Inside the Mind of Today’s Affluent Consumer
Luxury Travel Advisor jetted out to Los Angeles in April for American Express Publishing’s annual Luxury Summit, which was held at the Four Seasons Hotel Westlake Village (http://www.fourseasons.com). Luxury experts, from hoteliers and designers to entrepreneurs and actresses, made the scene to discuss what’s on the minds of high-net-worth individuals (HNWIs) and how best to serve them.
Right away, the tone was set with an address to delegates by keynote speaker Robert Frank, wealth reporter for the Wall Street Journal and author of Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich. Frank dissected the psyche of today’s newly affluent Americans, describing many of them as uncomfortable in their wealth. Often, Frank said, those individuals who make up the top percentage of America’s rich no longer desire to be the “neighbor on the street with the Hummer in his driveway.” Instead, Frank said, today’s HNWIs yearn for life experiences that set them apart from their peers. To illustrate, Frank told the story of a man he met in his research for Richistan who traveled with his family to Antarctica, where they studied penguin migration for 10 days. Not only did his subject enjoy an extravagant 10-day expedition with his family, but when he returned home to regale friends with tales of his family’s journey, no one knew how much he spent to make it happen. Frank’s point: Sell values, not value.
Turning the spotlight on a burgeoning demographic of young affluent consumers, Frank introduced a new term into the luxury lexicon: YAWNs—those who are “young and wealthy but normal.” This financially fortunate group is constantly searching for unique experiences and values genuine relationships, Frank said.
Those themes introduced to the delegation by Frank carried over into the Summit’s daily sessions, where new themes were touched upon as well. Designers Diane Von Furstenberg and Donna Karan and actress/philanthropist Jane Kaczmarek added star power to the event in their own respective discussions, hitting on topics like charitable giving and social responsibility, among others.
During the panel discussion “Creating a Motivated Staff That Wins Over Guests” featuring panelists Alan Fuerstman of Montage Hotels & Resorts; Jeff Klein of JK Hotel Group; and Didier Le Calvez of Shangri-La Hotels and Resorts and moderated by Travel & Leisure’s Laura Begley, the similarities between hotel staff and guests and luxury travel advisors and their clients became quite apparent. “Thoughtful anticipation” was a recurring theme of the discussion: Fuerstman used the phrase to describe an employee who, upon overhearing a client’s kids gabbing about their dad’s approaching birthday, asked the hotel pastry chef to bake a cake, which was placed in the family’s room with a hand-written card from the staff. “That thoughtfulness created a lifelong memory for that guest,” Fuerstman said, “and a loyalty to Montage.” Fuerstman added that hotel employees should take advantage of consumers’ vacation experiences gone awry, explaining that some loyalties are forged in the wake of a staff’s performance during damage control.
Other fascinating presenters included Bertrand Lavayssiere, managing director, global financial services, Capgemini, who outlined the investments, spending and changing behaviors of HNWIs; Barbara Banke, co-proprietor, Jackson Family Wines, and Marjorie Federbush, president, Strategies and Synergies International, both of whom addressed the topic of philanthropy; Roustam Tariko, founder and chairman of Russian Standard Bank and Russian Standard Vodka, who took on the topic of affordable luxury for the Russian consumer; Michelle Kydd Lee, founder and executive director of the CAA Foundation at Creative Artists Agency, who lent her expertise to companies searching for the perfect celebrity pairing; and Marta Benson, CEO, Gump’s, who enlightened attendees with anecdotes about restoring the integrity and mission of the fabled San Francisco luxury collectibles purveyor.
Perhaps the most thought-provoking panel of the Summit, however, saw four Gen-Y and Millennial guests, aged 15, 20, 24 and 25, take to the stage to name their likes, dislikes, wants and needs when it comes to consuming all things luxury. A 15-year-old high school student counted among her shopping must-haves her trusted sales associate at the local Marc by Marc Jacobs boutique. Moderator DeeDee Gordon of Look-Look Inc. used the term “Luxury 2.0” to describe this new brand of luxury these privileged youth have inspired, thanks to a level of connectivity that far surpasses that of any prior generation’s.
Dr. Jim Taylor, vice chairman of the Harrison Group, summed up the Summit’s events with an animated presentation of The Annual Survey of Affluence and Wealth in America 2008, which is produced by American Express Publishing and the Harrison Group.
Talk of trends among America’s top-ranking affluent continued in New York City April 29, when the Association of Travel Marketing Executives (ATME) presented its Travel Industry Forecast during a panel lunch at the Yale Club. Luxury Travel Advisor’s editorial director, Ruthanne Terrero, moderated a discussion among panel members Marshall Calder, senior vice president of marketing for The Leading Hotels of the World; Peter J. Bates, president, Strategic Vision; Teddy Ganzarski, corporate sales manager for L’Avion; and Dennis Pinto, managing director, Micato Safaris. Topics included the staying power of baby boomers on the luxury scene and its future in the hands of those aforementioned YAWNs, as well as today’s unstable economy.
Pinto and Calder agreed that affluent consumers today are seeking out more meaningful travels: “Experience is the driver for luxury travel today,” Calder said, adding that those travelers’ objectives include reconnecting with family, friends and themselves, achieving a sense of discovery and “being a better citizen of the world.”
Talk of the act of marketing itself turned to social networking. “The consumer is king these days,” Pinto said. “They can get news back home about a bad hotel and word spreads quickly.” Calder agreed, saying that the social networking phenomenon has rendered marketing less efficient. “Consumers trust one another, so they turn to social networks for information,” he said. Calder said it’s important for purveyors to monitor sites, blogs and other networking outlets, and to “engage bloggers.” Ganzarski concurred on the importance of engaging these vocal consumers, saying that they have the ability to share information “at breakneck speed. They can provide an immediate evaluation of who you are and what your product is,” he said.
Panelists questioned and addressed the overuse of the term “luxury” and how to convey that same image and experience to consumers without using the swiftly depreciating term. “Luxury should be the ultimate in any sector,” Bates said. “The word has become diluted, and it’s time to consider words that are more appealing.” Calder suggested a few terms to replace those “Robin Leach words—luxury, deluxe, etcetera,” which included authenticity, enriching, responsible and sustainable. When asked how his company, Micato, gets the message out about its clients’ experiences without using the L word, Pinto said, “We paint an accurate picture and rely on our past guests to talk about their experiences.”
In closing, Terrero steered the conversation to today’s economy, pondering whether the United States will enter a recession and, in such a fragile state, how panelists emphasized value without tarnishing their luxury reputations and principles. Bates, who earlier in the discussion said that affluent consumers’ spending habits could be described as “cautiously optimistic,” was quick to respond: “By keeping the integrity of your pricing. Adding value is key.” Calder shared Bates’s sentiments, stating that “putting values out on the marketplace is a delicate balancing act…When we discount, we are pricing it to the customer opaquely,” he said, “so they don’t know what they’re paying for each service [air, car, hotel, etc.].”
For more information, visit www.atme.org.
—Lindsay Lambert
Tags: consumers, Marketing, strategies