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.

Reimagine, Resonate and Reboot

As we approach the last quarter of the year, three words come to my mind with respect to luxury travel marketing today – “reimagine,” “resonate” and “reboot.”  Why? 

• Savvy marketers should be brave enough to know when it’s time to reimagine their brands in order to sustain the life of that brand.
•  To be effective marketers, our efforts must resonate with our target audience. They can’t just resonate with us – they have to be meaningful and impactful to our customers
• If we embrace the ideas of reimagining and resonating – along with new technology – we will likely enjoy a successful reboot, which is often a necessity in the lifecycle of a brand. Think of it as “revival of the fittest.” 

Reimagine & Reinvent

As luxury travel executives, we intimately know our brands – their essence, their defining aspects – but that doesn’t mean our brands are as distinct in the marketplace for affluent consumers and valued travel advisors. That’s why clarity of brands is crucial – showcasing an identity that is distinctive and rich in personality is the difference between being remembered and getting lost in the clutter.

For clarity, you need to understand your brand – and not be fearful of reassessing how consumers and travel partners perceive your brand. Keep your messaging fresh and on-point.  In the luxury space, we shouldn’t try to be all things to all people – it is about being the right thing to the right people.  This principle of “reimagine and reinvent,” as I like to call it, is driving luxury travel brands to create stronger corporate identities and strengthen their messaging.

Today’s emphasis is on exhibiting a razor sharp focus to target the right people.  Luxury travel companies are spending more money on new print advertising campaigns as well as putting money into digital and video/film because of their impact. Who is doing this? Look at Rosewood Hotels & Resorts (they just launched a new “Sense of Place” brand campaign), Shangri-La Hotels & Resorts (they are conceiving new television ads), Peninsula Hotels (the company is working on new creative and a focus on video) and Taj Hotels (they will shortly unveil a new campaign). Full disclosure – Rosewood and Shangri-La are clients.

What's Happening With Today's Traveler? - Fees & Social Media

Last time I wrote, I shared insights about popular/less popular destinations and travel trends of today’s affluent consumer based on a survey Strategic Vision conducted with approximately 50 travel advisors at the owner or manager level. We learned that Italy was one of the most popular destinations for bookings in the last six months, Southeast Asia and the U.S. are trending up destinations, Hawaii and villa rentals in Italy and France continue to grow in popularity for family travel (a burgeoning trend in itself), and much more. We also heard from numerous agencies that are experiencing different trends than those surveyed, so I’d like to thank those who shared their feedback.

Keeping the dialogue going, here I review survey results on the subjects of ancillary fees and social media. 

EXPLAINING FEES

We’ve been concerned about fees and wanted to follow the conversation.  Respondents overwhelmingly believed in clearly outlining all fees to their clients – whether ancillary fees from hotels and airlines or service charges from travel agencies – so there are no surprises.  One respondent said their agency has a spreadsheet with all ancillary expenses clearly defined, and that travel counselors “are trained to explain each fee along the way.”  Respondents noted that fees are a “sign of the times” and “part of today’s landscape,” and one commented that “it is a way of life but there are ways around it.”

While the fees are not necessarily a “major issue questioned by luxury clients” because most are “used to them” and not “price-sensitive,” clients do demand more transparency so as to understand exactly what they are paying. This desire for transparency goes beyond fees – clients are continuing to require a cost breakdown for all the elements of their trip.

In terms of agency fees, they cover “time, research and expertise” for “customized services beyond the travel components,” and clients tend to be “amiable” if they understand what the charges are for.

Survey Says...

I have always advocated the importance of research in order to effectively set a marketing strategy – when you’re equipped with knowledge, you’ve secured a degree of power that makes you a savvy strategist. In the effort to build on our wealth of information, Strategic Vision sponsored American Affluence Research Center’s Spring 2013 Affluent Market Tracking Study, a survey of the wealthiest 10% of U.S. households based on net worth.

The survey is based on self-administered questionnaires mailed to a randomly selected national sample of 4,500 men and women in households with specific income and assets ownership and a minimum net worth requirement of $800,000. 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.

Some results were rather surprising...

What Magazines Do Affluents Read?
Marketing requires a constant examination of the luxury consumers’ interests, opinions and product preferences – including what publications comprise the affluent library. When asked what leisure magazines they read most on a regular basis (from a choice of 11 high-end titles), survey respondents indicated Travel + Leisure as their top choice (22%), followed by WSJ Magazine (19%), T: The New York Times Style Magazine (15%) and Departures (13%), which is distributed to American Express Centurion and Platinum Card holders.

Navigating Modern-Day Content & Consumer Engagement

The expression “the more things change, the more they stay the same” is one we might forget in our rapid-speed, tech-driven way of conducting business but I feel compelled to remind luxury marketers about the importance of circling back to a principle that should guide us – at the core, marketers must engage consumers. Regardless of the tools we use to achieve that goal, we need to move the needle forward to create brand loyalty and generate sales.

To help move that needle in today’s 24-hour, tech-savvy world, we need to treat SoMoLo (social, mobile and local) channels differently. They dominate the daily mindset and increasingly draw a larger share of the marketing budget, but it is a huge marketing misstep to lump these platforms into one category and treat its users the same. To secure the coveted customer, we must understand/engage/inspire them – but we should also give that same attention to the individual social networks. While remaining rich, inspiring and interesting, content should be amended to fit the audience and the channel they are using.

Keep in mind that social is akin to “digital word of mouth.” With social media, luxury marketers have the opportunity to tap into these crucial conversations, help change opinions, and embrace the power of brand advocates across large networks.

Twitter – The Power of 140 Characters
Twitter epitomizes the “less is more” approach. Has brevity ever been more powerful? Tweets are effectively today’s sound-bytes – must-have deals that spur clicks and sales, an endorsement, a statement on news, sharing of opinions, etc. Chuck Todd, NBC’s chief White House correspondent, even likens Twitter to a newswire for the digital age (Adweek article – October 29, 2012).

Today, we rely on the consumer to further our messaging more than ever before (consider the analogy of Twitter being like a coffee house where people come together to share ideas and drive conversation). Consumers become our brand advocates, and they emerge as valuable influencers among known, and in some cases unknown, social networks. When a luxury brand’s tweet is re-tweeted, we know we’ve done something right – the message was worthy, relevant and spot-on, and it inspired our followers to share it with their network of followers.

As I 'C' It

Times have changed dramatically from when the “four p’s” of product, price, place and promotion dominated marketing strategy. Now, this is “How I ‘C’ It” – Content, Community, Channels, Commerce and Collaboration are the pillars on which to create an effective course of action to target today’s affluent consumers.


The ‘Consumer Age’
Our social and business climates have changed in immeasurable ways during the last decade, and the pace of transformation is best reflected in this quote from author Thomas Friedman:

“When I wrote The World Is Flat: A Brief History Of The 21st Century, Facebook didn’t exist. Or for most people it didn’t exist. Twitter was a sound. The ‘Cloud’ was in the sky. 4G was a parking place. LinkedIn was a prison. Applications were something you sent to college. And, for most people, Skype was a typo.

That all happened in the last seven years. And, what it has done is taken the world from connected to hyper-connected – and that has been a huge opportunity and a huge challenge.”

In the ‘consumer age,’ today’s luxury travelers are intelligent and well-researched, possess distinct expectation, and face diverse influencers. This consumer psyche has resulted in dramatic shifts in marketing strategy amid the constant evolution of the digital and social landscapes. Among the changes, one core point emerges as stronger than ever before – engagement is the cornerstone. It drives relationships, and that ultimately drives sales and profits.

Are We in Social Media and Technology Overload?

iPad, Kindle Fire, Samsung Galaxy – these names, among others, dominate our daily lives, whether we’re reading about these devices or utilizing them ourselves. And, today’s marketers are tasked with determining how best to take advantage of consumers’ obsessions with these latest and greatest technology ‘toys’ as well as how to effectively incorporate social media (Twitter, Facebook and more) into their strategies. It seems that every recent conversation I have had with marketing executives includes these topics to some extent as the hospitality and tourism industries try to figure out the best way to embrace new technology and communications channels.

In our effort to be innovative and strategic, it is crucial not to get carried away. For example, on a recent trip to London I dined at a well-known restaurant that recently opened following an extensive renovation. As always the food was excellent, but I was disturbed when the professional and efficient sommelier presented the wine list on an iPad. Was this really necessary? Leafing through the pages of a wine list is part of the enjoyment of selecting a good wine. I grew more concerned when that same sommelier had to spend several minutes at a nearby table explaining to the guest how to use the iPad. What was the restaurant trying to prove? Surely, a wine list on an iPad is no more than a gimmick. Is there any added value in the experience or was something authentic stripped from my lunch?