Recently, Regent Seven Seas Cruises made news announcing that the top suite on its newest ship, Regent Seven Seas, will be priced at $10,000 per night. The five-figure per diem was deemed important enough that it was covered in the consumer media by numerous outlets, from USA Today and Fortune Magazine to CNBC and Fox News.
When we consider that the median household income for Americans is slightly over $50,000 and that researchers generally peg $100,000 and over as "affluent," the idea of people paying $10,000 per night for a place to sleep becomes newsworthy.
Last year, Elite Traveler magazine ran a feature on top suites in Paris. There were 11 suites costing more than $10,000 per night, and unlike Regent, alcoholic beverages were not included. In fact, many of the palace hotels in the City of Light have multiple signature suites, so I suspect there are probably closer to 40 suites that are priced in excess of $10,000 per night.
While some might assume that most of these suites are sold at discounts or used for upgrades, that's generally not the case. During the International Luxury Travel Mart in Cannes in December, virtually every hotel executive noted new hotels are coming with larger and more lavish suites and villas because they sell at top prices.
Paul James, who heads the luxury brands of Starwood Hotels & Resorts, noted an interesting turn of the tables. Going back a couple decades, he said, four-star hotels generally were cheap and full, actually running higher occupancies than their luxury cousins that were "expensive and empty."
Citing STR Global, James said, "Luxury hotels today are running higher occupancy rates than upscale hotels," with higher price tags as well, of course.
Executives of one Caribbean resort who I met during the show discussed finalizing plans for a 20,000-square-foot top floor suite priced at $50,000 per night. Preferred Hotels & Resorts unveiled a program marketing villas and private residences that are part of resort hotels.
What this means is that while even the rich don't want to pay more than they have to, price is rarely the driver in decision-making. For an industry where marketing is often focused on fourth night free, free upgrade at check-in and $100 spa credits, shifting gears when working with ultra-high-net-worth customers is crucial.
In the book "The Sky's the Limit: Marketing to the New Jet Set," which I co-authored, we interviewed more than 600 private-jet owners asking how much they spent annually on various categories as well as about their frequency of purchase. Travel took up five of the top 10 places and, importantly, underscored that unlike many of us, the wealthy usually don't have to make financial choices among a vacation, a new watch or refinishing the deck.
The top 10 categories of private-jet- owner luxury spending were:
- Home improvements -- $542,000 (75%)
- Yacht charters -- $404,000 (10%)
- Fine jewelry -- $248,000 (89%)
- Automobiles -- $226,000 (15%)
- Meetings and events at hotels or resorts -- $224,000 (73%)
- Villa/chalet rentals -- $168,000 (28%)
- Leisure stays at hotels/resorts -- $157,000 (65%)
- Watches -- $147,000 (32%)
- Cruises -- $138,000 (21%)
- Fashion and accessories -- $117,000 (90%)
Other notable annual spending included $107,000 on spas and $98,000 on experiential travel.
While tapping into this market takes well-honed skills and knowledge, the first thing to remember is that it is rarely about price. The same customer who is spending $5,000 or $15,000 on a suite is buying $50,000 watches, $10,000 handbags and $100,000 pearl strands.
And he or she is also spending $10,000 per hour to fly a private jet.
Doug Gollan is the co-founder of Elite Traveler, a magazine distributed on private jets, launched in 2001. He is a CTC and a member of The Luxury Marketing Council. In addition to his blog, Douggollan.com, which covers news and trends about selling and marketing to the Super Rich, he is currently working on his third book, "Sales Superstars: Secrets of Selling to the Super Rich." He can be reached at [email protected].