In the current climate of political and economic uncertainty, and terrorism reports dominating our news media, it is important to keep focused on how these issues impact the affluent travel market. Luxury travel advisors, deluxe hotels, luxury cruise lines and other upscale suppliers are keenly interested in the answer to that question, so I asked Cara David, managing partner for YouGov, for her firm’s latest survey of the U.S. affluent market. YouGov is a global market research firm that captures the views and perspectives of over 4 million consumers worldwide.
One of YouGov’s most recent surveys captured the views of 2,515 U.S. based “affluent” consumers on a range of expenditure categories, including travel. The study analyzed differences between customer age profile and annual household income from Base Affluent ($150,000-$199,000 annual household income) up to and including the Wealthy ($10 million plus in assets with a median of $20.1 million).
Travel Spending Grows
YouGov is forecasting $277 billion in affluent spending this year across the nine discretionary categories it surveys, including Leisure Travel, Fine Dining, Home Décor/Furnishings/Electronics, Fashion Accessories, Fashion Apparel/Fashion, Women’s Handbags, Fine Jewelry and Watches. While YouGov is forecasting an 11 percent decrease across six of those categories, Leisure Travel along with Fine Dining are predicted to increase 9 percent. That’s good news for luxury leisure travel sellers!
YouGov also found that leisure travel represents 43 percent of discretionary spending for affluent travelers and is forecast to grow 10 percent over 2015 for total market value of $119 billion in 2016, with the increase in spending evident across all generational groups.
What Role Travel Plays
YouGov also asked what role travel plays in the lives of the affluent across generational groups. “While each trip may have a different purpose, in general we see differences in the role travel plays by generation,” Cara says. “Millennials through Boomers look to travel to provide an escape where they can relax and unwind. Matures, on the other hand, are more interested in meeting new people and experience new cultures.”
Travel is a Priority
The YouGov survey highlights that travel takes priority over other luxury discretionary purchases. “The experiences affluent travelers have, defines who they are and this sentiment is particularly strong among Millennials,” Cara says.
For example, 85 percent of Millennials said they will take a luxury vacation before buying any other luxury product (versus 67 percent of Gen Xers, 64 percent of Boomers and 63 percent of Matures). Eighty percent of Millennials say travel experiences define them as a person (versus 66 percent of Gen Xers, 58 percent of Boomers, and 67 percent of Matures).
No Recessionary Fears
More spending on travel may be in part driven by the fact that only 38 percent of affluent consumers believe the U.S. is heading to a recession, with no significant differences seen between different generational groups. When asked if they are extremely confident in the strength of the U.S. economy, Millennials at 41 percent were the most confident generational category.
On the other hand, when it comes to planned spending on Leisure Travel, Millennials and Gen Xers are the most vulnerable generational categories, with 31 percent of Millennials and 29 percent of Gen Xers stating they would give up Leisure Travel during difficult financial times.
Concerns Over Safety?
According to the YouGov survey, nearly half (48 percent) of affluent consumers say they are extremely or very concerned about the threat of ISIS in the U.S. In addition, 64 percent of affluent travelers overall say their concern with safety and security is greater the further they travel from home. This is particularly evident among Millennials where this response rates rises to 74 percent.
No Travel Limits
While 42 percent of affluent consumers overall believe travel security infringes on personal privacy, that figure rises to 53 percent of Millennials, compared with 41 percent of Gen Xers, 40 percent of Boomers, and 30 percent of Matures.
YouGov’s survey also found that while there is a small number of affluent consumers who have limited their travel due to the hassle of security measures, 67 percent of affluent travelers refuse to alter their personal travel plans in the future because of terrorism, with only minimal differences seen between the different generational groups.
As always I welcome your feedback on what’s changing in the luxury market today. I look forward to getting your comments. Let’s keep the conversation going!