Affluent households ‘drive the travel trade’
Money might not be able to buy happiness, but a little extra cash certainly predisposes Americans with above-average means to hit the road for holiday fun, according to a new study of affluent U.S. consumers.
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The 2011 Ipsos Mendehlson Affluent Survey, released Sept. 12, found that Americans with annual household incomes of $100,000 or more are not only twice as likely as others to make entertainment and leisure purchases, and more than three times more likely to spend more, but they also have many of the qualities — passport ownership, a desire to “stand out” and disposable income — of the ideal consumer of travel products.
“Effectively, 50% to 60% of all expenditures in the travel world come from these people,” said Bob Shullman, president of New York-based Ipsos Mendehlson. “The affluent are very important and … do drive the travel trade.”
According to the study, 65% of affluent Americans, who account for just 21% of the population, have a passport, compared with about 37% of all Americans.
Seventy-six percent of those surveyed told Ipsos Mendehlson that they planned to take a vacation this year, with 28% saying the travel would be international. The top destinations visited in the last 12 months were domestic, with Las Vegas, New York, Orlando and Los Angeles heading the list.
Internationally, the Atlantic/Caribbean region, Europe and Mexico were the top three destinations visited by “affluents.”
In the last year, 83% of survey respondents took a trip of any sort, spending an average of $2,849 per journey, and 55% stayed at hotels with ratings of four or more stars, the study found. “The reality is that affluent travelers stay at high-end hotels, and when they go on trips they like to shop as well as enjoy the amenities of the hotels, resorts and villas that they stay at.”
While sightseeing, taking walks, visiting family and friends and going to the beach were top vacation activity picks, shopping came in at No. 1, which was perhaps not surprising given the demographic.
Not that affluent travelers are profligate in their spending. Ipsos Mendehlson found that only 16% flew in first or business class when traveling, with a mere 3% flying privately, and just 18% agreed that they “prefer to buy designer or luxury brands.”
Like any consumer, affluents are looking for value for money spent, Shullman said.
“For those travel suppliers who can provide value, people are still willing to pay,” he said. “This may be just an inference, but those who think they can charge extortion-type rates and get away without providing value are going to have problems.”
Despite all the good news for marketers, Ipsos Mendehlson found that affluents’ overall expenditures in 2011 on travel and other product categories remained flat. “The new normal is stability, and I don’t think we’re going to see dramatic growth,” Shullman said.
The study’s findings were somewhat borne out in the experience of Edina, Minn.-based operator MLT Vacations, which offers luxury products via the Delta Vacations and United Vacations brands it manages. According to MLT, luxury bookings have rebounded from the 2008-09 recession more slowly than mainstream ones.
“This is a year of a relatively slow growth in luxury product sales, [but] the percent of growth in the upscale segment of our business has remained in double digits, and we expect it to accelerate even more next year,” said an MLT spokesperson.