Poll: Wealthy shun luxury lines

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MIAMI -- The well-heeled are six times more likely to take a cruise than most people, but only about 40% of the rich are choosing luxury lines for their vacations, according to a survey of high-income individuals.

Most of the cruising rich, defined as those with a net worth of more than $5 million, are traveling on midpriced lines, according to the survey, which was undertaken by Management Resource Group (MRG), a consulting firm, and Decision Resource, a marketing company, both based in Miami.

The findings suggest that luxury lines have a large untapped market.

But the message for travel agents is that they should consider recommending mid-priced lines to some of their clients, when appropriate.

"The luxury market has a good deal of unused potential," said Ron Kurtz, president of MRG. "On the other hand, travel agents should not feel shy about sending their high-net-worth clients on midpriced lines after carefully assessing what the clients' needs are."

Kurtz, who was the founding president of Sea Goddess Cruises, conducted the survey for ResidenSea Ltd., which is developing a cruise ship planned as an exclusive residential community for the super-rich. The survey was based on responses of 370 individuals from an estimated 450,000 households in the U.S. whose members have a net worth above $5 million, with annual incomes starting at $250,000 and extending to over $1 million. Of the group, 28% took a cruise during the two preceding years, for an average of 1.6 cruises during the period, a propensity to cruise far above that of the average consumer.

Based on the data, MRG estimated that the super-affluent account for $880 million in annual cruise sales, based on 2.2 million passenger cruise days and an estimated average per diem of $400. Surprisingly, only 41% took their most recent cruise on what the survey designated as luxury lines: Crystal, Cunard, Radisson Diamond, Seabourn, Sea Goddess, Seven Seas, Silversea and Windstar.

Almost the same number, 38%, traveled on so-called premium or contemporary lines: Carnival, Celebrity, Costa, Holland America, Norwegian, Olympic, Orient, Princess and Royal Caribbean. The remaining 21% booked other cruise lines.

The unexpected tendency of the group to cruise on midpriced lines held for even the highest tier of the wealthy -- those with a net worth above $10 million and annual incomes above $1 million, according to the survey. Of this group, only about 45% traveled on luxury lines, the survey found. Kurtz noted that these affluent cruisers could easily afford a luxury cruise.

Why, then, do so many book with midpriced lines? For one thing, Kurtz said, some cruisers may prefer a large suite on a midmarket ship, offering the opportunity to have the ship's best accommodations. "The top suites on many midmarket lines are very spacious," he noted.

Other affluent passengers, he said, might want a more casual environment than that found on most luxury ships. In a related idea, he added, some may not want to pay luxury cruise per diems for casual destinations, such as the Caribbean.

In addition, traveling on a ship catering to families is clearly a factor for those with children, Kurtz said. For example, 73% of those with children in the home chose midpriced lines, compared with 49% of those without children, the survey found. Even those without children in the home frequently travel with grandchildren, he added, and in those cases prefer to book a ship catering to children.

Despite these explanations for the preference of many affluent cruisers to travel on midpriced ships, Kurtz added: "We were surprised to find that luxury lines are missing so much business."

As one tactic to gain more of the business, Kurtz suggested that luxury lines might offer cruises with a much more casual atmosphere. On some holiday cruises, for example, luxury lines could make more of an effort to accommodate families, he said. In addition, he said, some luxury lines may not be doing enough to differentiate their products and explain the benefits they offer in service, food and other amenities.

Travel agents should promote these benefits for affluent clients who may not be aware of the differences, Kurtz said. It could result in a higher commission. "In particular," he said, "agents should think of 'upselling' if there are no kids."

Kurtz said that the survey's margin of error was plus or minus 5%.

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