luxury” appears to have a rather ambiguous meaning for the affluent. That is evidenced by “the broad range of price points that the affluent use to define luxury in many products and services.”
Harvey Chipkin
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Issues & Insights 
