SURVEY SAYS…THE AFFLUENT ARE SPENDING

It’s excellent news for our industry! The fact that affluent consumers are spending money was one of the key trends that emerged from the American Affluence Research Center’s Fall 2014 Affluent Market Tracking Study, a survey of the wealthiest 10 percent of U.S. households based on net worth.

And, the segments in which they want to spend that money is extremely encouraging for us. Forty-two percent of the respondents indicated that they prefer to divide their discretionary income among durable goods, and local experiences or travel. This is an important sign of positive consumer confidence among high-net-worth individuals, and it also extends to holiday purchases. A reported 80 percent of the affluent said they will spend more or the same on holiday gifts this year compared to 2013.

Here is a snapshot of other survey insights:

·    Respondents (41.8 percent) specified that the role of a trusted travel advisor in helping plan their next vacation was either very or somewhat important. The affluent recognize a travel advisor’s esteemed value and the breadth of expertise, contacts, and knowledge that they bring to the process of crafting a vacation experience.

·    The research also shows that there are opportunities for travel advisors to continue to elevate their profile and enhance their business because 31.3 percent of survey respondents cited that the role of a travel advisor was not very important.

·    The family that travels together stays together! Half of the respondents (51.9 percent) answered “yes” to the question “Will your next vacation trip revolve around multi-generational or family travel activities and destinations?”

·    According to survey respondents, nearly half (49.3 percent) last traveled to the Caribbean over two years ago, and 36.7 percent indicated they have never visited the region. In the last six months, 4.1 percent vacationed in the Caribbean. These figures exclude cruise visits.

·    Of those who indicated they have traveled to the Caribbean for vacation, the top five most popular destinations in the region were the Bahamas (31 percent), U.S. Virgin Islands (24.9 percent), Puerto Rico (20 percent), British Virgin Islands (12.7 percent) and Cayman Islands (10.9 percent).

·    Safety perceptions and security issues likely played a huge role in these results – more than half of those surveyed (67 percent) have never visited the Middle East for vacation and do not expect to travel there.

·    High-net-worth consumers are still exploring this part of the world, though. A total of 23 percent reported having previously visited the region on holiday. Another 9.2 percent said they haven’t visited but expect to in to future.  Israel topped the category (at 59.6 percent) as the destination respondents have either visited or plan to visit. Rounding out the top five countries were Turkey (52 percent), Egypt (38.9 percent), Jordan (17.5 percent) and the United Arab Emirates (9.8 percent).

The survey was based on questionnaires mailed to a randomly selected national sample of 4,500 men and women. Following a weighting of the respondents, the participants in this survey have an average net worth of $3.1 million and an average primary residence value of $1.2 million.

Let’s keep the conversation going!

 

Luxury Travel Summer Report: Nihiwatu, Sumba, Indonesia

On The Edge of Wildness

I rarely write about a specific property or experience, trying to focus my thoughts on the business aspects of hospitality and tourism. From time to time, however, I come across an experience that I believe is worth bringing to your attention. Recently I have visited the Island of Sumba – which lies about 400 KM southeast of Bali.

For the past 26 years and perhaps longer, surfing aficionados from all over the world have been making the journey to the Indonesian Island of Sumba to experience the left hand wave at Nihiwatu, a magnificent surfing paradise. It was in 1988 that Claude and Petra Graves first arrived and painstakingly set about building a small resort with eleven keys. They continued to attract surfers limiting the number to ten per day giving the resort almost cult status and building a successful business that has garnered more than its fair share of awards from leading publications around the world.

Unspoiled Exotic Location

The secluded resort is nestled upon 567 acres of land, only 65 acres of which are developed -- and it is capped at that. Formerly a Dutch colony, Sumba is home to 650,000 residents and is categorized as a deciduous forest eco region due to its special flora and fauna. Nihiwatu features a spectacular 2.5 KM of pristine beachfront.

Authentic Culinary Excellence and Bespoke Luxury Service

Each suite at Nihiwatu has a dedicated butler – always at the ready with a smile to cater to guests’ every need in a charmingly unobtrusive way. They are part of the 300 terrific Sumbanese staff led by a handpicked group of expats who truly appreciate the culture and the island.

Nihiwatu’s main restaurant, the Wavefront, has unparalleled views and a renowned executive chef Bernard who has a lot of experience in Asia. Guests can also eat at the Nio Beach BBQ or gather at the iconic Boathouse Bar where the beach fire pit invites inspired nightly discussions of the day’s activities. Resort rates include breakfast, lunch and dinner and nonalcoholic beverages.

Active Leisure on Land and Sea

Nihiwatu features every form of water sport imaginable from surfing and snorkeling to scuba diving, deep sea fishing and stand up paddle boarding. Active pursuits on land range from trekking through the natural and unspoiled beauty of the landscape, to horse-riding on Sumbanese horses (smaller than western horses but sturdy and ready for a cantor on the beach), to yoga beside an enticing waterfall, or mountain biking on terrain that ranges from rugged to scenic trails. Cooking classes are offered in the beach kitchen, perfectly positioned between the forest and the sea. Your butler will take you to a local village and introduce you to the villagers and to the antique shops in the town which will ship home for you. If you buy from the hotel, they will also ship for you.

Sumptuous Spa

The Spa at Nihiwatu features treatment huts at the water’s edge, combining seclusion, inspiring views and the calming sounds of the waves. The skilled local therapists offer a full range of massage and body treatments, including scented foot baths, body scrubs and facials. There will be a purpose built spa in the next phase.

Giving Back to the Community

Perhaps the most significant aspect of this luxurious getaway is that in 2001 the Graves founded the Sumba Foundation with Sean Downs, a successful businessman who stayed at the resort to surf. The foundation is committed to helping “alleviate the burden of poverty” on the people of this extraordinary island of Sumba by improving health and education, creating economic opportunities, fighting malaria, and providing tanks of drinking water throughout the island. As the business became more successful, more money was directed to the Foundation so that, to date, 15 primary schools and 48 water wells have been built, five clinics opened and 172 villages are supplied with clean water. All this has resulted in reducing malaria in neighboring villages by 85%.

Plans to Grow Responsibly

The next phase of the journey is in process. Looking to take the resort to the next level in 2013, U.S. entrepreneur Chris Burch purchased the resort and, together with his Managing Partner James McBride -- best known for his time at the Ritz Carlton Hotel Company, Rosewood Hotels & Resorts, and most recently as President of Malaysian hotel conglomerate YTL Hotels -- set about transforming the property. Adding suites including a five bedroom master suite, four tree house apartments and additional rooms, the resort will grow to grow to 32 spacious villas and a tree-house Jungle Spa by Spring 2015. 

The deep-rooted commitment to give back will be maintained and all profits repatriated into the Sumba Foundation. The result: a unique collaboration between Nihiwatu and the local community that today co-exists with compelling interdependence: the resort has become the biggest employer on the island.

In keeping with a philosophy for environmental responsibility and the desire to reduce carbon emissions, the resort produces its own fuel through harvested coconut meat; hotel waste water is treated and recycled to the gardens; and the daily menu is influenced by the organic garden and local produce from fresh fish caught daily to Nihiwatu’s very own chicken farm.

Traveling to Sumba

Sumba is an hour and 20 minutes by air from Bali. Guests fly into the new international terminal in Denpasar, Bali and then take one of several daily turbo prop flights to Sumba. People combine a visit to Sumba with a few days in Bali as well.  Nihiwatu also organizes charter flights for guests that can be booked via their Bali office.  Please contact info@nihiwatu.com for information.

Looking ahead

A steady stream of international journalists from the most respected lifestyle, design and travel publications are coming to see what partners Chris and James have in mind as they complete this development and start on another project just up the coast.

While you no longer have to be a surfer to enjoy this resort, it certainly enhances the experience. More important is an appreciation of the Sumba Foundation that exists because of the generosity of hotel guests past and present who continue to support the vision -- proving that the hospitality industry as a responsible citizen can have a lasting effect when it puts its mind to it.

For more information and to make reservations please let me introduce you to Peter Neto, the General Manager at gm@nihiwatu.com.

Innovation in Australia

While moderating the Tourism Australia Summit recently, I noted key themes emerging included digital technology and an extraordinary bounty of culinary adventures driving tourism to Australia. Tourism Australia has a reputation for innovation and thinking outside the box with an approach to marketing its destination that others in the tourism industry may want to watch and emulate.  

Technology is the preferred method of providing content to the travel industry and potential long-haul travelers, feeding them an abundance of information on experiences unique to Australia. Bloggers, digital writers and new technology leaders addressed the online/mobile approach to attracting customers. 

An innovative use of new media demonstrated how integral technology is in motivating tourists to dream — and book. Newly developed billboard capabilities recognize when a certain international flight passes overhead. The digital signage generates video of a child jumping up and seemingly pointing at the plane while the billboard displays the destination of that plane. That brand of frontline thinking highlights a new direction and elevated methods converging in travel marketing. 

And the gastronomic news from Australia is undeniable — a result of the incredibly diverse settings and expansive resources that create every experience from sophisticated dining to “bush tucker,” or Australian native bush food. Foodies seeking adventure benefit from rich seafood supplies, a natural bounty of produce by region and climate, a lush wine country and a broad spectrum of choices to suit myriad appetites. Tourism Australia responds to the nation’s obsession with food and wine with Restaurant Australia, a campaign that recognizes food tourism’s global appeal. 

One unexpected way Australia will surely attract American travelers in 2014 is the historic arrival of Major League Baseball at the legendary Sydney Cricket Ground for the first regular season games ever played in Australia, this month between the Los Angeles Dodgers and the Arizona Diamondbacks. 

Attendees at the Tourism Summit were in agreement: the long haul is worth it for the rich uniqueness of Australia, and purveyors of other destinations can and should benefit as tourism is taken to new heights. 

Innovative marketing and successful creative campaigns are encouraging signs that long-haul travel to a destination like Australia is not out of reach in this recovering economy. What do you think? 

Asian Hospitality Industry Energized

Traveling in Asia last month just prior to the arrival of Chinese New Year, I was again reminded just how dynamic the hospitality industry is in Asia. From the number of hotel brands opening new properties in Kuala Lumpur to the transformation of Singapore as a result of integrated resorts to Hong Kong, new restaurant concepts seem to open daily, and hospitality executives are continually reinventing and reenergizing to stay ahead of the curve. Much of this energy, of course, is driven by major property companies that all seem to have hotel subsidiaries. 

Flexibility is the key to the success. Market forces change, but the industry in Asia is adaptable. For example, China is experiencing a rapid slowdown in government entertaining, which has been drastically curtailed by the new government. Concurrently, visitor numbers are down, and hoteliers are realizing that while China remains a massive market, a business mix is essential.  

Looking ahead, the South China Morning Post reported in January that Hong Kong could receive 70 million tourists annually within three years and 100 million within a decade, mostly from the mainland. Tourism experts in the region said more hotels should be encouraged, especially in rural areas. 

I am not seeing much in jaw-dropping new sales and marketing concepts. The focus seems to be on tried and tested methods. Advertising is a combination of digital and print (yes, they still believe in the power of print in Asia) and, in some cases, regional and European television. Manpower is perhaps the biggest issue — finding qualified staff, training, retention and consistencies of delivery are of utmost necessity. 

However, I am energized by the region and its movement toward development or expansion, renovation and restoration, and the motivation to experiment and try new concepts. The professionalism and willingness to serve are apparent, whether it is the doorman at a major hotel in Manila or a check-in agent at the airport. Tourism and hospitality has its act together in this region, and anticipating guests’ needs seems to be second nature. We should all study best practices from Asia. Welcome to the year of the Horse. 

Is the Mega Trade Show Dead?

Last fall at the World Travel Market I spent several days conducting meetings, making new connections and absorbing all the interactions around me. After taking stock of my own experience and mulling over my observations, a huge question came to mind — are governments spending too much money on a formula that might no longer work?

Let me be clear — I believe in the power and impact of trade shows. For as tech-focused as we are now in a Twitter world where mobile devices are never far from our fingertips, face-to-face meetings are a crucial part of conducting business. Building relationships is at the core of an effective marketing strategy, and they yield a great return on investment (even though sometimes the return takes a while to receive). It was this emphasis on face-to-face relationship building that prompted me to consider the question about government spending and the trade-show formula.

I saw massive stands by countries (Spain, Turkey and several Middle East countries were particular standouts to me) with a compelling visual presence, but it seemed that few hotel companies had their own stands. The hotels joined their country stands, which created larger destination branding. The stands were a showcase for the destination experience. What was clear to me (and equally troubling) was that people manned their stands and waited for delegates to visit them — without an appointment. Or, there were stands left unattended, which basically conveys to delegates, “My destination is worth passing by.”

To me, this strategy didn’t make sense. Decades ago when I started in this business, hoteliers and tourism officials waited at their stands for people to visit, but today, our world and the travel industry are completely different. Today, you must make advance appointments in order to really maximize your investment. A program of structured, timed meetings (whether you set them yourself or attend a show that is shaped by an appointment process) is more substantive and yields stronger business, and thereby offers the greatest benefits. The best trade-show experience isn’t about people picking up brochures and business cards as they robotically go between the aisles. It should be about conversations and experiences (preferably personalized ones). Furthermore, trade shows should be manned by people who intimately know the product at hand and are serious about doing business — not people more interested in exploring the dynamic city in which the trade show is located.

People could pass your stand all show long, and they might think, “I need to stop there,” but never do because they are on their way to pre-scheduled meetings. So, I think it’s not so much a question of whether or not the trade show is dead — it truly can be a great showcase of travel experiences and travel selling. What should be gone, though, are strategies that simply don’t work.


What do you think?

Read my Hotelsmag.com blog here.

Predicting Luxury Travel Trends for 2014

Visionary Marketing for Luxury Brands Predicting Luxury Travel Trends for 2014 Affluent Survey: A survey by the American Affluence Research Center Once again, Strategic Vision has sponsored the American Affluence Research Center’s (AARC) Affluent Market Tracking Study, a survey of the wealthiest 10% of households determined by the Federal Reserve Board based on net worth. I continue to advocate the importance of this kind of research and data collection for industry leaders to gain insights and implement effective marketing strategy in the luxury travel arena. The survey is based on a self-administered questionnaire mailed to a randomly selected national sample of 4,500 households expected to meet the minimum net worth requirement of $800,000. Following a weighting of respondents, the participants have an average residence value of $1.3 million, an average household income of $295,000, and an average net worth of $3.1 million. Read on for their valuable insights… Booking Leisure Travel -- Online Travel Agencies (OTAs) or Traditional Travel Advisors? Survey results I found noteworthy: In this flourishing digital culture, we all know that leisure travelers increasingly use their computers and mobile devices to book travel. While the growth of OTAs is undeniable, the number of those surveyed who continue to work with travel advisors or make a direct call to a branded entity (airline or hotel) still outweighs use of OTAs when combined. Travelers Explore OTAs Of those responding to the question, “Have you ever used an OTA to book leisure travel?” -- 69% said yes. Still, a significant 31% of all respondents said they had never used an OTA. Forty percent of affluent consumers who said they booked leisure travel through an OTA had logged on in the prior three months, and 37% had booked digitally within the last year. Expedia was the OTA most respondents used (40%), with Orbitz coming in second and Travelocity a close third, each with about 23%. Fifty-six percent of those using OTAs were under age 50, and 78% who said they navigated online specified they shopped through a single OTA. Opportunity for Travel Advisor Growth The research found that a remarkable 66% of those surveyed rely on an advisor or reach out to a major brand when booking leisure travel, the ability for affluent travelers to make a direct connection is still an appealing influencer. When asked if they had employed a traditional travel agency to book leisure travel in the past year, 23% of respondents said they had. And 20% of those surveyed said a traditional travel agency was the choice they used most often for booking travel. Forty-three percent answered that they book directly by calling airlines or hotels or using their websites. Of those who book in this way, 30% were under age 50. As a young travel advisor recently told me, “There is so much information out there through OTAs and online resources, the agent becomes the editor/navigator for the client.” Are Hotel Loyalty Programs Important to You? Marketing and branding strategies necessarily adjust with the changing times and consumer habits. In this mobile-driven and online booking climate, a significant number of affluent travelers trend toward brand loyalty in the hotel category. In the American Affluence survey, 63% of those responding said that hotel loyalty programs are either very or somewhat important. Of total respondents, 52% said they were members of Marriott Rewards, 45% joined Hilton Honors, and 32% belonged to Starwood’s program. Overall, the responses of high net worth consumers to survey questions regarding leisure travel booking offer encouraging numbers and promising opportunities for travel advisors to expand their client base as affluent travelers seek a connection and strong brand direction. In Closing Cautious Optimism Looking Forward As 2014 begins and consumers look ahead, a few interesting findings of the AARC survey are worth considering: • The affluent seem to have a slightly better outlook for the economy and their personal wealth than the general public. Almost a third expect their net worth to be higher in March 2014. • The new research reveals a significant 7 point improvement among those surveyed who said they planned to defer or reduce expenditures in the coming 12 months. Only 37% said they would cut back this year as opposed to 44% of affluent respondents in Spring 2013 -- a forecasting of positive spending trends as we enter 2014. • Of 17 product categories tracked in the AARC survey -- such as fine jewelry, major home appliances and designer clothing-- only one, domestic vacation travel, is in positive territory; eight are in the neutral range and eight are in negative territory suggesting a decline in spending. • An encouraging mood and spending plans of the affluent may be carrying through the new year with the stock market hitting record highs on Christmas Eve -- 2014 is a year to watch. As always, I welcome your feedback. Let's keep the conversation going.