October, 2011 – This article from The Fiscal Times features data about the growth for the wider luxury industry (http://www.thefiscaltimes.com/Articles/2011/10/07/9-Must-Have-Status-Symbols-that-Say-Im-Rich.aspx#page1).

By Drew Gannon

Take walk down Fifth Avenue, Michigan Avenue or Rodeo Drive, and you might think Louis Vuitton had finally had a sale. Block by block, the signature brown bags fill the streets. Never mind that the bags in the Spring 2011 collection start at $2,930 for a small clutch, and go up to a whopping $35,500.

With sales up 23 percent from last year to $23.4 billion, Louis Vuitton is setting the tone of growth for the wider luxury industry. In 2011, spending on premium items and services is expected to rise 8 percent over last year to $359 billion, according to an annual survey by American Express Publishing and Harrison Group.

But the big players are not just the barons of Wall Street, sports, and entertainment.

“America’s top one percent – a little over one million households with a net worth of six million plus – are spending on luxuries,” says Ron Kurtz, president of the American Affluence Research Center. “But the bigger growth has come from the BRIC markets – Brazil, Russia, India and particularly China.”

China, the deus ex machina of the luxury market, is expected to account for 20 percent (roughly $27 billion) of global luxury sales by 2015, according to research by McKinsey, as the Chinese shift their consumption preferences from generic goods and materials to the status of internationally well-known brands. China’s unprecedented wealth has bolstered consumer confidence throughout the country; the fifth annual China Luxury Summit in December 2010 was aptly titled “China Luxury Market: An Oasis of Hope and Possibility.”

In the U.S., despite the belt-tightening across most of the country, wealthy Americans are starting to enjoy the good life once again, buying high-status items and services they had cut out of their 2009 and 2010 budgets. Indeed, rich Americans’ expenditures on luxury are set to rise $26.6 billion this year.

Whether such optimism will trickle down to the middle class is to be seen. Overall spending is still at a standstill, with consumer confidence declining sharply in August. Online shopping and social media may be the key to bringing up luxury sales in the United States as well as abroad. A recent study by Italian luxury foundation Altagamma found online sales (now only 2.6 percent of the market) growing at a rate of 20 percent a year as luxury brands multiply their friends on Facebook and activity on other social media sites.
Here are nine popular purchases helping wealthy consumers live high. Some people just can’t live without their Louboutins.

1. Swanky Strollers
Think a stroller is just a way to transport your kids? Think again. The mommy wars are being played out on the playground, with parents sizing up each others’ wheels. High-end strollers like those by the Bugaboo brand are flying off the shelves, and run anywhere from $500 to $2,000. One Bugaboo model that converts from a single stroller into a side-by-side double has a $1,659 price tag, and a waiting list to buy one. Another stroller by Kid Kustoms has a vinyl leather seat and optional iPod speakers, for a mere $3,500. Celebrities like Naomi Watts and Gwen Stefani have been spotted pushing around expensive Bugaboo prams, and their popularity has spread to suburban streets across the country.

2.Specialty Bikes
Biking became more popular in the last year, with bike sales rising 15 percent between 2009 and 2010, according to the Bicycle Manufacturing Association. But the bikes that are gaining the most popularity? Pricy, custom-built bikes. Specialty bike retailers command only 14 percent of the market, but 44 percent of the dollars, according to the National Bicycle Dealers Association. For example, custom bicycle company KGS Bikes does an elaborate three-hour fitting session, and has sold bikes for as much as $32,000. “I’ve seen growing demand,” says KGS Bikes’ owner Kevin Saunders. “My customers want a bike that is perfect for them.”

3. Designer Fashion
Last year, Carolina Herrera reported that, to her pleasant surprise, her $7,990 gray sequined ball gowns were “selling like hotcakes.” Other top designers have also reported stellar earnings, including Louis Vuitton (up 23 percent from 2010 to $24.3 billion), Hermes (up 41 percent to $11.9 billion), and Chanel (up 23 percent to $6.8 billion). The king of American style, Ralph Lauren, has seen his $13 billion-valued company’s stock grow 150 percent in the two years since June 2009. Sales for Ralph Lauren’s heritage Rugby brand jumped 34 percent last year after an online-only fashion show where online shoppers could purchase items in real time. High-end department stores and online designer sale sites have snagged some of the profits as well. Saks reported quarterly earnings up 50 percent and sales up nine percent ($726.7 million) in May this year, thanks in part to a boost in full-price sales.

4. Fine Wines
Forget two-buck chuck. Nielson Co. reporting a 4.1 percent rise in total U.S. wine sales to $9.32 billion this year, but wine priced $20 plus saw an even larger increase in sales (11 percent), demonstrating that pricier wines are becoming more popular. In its 22nd Annual Restaurant poll, Wine & Spirits magazine found the average price for the most popular wines in restaurants was $62. One of the magazines’ most popular restaurant brands, Duckhorn Vineyards, boasts an array of reds, including a 2007 estate-grown Rector Creek Vineyard Cabernet Sauvignon, which goes for $95 per bottle.

5. The Fur Effect
Fur is in, according to America’s top fashion magazines. Many September issues– including long-time fashion bible Vogue – featured fur and faux fur as the next big thing for the coming cold. According to them, fur goes with and on anything, from apparel like vests and coats, to accessories like purses and even shoes. Global retail sales for fur were up 5.4 percent to $14 billion in 2010, according to the International Fur Trade Federation. Alexander Wang’s fur sandals sell for $895 a pop. And while just this month West Hollywood becomes the first U.S. city to ban all fur sales, fur’s popularity continues to rise as the temperature falls.

6. …to Furry Friends
American pets are living the good life – sometimes even better than their owners. In 2010, Americans spent a record $55 billion on their pets, according to research firm Packaged Facts, more than the gross domestic product of many countries. Gourmet pet food tasty enough for humans to eat (think duck and quinoa) and premier pet care facilities like the Barkley Hotel and Day Spa, are popping up everywhere. Packaged Facts estimates that pet insurance sales, which rose 27 percent from 2008 to 2009 to $303 million, will reach $881 million by 2014. By the end of 2010, one in five Fortune 500 companies offered pet insurance by Veterinary Pet Insurance (VPI), the industry’s largest provider. Expensive designer dogs, like “teacup” dogs as well as hybrids between two breeds are growing more and more popular, and can cost thousands of dollars. Celebrities buying into the designer dog trend include Mischa Barton with her Shih Pom (cross between a Shih Tzu and Pomeranian) and Jessica Simpson with her Maltipoo (cross between a Maltese and Toy Poodle). But pure breeds have also kept their place on the upper crust. An 11-month old red Tibetan mastiff named Big Splash became the world’s most expensive dog after being sold to a Chinese millionaire for 10 million yuan, or $1.5 million.

7. Fast Cars
Despite the doom and gloom in Detroit, the luxury car sector is revving its engine. In July, Mercedes-Benz reported its highest monthly sales growth (16.7 percent) since 2006, with 21,065 cars sold. Still, BMW outsold its competitor that same month by over 5,000 vehicles, an 11.7 percent increase from sales on year prior. BMW’s SAV, a midsize SUV starting at $37,000, led the pack, with sales up 56 percent in 2011. And the high-end Z4 Roadster was BMW’s third highest selling vehicle, up 92.4 percent in July from the previous month. U.S. News & World report named the Z4 one of the best luxury cars of 2011, describing it as a car suited for drivers more interested in luxury than performance. The Z4 sells for between $47,450 and $62,500.

8. Cruising Through Life
An estimated 73.7 million Americans will travel outside the United States in 2011, estimates Business Monitor International in last month’s United States Tourism report. And while air travel sales remains on a perpetual roller coaster of ebbs and flows, cruises have grown more popular for wealthier Americans this year. Business Monitor International reports that in 2011, 9.6 million will have traveled outside of the United States by cruise. The Cruise Line International Association plans to welcome 22 new ships to its 25 lines, including the 3,690-passenger Carnival Cruise Lines’ Carnival Magic, launched in May 2011. A 12-night stay in the Mediterranean on luxury cruise liner Celebrity Solstice costs $9,299 per person.

9. The Bling
Rolex, recovering from a 14 percent decline in brand value last year, is making a comeback. Sales are up 11 percent to $5.3 billion this year, making it the sixth most powerful luxury brand according to consulting firm Millward Brown. The Rolex Presidential Day-Date watch has long been considered a quintessential luxury item, worn by celebrities and several U.S. Presidents from Roosevelt to Reagan, and costing upwards of $35,000 depending on its materials and dealer. Rolex’s signature men’s watch has now opened its doors to women, with InStyle featuring Jennifer Aniston and Courtney Cox among others wearing the brand. Other jewelers have also seen strides in the last year. Milward Brown ranks French jeweler and watchmaker Cartier fifth on its luxury list, up 34 percent to $5.3 billion net worth. Tiffany & Co.’s American sales rose 22 percent in the first half of 2011.

Posted in Affluence Research, Apparel, Automobiles, Cruises, Entertainment & Recreation, Fine Jewelry & Watches, Luxury Market & Goods, Travel, Vacations | No Comments »

This is an article from Fox Business featuring AARC research about the latest trends in affluent travel (http://www.foxbusiness.com/personal-finance/2011/06/10/adventures-in-affluence-how-billionaire-vacations/)

By Kathryn Glass

Published June 10, 2011

Recent market performance notwithstanding, the return of glitzy globetrotting for the super wealthy is back, travel connoisseurs say, as the days of cutting back to seem “recession-chic” slowly become a thing of the past.

According to the American Affluence Research Center, 35% of America’s wealthiest households plan to spend more on domestic vacations this year, and 31% plan to spend more on vacations abroad. That means the rich are planning to do some serious spending on everything from private jets to private islands.

If you have ever wondered how the most affluent travelers go about planning their perfect summer getaway, you can be sure they don’t sit online and compare hotel suites like the rest of us. When money is no object, the rich and famous call a high-end travel agency, or concierge service, as it’s more appropriately dubbed, which specializes in fulfilling the sometimes bizarre, always lavish travel and service demands of the elite. These service-providers boast having achieved near-impossible feats in order to accommodate their clients’ needs, and achieving the impossible doesn’t come without a price. Bill Fischer, long-known as the coveted New York travel advisor with the famously unlisted number, charges new clients a one-time initiation fee of $100,000, and annual service fees of $25,000; he says business is booming.

FOX Business got the ‘what,’ the ‘where,’ and the ‘how’ from Fischer and more of the industry’s most exclusive travel connoisseurs on the trends and tips the jet-setting crowd adhere to when booking their joyful jaunts, so you can travel more like the billionaires this year.

Trend 1: Avoiding the Airport

Airport security, both at home and abroad may be a necessary evil for most of us, but for the super rich, it’s just another inconvenience money can avoid. Private jets–through both shares and ownership–allow rich travelers to skip the lines and hassle of security.

“A lot of people who can afford it will go by private plane because it’s getting more and more difficult to go through the airports—not only in the U.S., but especially coming from overseas back to the U.S.,” says Rudi Steele, a sought-after Naperville, Il.-based travel specialist.

Even if flying by private plane is not an option, affluent jet setters will often go the “meet-and-greet” route, where they are met by someone at the airport who expedites processing through airport security and customs, says Dallas-based luxury travel consultant Jim Strong.

“We make sure we have on-arrival or on-departure, someone there to hold their hand and expedite them through the customs lines and the diplomatic lines and there are services offered to get this done,” Strong says. The service generally runs between $200 and $500, according to Strong, but he says it’s well worth the price. “In the Rome airport, or Heathrow, it can save you hours.”

Trend 2: The Multi-Generation, Multi-Room Requirement

Perhaps one of the biggest advantages of being able to fly private is that you don’t have to worry about cramming the kids into coach. More of the rich and famous are bringing the whole family along when they take a trip, creating quite the booking task for travel advisors.

Virtuoso, a network of high-volume travel agents, reports in its January survey that 63% of its 6,000 members in North America predicted the biggest travel trend for 2011 would be “family and multi-generational travel.”

“I think since 9/11, people just don’t want to leave by themselves; they want to take their extended family with them,” Fischer says. “You could sometimes see four generations traveling at once.”

Traveling with an entourage requires multi-room accommodations, which is no easy feat. Depending upon the size of the client’s entourage, a three to four-bedroom suite at the Four Seasons may not fit the bill.

“We do a lot of private islands, but what our clients like the most is staying at a villa with butler service that is attached to a hotel,” Fischer says. “In other words, there is a hotel component, but the villa is separate and private so you’re getting all the accoutrements of the luxury hotel, but are staying in your own private space.”

Fischer recalls a situation where one of his clients needed a three-bedroom suite in a particular hotel that only had two-bedroom suites. After speaking with the hotel’s general manager, Fischer suggested they knock out a few walls, and sure enough, he got a call back from the general manager telling him, “Bill you have your three-bedroom suite.”

“We are catering to a client that can afford anything; [they] want what they want when they want it, and we’re always saying ‘yes.’”

Trend 3: Exclusivity and Privacy is Paramount

Because the super rich are often in the public eye, planning a getaway that is extremely private is of the utmost importance. This sometimes means staying away from big name-brand hotels and having back-up hotels booked in case the guest-in-question needs a quick escape from prying eyes.

The desire for privacy is also the driving force behind the popularity of renting a private island, experts say; it’s easier to guarantee privacy, and top-notch service when you know you’re the only guest there.

“When you are at a resort, you always wonder if you’re being treated as well as the other guests,” Strong says. “But when you buy the whole island, you know you’re king of the hill.”

Richard Turen, another Naperville, Il.-based travel planner who writes for industry publication Travel Weekly, says boutique and non-chain hotels have grown in popularity for this reason.

He says one of the more intriguing ideas to help provide that sense of seclusion and intimacy has come out of the Alessandro Rosso Group, which has been creating “one-room hotels” in some of the best cities around the world.

“Your key combination is sent to you, there’s a cell phone where you dial one number and you get your butler, and you actually have your own hotel,” Turen explains. “It’s a very interesting thing because you can stay in the best part of Paris or Rome and have it all yourself.”

Trend 4: Once-in-a-Lifetime? Yes, please.

A mundane vacation just won’t cut it for the super rich. Travel advisors say their clients are seeking once-in-a-lifetime experiences, like diving with sharks off the coast of Australia or a traditional Italian meal cooked by a famous chef in her home on the Amalfi Coast.

“These people want authenticity; they don’t want something that’s manufactured, or pushed upon them,” Strong says. “They want it to be natural, authentic, in a memorable scenario that they will treasure forever.”

Fischer says he’s coordinated parties where famed-tenor Andrea Bocelli gave a private performance, and just last weekend, he managed to get a client special tickets to the Grand Prix in Monte Carlo, along with entry to F1 Paddock Club and after parties.

Trend 5: Safety First

In some cases, travel advisors need to accommodate not just a client and the client’s multi-generational family, but the security detail as well.

“People when they have quite a bit of money, the most important thing they want is security,” says Fischer.”So we have people who work for us that we will send to take care of the families. They know the destinations; these are former CIA that work for governments and know the inner workings of the countries.”

In addition to sending the best private security personnel available, Fischer has sent top-notch doctors with clients on trips. For some destinations he has ordered armored vehicles for clients and registered them with the local police departments so they can be provided with a local police escort.

Trend 6: Access—to Any Place in the World

A luxury travel advisor has to be ready for last-minute requests to visit some of the planet’s most exclusive locales. While no corner of the globe is out of reach, the clear standout among this summer’s most popular destinations is Europe, with Italy being the top destination for the wealthy elite.

“You have the parents of teenage children who are very much aware of the educational value of travel, and they definitely want to take advantage of traveling to destinations where children are getting some education,” Strong says.

In addition to travel mainstays on the Mediterranean, safaris are also all the rage.

“Africa is one of those amazing destinations, especially east Africa and southern Africa, mainly for game viewing,” Steele says. “If you go on safari once, you would think you would get it out of your system, but when it comes to Africa and safari, it pulls you back; people go over again.”

Strong says more exotic destinations such as Morocco, China, Vietnam, Laos and Cambodia are all still very popular with clients.

For the beach-going set, places like Fiji and Bali are back and bigger than ever, according to Turen and Steele. Fischer expect travel to Brazil to ramp up as the country readies itself for the 2016 Olympic Games.

For the indecisive industrialist, a cruise may prove a better option, offering the flexibility of multiple port stops. Private yachts that sleep up to 30 people are popular with Fischer’s clients because they can accommodate multiple generations and an entourage.

Finally, for the wealthy with the most severe case of wanderlust, there’s The World. This seafaring sanctuary was referenced by both Fischer and Turen for clients that have the time to travel for longer periods. Turen calls it “the world’s top-rated ship,” and the 644-foot yacht, which launched in 2002, plans itineraries based upon the input of the owners, offering the utmost in luxury service and accommodations. The World boasts itself as the “largest privately owned yacht on the planet,” with 165 private residences, valued between $1.4 and $7.9 million, with about $240,000 in annual fees.

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This is an article from Mobile Commerce Daily by Rachel Lamb (http://www.mobilecommercedaily.com/2011/05/20/61pc-of-wealthiest-americans-own-smartphones-study). The article references the AARC Spring 2011 survey results regarding use of smartphones among affluent Americans.

May 20, 2011
By Rachel Lamb

Approximately 61 percent of the 22 million wealthiest individuals in the United States own a smartphone, indicating a potentially untapped market for about 8 million smartphones, or 39 percent of the affluent, according to a recent study by American Affluence Research Center.

According to the data, 22 percent of those surveyed own a tablet, meaning that there is a probable untapped market 78 percent of the affluent. The study was able to dissect the ages and demographics of individuals, along with types of devices.

“There is so much talk about pervasiveness of mobile devices, but it’s important to understand who has these devices and how they are using them in order for people to market effectively through them,” said Ron Kurtz, principal of American Affluence Research Center, Atlanta. “It’s interesting that affluent have a smartphone or tablet, so clearly this is a medium in a way to reach people.

“It’s important to know what platform [marketers] need to be communicating through to be convenient and easy to access a brand’s information, and to receive or use an app,” he said.

Participants in the survey have an annual household income of $333,000 and an average primary residence value of $1.2 million. Their net worth is, on average, $3.1 million with investable assets of $1.8 million.

These are the top 10 percent of the wealthiest individuals in the U.S.

Dissecting the affluent

In addition to 61 percent of individuals who actually own a tablet or smartphone, it is said that about 65 percent of the affluent at least have access to smartphones or tablets.

The survey broke down the participants into demographics and type of mobile device used.

For instance, 84 percent of affluent individuals under 50 own a smartphone, whereas only 38 percent of those 60 and up own one.

The study also showed a correlation between income and type of smartphone.

Individuals who earn more than $200,000 per year are almost twice as likely to own a smartphone and have a slight preference for the BlackBerry.

Moreover, those with a slightly lower income, less than $200,000 per year, favor the iPhone.

The study did not see much difference in gender pertaining to preference and ownership of tablets, but four out of five individuals favored the iPad as their chosen tablet.

Predictably, younger individuals are more likely to own tablets and smartphones. Also, the increased likelihood to own a smartphone or tablet has a direct relationship with net worth and income.

Moving forward

Many luxury brands are reluctant to move their marketing into the tablet or smartphone sphere.

However, since 61 percent of the most affluent individuals in America have a smartphone, it seems like brands should be rethinking their strategy.

Some brands, even the most prestigious, are learning.

For instance, French fashion house Chanel is taking one giant leap for iconic luxury brands with the launch of two mobile-optimized sites for its fine jewelry and watch collections (see story).

Still, many luxury brands are beginning to understand the power of mobile applications, mobile-optimized sites and SMS messaging.

These are all ways that luxury brands can use smartphones and tablets to get in touch with their customer base, move products and build loyalty and relationships.

“The smartphone and tablet users are still younger users, which aren’t the absolute key demographic for luxury brands, but it’s a start,” Mr. Kurtz said. “Clearly, it is a channel to which the affluent are connected, though certainly a younger segment.

“Brands need to take this information into consideration and what they’re going to be offering and saying, how they’re going to be saying it and how much they’re going to be spending on these channels and on [mobile],” he said.

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This is an article from JustLuxe Affluent Lifestyle Guide by Susan Kime (http://www.justluxe.com/luxe-insider/trends/feature-1583284.php). The article references our Spring 2011 survey.

May 16, 2011
By Susan Kime

Last year I wrote two articles about the Fall 2010 Survey research results and interpretation provided by the American Affluence Research Center, Ron Kurtz, President. The results of the Fall 2010 survey seemed to indicate some hope for the economic future, and for future affluent spending patterns.

Now, the results of the Spring 2011 American Affluence Research Center Survey appear even more hopeful. This report is based on the responses from 405 men and women who promptly responded and met the minimum net worth requirement of $800,000. Their households have an average annual income of $333,000, an average net worth of $3.1 million, average investable assets of $1.8 million, and an average primary residence value of $1.1 million.

The survey respondents represented 28 states and the District of Columbia. Eighty-eight percent are married. The average age is 57. Fifty-six percent are males and forty-four percent are females. This research survey is the 19th in a continuing series of twice-yearly surveys that focus on the 11.4 million households that represent the wealthiest 10 percent of all U.S. households, as determined by The Federal Reserve Board, based on net worth.

These households account for about half of all consumer spending and a third of gross domestic product.
These surveys measure and track how luxury and affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market and their personal household earnings. The surveys also monitor the anticipated changes in spending for a variety of different products and services, changes in expected rates of saving, and primary investment objectives. In addition, each survey contains special questions exploring new topics.

The survey results are based on self-administered questionnaires mailed to 4,500 households that, based on their income and ownership of certain assets, were expected to meet the minimum net worth requirement of $800,000. The maximum margin of error of this survey, at 95 percent confidence, is five percentage points. Index values shown in the report can range from 0 (negative) to 200 (positive), with an index of 100 being a neutral point and where little or no change is expected.

Here are the major findings:
In contrast to Fall 2010, the affluent, who account for about half of all consumer spending, report a better outlook for the economy and their personal spending plans. Spending plans for all 17 products and services tracked by these surveys are much stronger than in the Fall 2010 survey. There is also improvement in the plans to make major expenditures such as for a new auto, a cruise and a vacation home.

Discounts by prestigious brands during the past two or three years of a weak economy have apparently been accepted by affluent and luxury consumers without diluting the stature of the brands. About 60 percent of the affluent in the Spring 2011 survey say the discounts did not affect their opinion of the brands, while a quarter said the discounts motivated them to make purchases they may not have otherwise made. Only 5 percent said the discounts lowered the image/prestige of the brand.

This data suggests that the affluent recognize there are certain situations where discounting by luxury brands is reasonable and understandable, if not part of an ongoing practice. Less than 20 percent said the discounts raised potentially negative questions about whether quality had been lowered to offset the discounts and whether prior prices and profit margins were fair.

Similar responses were elicited when asked about their opinion of discounts that prestigious brands communicate via the Internet or mobile devices only to past customers or to “members” of special “flash sale” sites. While 65 percent of the affluent own a smart phone or a tablet (or both), the remainder have regular access to a computer. Half of the affluent say they do not participate in any type of social media.

Among those that do participate in social media, only a quarter say they use it to receive regular communication about product and related information from a manufacturer or retailer. In other words, only 12.5 percent of the affluent say they are using social media to receive regular product information from a manufacturer or retailer.

This relatively low number (12.5 percent of the affluent) may be surprising given all the amazing statistics being circulated by various research and traffic tracking companies about the volume and growth of e-commerce, the ubiquitous mobile devices, and the urgent emphasis to invest time and money into various forms of mobile apps and promotional activities online through proprietary sites and social media.

It is important to understand who will actually be reached through mobile devices and social media (and whether the ROI is reasonable), what technology is needed to be compatible with the various different mobile and other receiving devices, and who might be missed if communications are limited exclusively to these channels.

Based on a different business model and with 12 years in business, Zappos has established a much stronger position among affluent and luxury consumers than any of the 11 “flash sale” sites listed in the survey. Among the flash sale sites, Gilt and RueLaLa have established leading positions.

Over half of affluent and luxury consumers are aware of Zappos while none of the 11 listed “flash sale” sites have more than 10 percent awareness. A third of the affluent have visited Zappos in the past 90 days while 5 percent or less have visited any of the “flash sale” sites during that time. A third of the affluent and luxury consumers have ever made a purchase at Zappos while less than 4 percent have ever made a purchase at any of the individual flash sale sites.

These results are not totally surprising as the affluent are typically careful spenders whose favorite stores include Target, Costco and Home Depot. Also not surprising, the results vary substantially within age, gender and wealth categories. What may be surprising is the fact that over 40 percent of affluent and luxury consumers are not aware of Zappos or any of the flash sale sites.

About 10 percent of the affluent say they will seriously consider acquiring access to a vacation home during the next 12 months. Plans to make an acquisition increase as age declines, income increases, and net worth increases. About 2.9 percent are considering two types of vacation home acquisition. Wholly-owned homes are the most favored type of vacation home access. Wholly-owned homes used primarily on a seasonal basis are more popular than those used frequently throughout the year.

In a recent interview with Ron Kurtz, President of the American Affluence Research Group, he said, “The affluent market, as defined by the top 10 percent of U.S. households, still spend carefully. Their favorite stores are still CostCo, Target and Home Depot. They are not conspicuous or ostentatious spenders. The recession may not have fiscally affected them, but in some deeper sense, they have been affected. But, there is reason to be hopeful.”

Mr. Kurtz recently presented his findings at the GNEX Shared Ownership Conference on May 11, where he was a keynote speaker. “The spending attitudes of the affluent seem to be improving,” he said.

“What we see is a continued conservatism, but tinged with optimism now. Unlike in other years, and taken as a whole, our research shows the affluent majority are not taking action to reduce or defer major expenditures now. They are interested in purchasing vacation homes and are again interested in travel. Things are looking better.”

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About 65% of the affluent have access to one or more smart phones or tablets and another 34% have regular access to a computer according to a new Spring 2011 survey of the wealthiest 10% of US households by the American Affluence Research Center. Only 1% of the affluent lack access to the internet.

On average, 61% of the affluent own a smart phone and 22% own a tablet. With a population of about 22 million individuals in the 11.4 million households of the affluent, there is a potential untapped market for about 8 million smart phones (39% of the affluent) and 17 million tablets (78%).

The incidence of ownership of a smart phone, and the type of phone, can vary substantially within the age, income, and net worth groupings. For example, 84% of the under 50 age group own a smart phone versus only 38% of the 60+ age group. Those with $200K+ income are almost twice as likely to own a smart phone (73% versus 40%) as those with less than $200K income, and they have a slight preference for the Blackberry whereas the lower income group favors the iPhone.

There are minimal differences by gender for ownership and brand preferences of smart phones and tablets. Ownership of tablets and both tablets and smart phones increases as age declines and as income and net worth increase. The iPad is favored by a margin of 4 or 5 to one over other tablets.

About 18% of the affluent in the new Spring 2011 survey, the 19th in a continuing series of twice-yearly tracking studies by the American Affluence Research Center, own both a smart phone and tablet. Ownership of both is highest among those under age 50 (32%), those with income of $250K+ (25%), and those with a net worth of $6M+ (37%).

Half (50%) of the affluent with a mobile device and/or computer participate in one of more of the types of social media. On average, they participate in about 1.5 types of the social media listed. Participation in social media declines as age and net worth increase. Men participate a bit less than women because they are much less likely to participate in Facebook (33% versus 49%). LinkedIn is somewhat more popular among those age 50 to 59 and those with a $200K+ income.

As might be expected, owners of both smart phones and tablets are most likely (70%) to participate in some form of social media. On average they participate in 1.8 types of social media. Those with access to only a computer are least likely (69%) to participate in some form of social media.

Participants in the American Affluence Research Center Spring 2011 survey have an average annual household income of $333,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.8 million.

A description of the survey methodology and other detailed highlights of the survey can be viewed at:
http://affluenceresearch.org/most-recent-tracking-study/highlights-of-most-recent-survey/

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In contrast to the March general Consumer Confidence Index of The Conference Board, which fell over 10% to the low levels last seen in Fall 2010, the affluent, who account for about half of all consumer spending, report a better outlook for the economy and their personal spending plans in a new Spring 2011 survey by the American Affluence Research Center.

Spending plans for all 17 products and services tracked by these twice-yearly surveys of the wealthiest 10% of US households are much stronger than in the Fall 2010 survey. There is also improvement in the plans to make major expenditures such as for a new auto, a cruise, and a vacation home. These results are consistent with reported sales during the first quarter of 2011.

Given the 11.4 million households represented by this survey, it can be estimated that the market segment represents potential purchases during the next 12 months of 2.4 million autos, 1.5 million home remodeling projects, 1.7 million cruise buyers (total of 3.4 million cruisers), 422,000 vacation homes, and 536,000 primary residences.

Men, those with a $6M+ net worth, and those under age 50 are the most likely to plan the acquisition of one or more of the 8 major expenditures listed. Most of the items have relatively large variations within age, income, and net worth segments. Reflecting a substantial amount of possible additional purchases, the “undecideds” or “don’t know” respondents are relatively numerous for autos (10%), cruises (8%), remodeling (5%), acquisition of a primary residence (4.1%), and acquisition of a vacation home (5.4%).

With the exception of the dining in casual/family restaurants index, which was unchanged, the index for all of the categories rose from the Fall 2010 survey, typically by 7 to 9 points.

The improvement has come primarily from increases in the “same” category and declines in the “less” category rather than increases in the “more” category.

In 16 of the 17 categories, two-thirds or more plan to spend the same or more during the next 12 months. There were 12 such categories in the Fall 2010 survey.

Domestic vacation travel continues to be the strongest category. Most of the categories are now higher than the Spring 2010 survey, when evidence of “frugal fatigue” first appeared in the surveys, and back to the levels of Spring and Fall 2008. The overall average is the highest it has been since 2008.

In 16 of the 17 categories, the segment with the strongest spending indexes is the under age 50 group. The differences within the gender, income, and net worth groups are generally minimal.

In general, the categories of services (vacation and leisure activities) appear to have somewhat better prospects than the other categories of tangible products. All three group spending indexes (home durables, leisure, and vacation travel) increased from the Fall 2010 levels, with the vacation travel category showing the most improvement and the other two groups up slightly less. All three groups are essentially back to 2008 levels.

Participants in the American Affluence Research Center survey have an average annual household income of $333,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.8 million.

A description of the Spring 2011 survey methodology and other detailed highlights of the survey can be viewed at:
http://affluenceresearch.org/most-recent-tracking-study/highlights-of-most-recent-survey/

Posted in Cruises, Entertainment & Recreation, Fine Jewelry & Watches, Home Entertainment Equipment, Home Furniture & Furnishings, Home Purchases & Remodeling, Luxury Market & Goods, Restaurants & Dining, Travel, Vacation Homes, Vacations | No Comments »

Contrary to popular perception, affluent Americans do not spend lavishly on luxury hotel suites on Park Avenue.

In ground breaking research on the definition of luxury and the spending habits of the wealthiest 10% of US households, respondents to a survey by the American Affluence Research Center were asked to specify the most they could imagine spending for 37 various products, including a hotel room for one vacation night in New York City.

For both men and women across various high net worth levels, the overall median amount survey respondents could imagine spending for one night of leisure in a NYC hotel is $300. Marriott and Hilton were the top two brands named by those responding with a brand preference.

Surprised that the wealthiest Americans aren’t staying at the Peninsula or the Four Seasons when vacationing in the Big Apple?  Ron Kurtz, President of the American Affluence Research Center, is not.

According to Kurtz, the people most likely to be savoring the finer things in life are the ones with a net worth of $6 million or more and an income of $500,000 or more.  These are the “conspicuous consumers” who, according to Kurtz’s study, indicated a median of $400 when imagining the most they would pay for a night in The City that Never Sleeps.

So what does all of this mean?  According to Kurtz,” about 90% of the affluent are not conspicuous or ostentatious consumers. They spend conservatively and save carefully.”  They choose not to stay at The Plaza or The Pierre, even though they have the funds for suites in these luxury destinations.  Kurtz believes it is these affluent consumers that represent “an opportunity to substantially increase the market for high end luxury products if the affluent can be educated about why they should consider buying them and the brands that offer them.”

Someone please tell The Donald he needs to sell his friends on the value of style, service and exclusivity if he wants to fill those suites at The Trump International.

The national survey included 552 affluent men and women with an average of $304,000 household income, $3.1 million average household net worth, and $1.2 million average value of their primary home.

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Contrary to popular media hype, wealthy Americans do not spend wildly on luxury cars, opulent hotel rooms, or 4000 thread count sheets.

In ground breaking research on the definition of luxury and the spending habits of the wealthiest 10% of US households, respondents to a survey by the American Affluence Research Center were asked to specify the most they could imagine spending for 37 various products, including a new car.

Over 75% of those surveyed said the most they would spend is $50,000 for a new automobile. Toyota ranked #2 as the most popular brand to buy, ranking just behind Lexus and ahead of BMW and Mercedes Benz.

Surprised that the wealthiest Americans only want to spend less than $50,000 on a new car?  Thought they were driving Ferraris and Maseratis?  Clearly this isn’t Lifestyles of the Rich and Famous.

According to Ron Kurtz, President of the American Affluence Research Center, the people most likely to be living the really good life are the ones with a net worth of $6 million or more and an income of $500,000 or more.  These are the “conspicuous consumers” who, according to Kurtz’s study, are most likely to spend more than $50,000 for a luxury automobile; the kind of car that you wouldn’t find in the Toyota showroom.

So what does all of this mean?  According to Kurtz,” about 90% of the affluent are not conspicuous or ostentatious consumers. They spend conservatively and save carefully.”  They choose not to spend more than $50,000 on a car, even though they have the funds.  Kurtz believes it is these affluent consumers that represent “an opportunity to substantially increase the market for high end luxury products if the affluent can be educated about why they should consider buying them and the brands that offer them.”

Luxury brands take note.  There’s market share to win if you can convince the average multi-millionaire that your product, brand, make, or model is worth the splurge.

The national survey included 552 affluent men and women with an average of $304,000 household income, $3.1 million average household net worth, and $1.2 million average value of their primary home.

Tags: Affluence Research, affluent market, BMW, Ferrari, high net worth, Lexus, Lifestyles of the Rich and Famous, luxury, luxury automobiles, luxury cars, luxury market, luxury motor vehicles, luxury research, Maserati, Mercedes, millionares, multi-millionaire, splurge, Toyota
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Record low levels of spending by affluent consumers for both entertainment and recreational activities are suggested by the most recent survey in a series of twice-yearly studies that began in Spring 2002.

Negative attitudes about the current economy and the economic outlook for the next 12 months are contributing to plans for reducing entertainment and recreation expenditures by affluent consumers during the next year, according to the Spring 2009 Affluent Market Tracking Study #15 conducted by The American Affluence Research Center.

In the Spring 2009 survey of the wealthiest 10% of all U.S. households, spending for entertainment (movies, concerts, sporting events, etc.) during the next 12 months, in comparison to their spending for such items during the past 12 months, is to be reduced by 29% of the affluent consumers and to be increased by only 3% of the affluent consumers. The remainder (68%) expects to spend the same for entertainment during the next year as in the past year.

Spending for recreational activities (golf, boating, skiing, etc.) is to be reduced by 35% of the affluent consumers and to be increased by only 3% of the affluent consumers. The remainder (62%) expects to spend the same for recreational activities during the next year as in the past year.

The survey respondents indicated a negative 12 month outlook for business conditions and personal household income. They also reported declines in their net worth, as a result of substantial declines in the value of their home and their investments/savings during the past two years. Together, these factors have contributed to a general attitude toward reducing or deferring expenditures in all areas.

The intentions to reduce spending for entertainment and recreational activities are consistent with the overall mood of the affluent market. Over 80% of the survey respondents reported that they had made a general effort to reduce or defer expenditures during the past 12 months, would make a conscious effort to do so during the next 12 months, or had both done so in the past and would continue to do so in the future.

The survey is representative of the population of the most affluent 11.2 million households in the U.S. that account for almost 40% of total personal income and two-thirds of the personal wealth of all Americans.

The 640 men and women included in the national survey have an average annual household income of $290,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.4 million. This survey of affluent consumers has a maximum margin of error of five percentage points at the 95% confidence level.

These surveys track how affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market, personal household income, and their spending plans for different products and services that include major appliances, home computers, furniture/furnishings, home entertainment equipment, casual and upscale dining out, entertainment, recreation, domestic and international travel, designer and non-designer apparel, collectibles, fine jewelry, and political and charitable contributions.

* * *

Ron Kurtz is President of the American Affluence Research Center, which provides marketing research and mailing lists of affluent consumers to prominent companies targeting the affluent market.

AARC is an independent, private research organization dedicated to providing reliable marketing information about the values, lifestyles, attitudes, investments, and purchasing behavior of the most affluent segments of the U.S. population through both custom and multi-client surveys.

Ron’s experience includes over 20 years in senior management positions in the airline, hotel, and tour business. As the founding President of Sea Goddess Cruises, he created the product category of small deluxe ships for the very affluent. He also served as the chief marketing officer of four cruise lines, including Norwegian Cruise Line and Windstar Cruises.

Ron has been a key contributor to 6 start ups and 11 turnarounds of substantial businesses. He earned his MBA at Harvard Business School.

The American Affluence Research Center CONTACT: Ron Kurtz at 770-740-2200 or info@affluenceresearch.org. Website: http://www.affluenceresearch.org

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