First let say I am a Bob Shullman fan. I always enjoyed his work when he was running the MMR Ipso Affluent Survey and having seen him speak found him both insightful and pragmatic.
Bob has been doing his own thing recently through Shullman Research Center and is now publishing regularly luxury related consumer research that while focused on the Mass Affluent does touch the lower edges of the rich.
“Insights into Luxury” out this month examines American consumers and their travel plans for the coming 12 months.
Bob’s research covers households starting with a $75,000 Household Income and then has breaks at $150,000, $250,000 and $500,000.As the common viewpoint is that it takes a $1 million + Household Income to be a heavy user of luxury goods and services – in other words Plus, Plus, Plus as opposed to “if I do that, I can’t afford this.” – the research doesn’t really get to the Ultra High Net Worth segment but it provides some interesting directional takeaways.
“ It takes a $1 million + household income to be a heavy user of luxury goods ”
First, take a look at how Shullman divides his data using 2012 U.S. Census data:
- Top 1% = $500,000 Household Income (HHI), 1.4 million households
- Top 2% = $250,000 to $499,000 HHI, 5.3 million households
- Next 8% = $150,000 to $249,999 HHI, 19.9 million households
- Next 28% = $75,000 to $149,999 HHI, 65 million households
Together these four groups represent 40% of U.S. households. For the purposes of my review, I am taking a look at the core Mass Affluent (75k to 250k) and Top 1% (500k +).
The Top 1% are:
- Twice as likely to be traveling outside the US than the Mass Affluent (59% to 28%)
- Nearly 250% more likely to be planning a vacation outside the US (49% to 21%)
- Are again 250% more likely to be planning a international adventure trip (23% to 9%)
- More than twice as likely to plan on staying at five star resorts (24% to 11%)
- 300% more likely to stay at a luxury boutique hotel or resort (11% to 3%)
“ The Top 1% are twice as likely to be traveling outside the US than the Mass Affluent ”
The Top 1% are more likely to be considering trips to the following places than Mass Affluents as follows:
- California (34% to 17%)
- Nevada (17% to 13%)
- Illinois (9% to 4%)
- Colorado (11% to 4%)
- Hawaii (22% to 13%)
Looking internationally, nearly twice as many in the Top 1% group (when compared to the Mass Affluent group) are considering France (15% to 7%), Italy (26% to 9%), Mexico (21% to 14%) and Bermuda (7% to 1%). Central America and the UK were of more interest to the Mass Affluent than the Top 1%.
When it comes to international travel plans, The Top 1%:
- 32% expect to stay in a five star resort (13% for Mass Affluent)
- Spend approximately $19,200, about three times as much as Mass Affluent
Private jet travelers spend approximately $69,000 per destination, so clearly while the research gets to an affluent audience, it is not speaking to the global super rich.
That said, it does show that for destination promoters and luxury travel providers, the simple formula is the more affluent the consumer, the more likely they will spend on luxury travel, including segments such as adventure travel, both in the U.S. and abroad.
To further investigate wealth & affluence on Luxury Society, we invite your to explore the related materials as follows: