This is a 2017 update for AYCA members, conducted on behalf of a Fan Foundry client.

1. Buyer Behavior changes in Luxury Travel
a June 2017 update for
Chief Digital Marketer
Ed Alexander

2. Buyer Behavior changes in Luxury Travel
Resources used in this report
American Affluence
Research Center
AYCA

3. What has changed? How should agents change?
Agenda: This is the future now
Trendspotting - new, now, next
Adapting – to keep pace
Transforming – to lead change
AYCA

4. Get these right, and you could
succeed in attracting Wealthy
and Mass Affluent customers.
Opening Conclusions:
• Travelers are notoriously early tech adopters
• Travelers prefer Authentic Experience over Luxury Brand
• Brokers & Agents regain relevance as choice proliferates
• Behavior shifts affect luxury travel
What has changed? How should agents change?
AYCA

5. a)User Generated Content (UGC) – welcome it!
Support & curate it with: interactive planning,
group collaboration, social chat
b) Clients become Ambassadors and Evangelists
- if they like how you make them feel.
(see item (a) above)
c) Use tech to enhance the human connection.
Seamless facilitation for buyers
(see item (a) above)
What has changed? How should agents change?
AYCA
Travelers are notoriously early tech adopters
Upshot:
Hire tech savvy talent

6. Interest Over Time
Luxury Yacht; Yacht
Boating
2004 2008 2012 2016
2004 2008 2012 2016
What has changed? How should agents change?
Q: Do these trends coincide
with wealth concentration?
AYCA
Authentic experience vs. luxury brand

7. Luxury Travel Travel Reviews Travel Blog
2004 2008 2012 2016
What has changed? How should agents change?
(call it something else) always relevant;
what’s your rep?
table stakes now
AYCA
Authentic experience vs. luxury brand
Upshot:
Blog / socialize

8. The Mass Luxury Challenge
Digital Strategy – 3 topics
18%
Influence Disruption Activation
AYCA

9. The Mass Luxury Challenge
Digital Strategy
1. Digital’s growing influence
% of Luxury Sales
2015: 6% ($14B/$224B)
2025: 18% ($70B/$390B)
2015 2025
18%
Influence Disruption Activation
AYCA
$14B
$70B
Upshot: Hire
tech savvy talent

10. The Mass Luxury Challenge
Digital Strategy
2. Digital Disruption
Pre-digital (was): Brand-centric
exclusive brand image
Post-digital (is): Buyer-centric
frequent, relevant engagement
Influence Disruption Activation
AYCA
Upshot:
Blog / socialize

11. The Mass Luxury Challenge
Digital Strategy
3. Digital Activation
Marketing spend cranks up to address:
Multiple touchpoints
Single view of client
Influence Disruption Activation
AYCA
Upshot: Get
media tech-savvy

12. The Mass Luxury Challenge
Digital Strategy
3. Digital Activation
Marketing spend cranks up to address:
Multiple touchpoints
Single view of client
Social channels crank up to:
Build online communities
Create purpose
Leverage convenience
Influence Disruption Activation
AYCA

13. The Mass Luxury Challenge
2. Discretionary Spending Trends
The Shift to Thrift
Global Spending Power
Mass Affluence
AYCA

14. Travel issues:
Over-tourism Sustainability Security Privacy
What has changed? How should we change?
AYCA
Upshot:
Know the locals

15. 2017 Luxury Brands
AYCA
The Shift to Thrift

16. 2017 Luxury Brands
Can you name them all?
AYCA
The Shift to Thrift
Upshot:
Address frugality

17. About the HNW:
Who are they?
Where are they?
How do they buy?
How do we sell?
How are they changing?
How are we adapting?
f
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Global Spending Power

18. About the NHW: Who are they? Where are they?
AYCA
2000
(41,000)
2015
(128,000)
Worldwide UHNW (>$50M) Population Growth, 2000 - 2015
$50M $100M $500M
14,000 1,200
45,000
4,300
25,800
78,700
3X
Global Spending Power
Upshot:
More Buyers

19. About the HNW: Who are they? Where are they?
AYCA
Global Spending Power

20. The new luxury hotspots, based on luxury property growth
AYCA
Global Spending Power

21. The Growth Markets: Who are they? Where are they?
Urban World: The New Global Consumers
❶
❷
❸
AYCA
Upshot:
Learn Chinese?

22. Urban World*: The 3 Global Consumers to Watch
(McKinsey, 2016) *91% of global consumption will occur in cities.
❶ Retirees in US, W.EU and NE Asia (>60 YO)
• Will grow by 1/3 to 222M in 2030 (US:+10K/day)
• Will generate >1/3 of global consumption growth
• Per Capita spending will DOUBLE –
2005: 30%; 2030: 60%
❷ China's working age consumers (age 15 - 59)
• Will grow 20% to 100M by 2030
• Per capita spending will DOUBLE
• Optimistic about financial future
• 2x more willing to pay more for new products
❸ N. American, working age (15-59)
• Inequality rising - Median net worth of top 20% is
8x the other 80% (up from 4x in 2000)
• Incomes under pressure - suggests multi-tier pricing
• 20% more likely to use sharing economy services;
this may require customized strategies
AYCA
Concern:
overinflated
economy
US Concerns:
High Debt
Low Savings
❶
❷
❸

23. $
$ $
$ $$Why Watch These Groups?
They stimulate consumption growth.
Was: new spenders, until pop. growth ↓
Is: same spenders - per-capita spend ↑
Marketing Challenges - are you equipped for:
1 : 1 Relationships - retargeting and
recommendations-based buying
Profile each target buyer
Age •Income • Ethnicity
Shopping preferences • Buying habits
Where they are • What they want
What drives their spending
Urban World*: The 3 Global Consumers to Watch
(McKinsey, 2016) *91% of global consumption will occur in cities.
AYCA
$ Was:
New Spenders
Is: Same Spenders
Upshot:
Embrace analytics

24. ❶ Retiring & elderly in the developed world
AYCA

25. ❶ Retiring & elderly in the developed world
In the US, this group will
represent more than 40%
of consumption growth in:
40%↑
Housing Transport
Entertainment
spending
AYCA

26. ❶ Retiring & elderly in the developed world
In the US, this group will
represent more than 40%
of consumption growth in:
2006:
33%
2011:
50%
Home Improvement: A decade ago,
people aged 55+ accounted for <33%
of US spend on home improvement.
By 2011, this grew to nearly 50%.40%↑
Housing Transport
Entertainment
spending
AYCA

27. ❶ Retiring & elderly in the developed world
Home Improvement purchase growth trend may also signal
an affinity market for luxury travel sales. Why?
=
AYCA

28. ❶ Retiring & elderly in the developed world
(a) Both require planning assistance
(b) Older citizens are likely buyers of both
Caveats: 1. Home improvement trend may signal frugality (underwater mortgages), yet some
older homeowners have mortgages paid off, freeing cash for entertainment and travel
2. Over 90% of all affluent retirees are self-made, accustomed to running things – not idle rich.
Home Improvement purchase growth trend may also signal
an affinity market for luxury travel sales. Why?
=
AYCA
Agents wanted!
Upshot:
Agents relevant

29. Entertainment is multifaceted.
Affinity markets matter.
❶ Retiring & elderly in the developed world
=
In the US, this group will
represent more than 40%
of consumption growth in:
40%↑
Housing Transport
Entertainment
spending
AYCA
Upshot:
Find partners

30. ❶ Retiring & elderly in the developed world
Travel plans:
1. YES! Travel is in just about everyone’s plans.
2. Price is not a dealbreaker, but it needs proof.
3. Bucket List items vary with wealth and life stage
4. Hot spots are, of course, hotspots
5. Connecting while away is “table stakes” for some, but not all
6. Fun and family are primary drivers of travel
AYCA

31. ❸ North America’s working-age population
AYCA
Impact
investing
Entertainment
Warm
Climate
Active
Lifestyle
Romance Culinary Sustainability
World
Sport

32. 2000 2016
4x 8x
Top
20%
Other
80%
Net
Worth
Affluent young consumers
They are fewer (15% of all
Millennials), but also more
affluent - increasingly so.
❸ North America’s working-age population
15% 8x
$$$
AYCA

33. 2000 2016
4x 8x
Top
20%
Other
80%
Net
Worth
Affluent young consumers
They are fewer (15% of all
Millennials), but also more
affluent - increasingly so.
❸ North America’s working-age population
15% 8x
$$$
AYCA
Today, the median net worth of
the top 20% of young-adult
households is 8X that of the
other 80%, up from 4x in 2000.

34. ❸ North America’s working-age population: who are they?
About those affluent Millennials ….
ETERNAL
OPTIMISTS
ENGAGED
DECISION
MAKERS
OPEN
MINDED
SOCIAL
CENTRIC
HUNGRY
FOR INFO
AYCA
Upshot: Content is King

35. 2017 Luxury Market Shifts
Buyer Profile
Media Social, not traditional
Behavior
“NET SET”: Global citizen,
midcareer, tribe-aligned
Preference Experiences vs Things
Value trend Lease / share vs. own
Engagement Frictionless, online
Environment Tech-enabled
Channels Digital (mobile, social, app)
Values
Spirituality, well being,
conscience, ethics, taste
Source: Luxury Society
Brand
Centric
“What
I own”
Buyer
Centric
“Who I
am”
❸ North America’s working-age population: where are they?
( )
AYCA
was: is:

36. How are we adapting to reach them?
• Referrals and Influencers
• Events and Activities
(passion, partner, charity)
• Web, Social, AI (1:1)
• Chatbots (on-demand CSR)
❸ North America’s working-age population
About those affluent Millennials ….
Source: The American Affluence Research Board
AYCA

37. ❸ North America’s working-age population
They are mobile …
AYCA
Upshot: be
mobile-responsive

38. ❸ North America’s working-age population
Source: The GrabYourWallet.org top list of businesses to boycott
2/2/17
They vote their conscience when aligning with brands
AYCA

39. 2017 Luxury Brands
They vote their pocketbooks, too.
AYCA

40. About The 1%
f
AYCA

41. 35 - 66 College educated
White collar Married
Caucasian F.I.R.E.
About the 1%: Who are they?
AYCA

42. The 1%: How do they buy? How do we sell?
Research what they buy, who sells to them, and how
Purchase Habits • Websites • Social Channels
Set Alerts • Nurture & Support Partnerships for co-selling
Ultimate Status Symbols of the Super-Rich (partner opportunities)
Private island Unlimited First Class Air Travel Pass
Private jet Exclusive designer handbags - Birkn, etc.
Electric supercar Limited edition cars
Children's car Submarine
Luxury treehouse Expensive stocks (ex.: Berkshire Hathaway)
Robot butler Membership in elite club
Enchanted forest (legacy trees) Amex Centurion Black Card
Kiteboard Mega-mansion
Attractive bodyguard Superyacht
AYCA
Upshot:
Exploit Your niche

43. Philanthropy Sports
Travel Reading
Art Cultural events
Fashion and style Golf
Politics Dining
Wine and spirits Hunting
Boating Jewelry
Health and exercise Fishing
Automobiles Watches
Collectibles (cars, etc.) Skiing
Top Hobbies of Billionaires (more Partner markets)
Hmmm… How and where do they socialize about these things?
Source: businessinsider.com
?
AYCA
Upshot:
Exploit your niche

44. 2017 Luxury Market Shifts
Source: Luxury Society
Even More Partner Markets
Relevant Influencers (consider engaging)
Concierge
Personal Assistant
Private Jet Charter
Sports (Tennis, LaCrosse)
Business and Leadership
Self improvement
Finance – Stocks, Bonds, Real Estate
Good Read (Forbes): “Luxury Market Travel Trends Shift as Affluent Millennials Act on Their Aspirations”
AYCA

45. Currency devalued
Economy cooling
Geopolitical
effects
Luxury Cities, Millionaire Migration
Source: Luxury Society
Buyers Partners Brand HQ
+11,000
+10,000
+8,000
-12K
-9K
-8K
+4,000
-6K
-6K
Migration Factors:
Education
Safety
Climate
Healthcare
Cleanliness
Source: New World Wealth
AYCA

46. Key HNW Issues
Source: US Trust
1. Health - a top factor in "living well".
2. Life purpose – this would not change,
even if all money were lost.
3. Social impact - top investing interests:
38% Enviro. protection & sustainability
35% Healthcare quality and access
35% Disease prevention, treatment and cure
24% Access to education
23% Veterans' assistance
21% Child and youth development
4. Family - #2 after Health
(career = #3 during peak earning years)
5. Equality - Women and men contribute
equally to household wealth
6. Financial planning - essential to financial
success.
7. Wealth / Health balance – difficult to do.
Formative Family Values
Charity
Academic achievement
Financial discipline (recession-induced thrift)
Rich people are cheap! Brands they shop:
Millennials' Outlook
Confidence in future is high
Connections are a big success factor
- includes mentors and Board members
- Regardless of age
①
②
AYCA
Upshot: Address
shifting values

47. 14%
29%
Target
market
Affluence in America – long term trend
Source: CEPA Report - Stanford Center for Economic Policy Analysis, March 2016
The US HNW Market is expanding
Share of affluent & high income households
has doubled in US since 1970
AYCA
Affluent
High Income
Hi-Mid Income
Lo-Mid Income
Low Income
Poor

48. Marketing to the HNW
If Luxury is - by definition - exclusive, and the NHW is expanding …
Q: How do you market broadly,
yet remain exclusive?
AYCA

49. Marketing to the HNW
How do you market broadly,
yet remain exclusive?
A: Do both.
If Luxury is - by definition - exclusive, and the NHW is expanding …
AYCA

50. Marketing to the HNW
If Luxury is, by definition, exclusive...
Market Broadly.
Create aspirational products
and experiences that
appeal to broader
audience interests
Align with shared values:
transparency, privacy, impact,
adventure, sustainability …
AYCA

51. Marketing to the HNW
If Luxury is, by definition, exclusive...
Remain Exclusive. Cultivate insider relations with:
Clients
Influencers
(values and relevance)
High potential prospects
Deliver exclusive benefits
High value content
Members-only Perks
VIP-Exclusive Experiences
AYCA

52. Cultivate “insider” relations
• Clients
• Influencers (value, relevance)
• High potential prospects
Deliver exclusive benefits
• Members-only Perks
• VIP-Exclusive Experiences
• High value content
Marketing to the HNW
If Luxury is, by definition, exclusive...
Be Exclusive.
Connect with a key Influencer’s
affinity groups based on his/her
engagement with your brand.
AYCA

53. Marketing to the HNW
2 words about privacy: It depends.
So, maybe … ask about it?
Ultra HNW: Highly Guarded
New HNW:
Digital Native:
Less insistent
Online sharer
Less affluent: Less concerned
AYCA
Upshot:
Personify integrity

54. Top Trip Types across generations
Significant
decline
over
2016
Balearic Islands Costa Rica
Bali Cuba
Bermuda Fiji
Bora Bora Galapagos Islands
Cancun Sardinia
Corfu Seychelles
AYCA

55. Get to know:
Who they are
Where they are
How they buy
How we sell
How they are changing
How we adapt
The US HNW Market is expanding
AYCA

56. AYCA
Hire tech savvy talent
Blog and get social
Get media tech-savvy
Know the locals
Address frugality
More Buyers
Learn Chinese?
Embrace analytics
Agents relevant
Content is King
Exploit your niche
Market broadly
Offer exclusives
Personify integrity
Address shifting values
Upshot:
Be mobile-responsive

57. Thank you!
For in-depth, tailored assistance,
or if you have a question, contact:
Ed Alexander, Chief Digital Marketer
ed@fanfoundry.com
+1 781 492 7638 USA East
AYCA

58. Appendix
Industry info
Tactical Approaches in Specific Markets