Arnie Weissmann
Yet another study has reaffirmed that leisure travel is expected not only to grow over the next year but to outpace expenditures in other categories. The Time Inc./YouGov survey of affluence and wealth, released last week, concluded that more than $115 billion will be spent on travel by the top 10% of earners, defined as those whose household discretionary income exceeds $120,000.
Luxury spending on the whole is forecasted to rise 6.6%, but travel is expected to jump 15.9% annually, the biggest category increase.
Impressive as that is, it is not the result that most surprised the senior adviser to the study, Dr. Jim Taylor.
Looking across several data points, the survey's designers have inferred that the affluent are less attached to the values of their local and national communities than they are to a new global culture of the wealthy.
"This is a big deal," Taylor told me.
Very precise perceptions, standards and expectations form a definition of a culture based on economic standing. And this culture, like all cultures, Taylor says "helps us understand who we are."
The uniform values embraced by the affluent with regard to travel and their trip-planning processes have serious implications for marketers trying to craft messages to reach these consumers.
Taylor said that "good health resonates."
"The No. 1 issue across all generations is, 'How long will I last?'" he said. "Good health and good travel are synonymous."
When the affluent were asked about their passions, travel was the top response, at 67%, followed by "spending quality time with my family."
"Family travel is regarded as the principal vacation, and the principal motive is to create memories that last," Taylor said. "First, the dialogue that begins around the kitchen table is often an Internet site-based discussion. Someone will bring up a site showing, for example, what a wonderful place Turks and Caicos is. That destination has just entered the competition."
The decision will ultimately be made by a family parliament, but only after third-party commentators, including review sites such as TripAdvisor, are consulted.
What's important to understand, Taylor said, is that "constant visibility is absolutely critical." Because the decision-making process is so fluid and information is being evaluated and re-evaluated up until the time of booking, brands' messaging must be omnipresent to ensure that it is present just before the decision is made.
"You won't benefit from creating awareness two years out," Taylor said. "That's not as important as an [immediate] understanding of your value proposition."
Though homogenized in many regards, the wealthy are not monolithic. Someone making, say, $500,000 a year will not necessarily end up at the same resort as a billionaire. And that's important if one considers that the affluents' desire to surround themselves with people of their own economic stratum is paramount. It's more important that fellow guests be of similar economic status than, for instance, of the same national origin.
The survey architects have devised an interesting hotel rating model to stratify the homogenized rich.
Price, rather than amenities, defines how many stars a hotel gets.
"A graduated classification that's assured by price [helps] those very much alike economically and culturally to find one another in remote destinations," Taylor said.
Their system breaks down hotels not into five or six levels of star ratings, but 10. And rather than use a checklist approach, as most star systems do, it focuses on $10 billion slices of market share, based exclusively on room rates multiplied by guest nights, for affluent travelers.
For four stars or below -- a four-star hotel tops out at $400 a night in this system -- the market slice broadens to $20 billion.
So 10-star hotels, as a group, collectively generate their $10 billion with the highest room rates in the world. They require fewer collective guest nights to reach this number than any other star level.
The nine-star hotels charge less, and so need to target a greater number of potential guests. The challenge for marketers, then, is to hone the message to the like-minded guests they're targeting.
Taylor said that even at the four-star level, one can craft a distinctive proposition, but added: "The value of the experience really needs to rise as the price rises." At the upper ends, "relationship management begins with the day of the booking."
At the eight-star level, wealthy consumers become very fickle, as they do across luxury purchasing.
"Only 14% [of affluent buyers] have a favorite hotel brand that influences where they'll stay," Taylor said. "For most, the number of brands in consideration expands, and the willingness to spend more likewise increases. Single-brand loyalists are nearing extinction."
He cautioned that doesn't mean that brands don't matter.
"Brands that invest in the details of distinction -- artistry, quality and service -- are doing great," Taylor said. "The qualitative environment of a Ritz-Carlton, a Mercedes-Benz, is important. Mercedes will be on the list. But it won't be alone."
And finally, what 2015 spending study would be complete without an analysis of millennial behavior? Among the affluent in that demographic, spending will increase 11.4%. Although "mature" increases are driven primarily by travel and dining, millennial spending is spread across the board, including on fashion apparel, accessories and home goods.
One characteristic of millennials that distinguishes them, Taylor said, is that they are the first generation since the 1920s in which 20% are entering their occupational years already affluent.
"As little as nine years ago, 94% came from the middle or lower-middle class," he said. "Many [millennials] had parents who traveled with them. They are well-trained in the art of consumption."