|The Luxury Consumer in the New Digital World: Then & Now.|
Four Seasons Luxury Trend Report
Monday, 16th January 2012
The global luxury landscape and the luxury customer have evolved dramatically over the last tumultuous and transformative three years.
The advent of unprecedented new technological innovations, coupled with the increased skepticism left over from the global financial crisis, mean that today’s consumers are demanding honest, accurate, timely and engaging information.
They are looking for intrinsic value and a deeper relationship with the brands with whom they choose to support and interact.
According to The Affluence Collaborative1, a research powerhouse that dives deep into the habits of high-income consumers, the affluent2 seek out companies and brands that can simplify and improve their lives. In the travel sector, this translates into increased expectations around personalization cutting across all touch points – including digital media platforms – as luxury travellers research, purchase, engage in and reflect upon their travel experiences.
The Luxury Traveller Technology Survey3, commissioned by Four Seasons, coupled with leading luxury market research and brand insight, sets out to uncover how consumers want technology to blend seamlessly into their experience, and how those preferences have changed in recent years.
Today's global luxury market
The world is truly global, and the luxury sector reflects this as brands cross geographic boundaries to reach consumers all over the world. Moderate growth in the U.S. and European markets, coupled with strong performance in China and Latin America, are driving growth in the sector. All combined, the global luxury market is expected to grow by 10 percent in 2013, according to consulting firm Bain & Company.
The luxury category encompasses a wide reach of products and services including apparel, furniture, restaurants, spirits and liqueurs, watches and jewellery, and more.
In the U.S., the luxury market has expanded tremendously over the last several years, from $1.2 trillion in 2009 to $1.6 trillion in 2011, according to the 2011 Ipsos Mendelsohn Affluent Survey Program4.
While the U.S. will continue to be the single most important market for luxury in the short term – due to its concentration of wealth and the propensity of Americans to spend – China is poised to ultimately be the largest market for luxury products and services in the near future.
According to consulting firm McKinsey’s Understanding China’s Growing Love of Luxury report, China is on track to reach $27 billion, accounting for more than 20 percent of the global luxury market.6
Luxury hotels bounce back worldwide
According to Smith Travel Research (STR)5, 2010 saw an unprecedented rebound in the global luxury hotel segment and since then, nearly every global region has seen significant growth; this rebound has continued in 2011. In the U.S. alone, the travel category totalled $137.3 billion in 20114. Most regions saw substantial increases in a key industry metric: revenue per available room.
The year 2012 also promises to be lucrative for the sector globally. While STR predicts that occupancy within the luxury sector will increase by a more moderate 1.3 percent in 2012 in the U.S., key revenue indicators will continue to rise.
The average daily rate (ADR) will increase by 5.5 percent, while the revenue per available room (RevPAR) will increase
by 6.9 percent. These numbers indicate that the luxury consumer is planning to travel more, in all markets.
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1 The Affluence Collaborative is a flexible research model that offers marketers who focus on the affluent consumer a unique platform combining actionable insights, thought leadership, and community. www.affluencecollaborative.com
2 Research group The Affluence Collaborative states the affluent are defined in the U.S. as having a household income of at least $200,000. This general definition transfers to other parts of the world as well.
3 The Luxury Traveller Technology Survey was distributed to more than 825 members of Four Seasons’ Guest Advisory Panel dispersed around the globe to explore how they want digital innovation to fit into their travel experience.
4 The 2011 Ipsos Mendelsohn Affluent Survey defines the affluent market as the top fifth of U.S. households based on current household incomes of more than $100,000. The travel category includes domestic and foreign destinations, hotels, airlines and cruise lines. According to U.S. Government statistics,
this select group of households accounts for approximately 60 percent of household income and about 70 percent of all net worth. www.ipsos.com
5 Smith Travel Research (STR) Global offers monthly, weekly, and daily STAR benchmarking reports to more than 43,000 hotel clients, representing over 5.7 million rooms worldwide. The research firm provides information on key metrics including RevPAR (revenue per available room), ADR (average daily
rates), and occupancy rates. www.strglobal.com
6 McKinsey’s Understanding China’s Growing Love of Luxury report can be found here: www.mckinsey.com/locations/greaterchina/InsightsChina_LuxuryGoods.pdf