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The luxury consumer in new digital world (Four Seasons report 2012)

Transcript of 2012 trd report_final

  • 1.Luxury Travel Trend Report | 12012 Four Seasons Luxury Trend ReportTHELUXURYCONSUMERINTHENEWDIGITALWORLD:THEN&NOW

2. | January 20122strong performance in China and Latin America, are driving growthin the sector. All combined, the global luxury market is expectedto grow by 10 percent in 2013, according to consulting firmBain & Company.The luxury category encompasses a wide reach of products andservices including apparel, furniture, restaurants, spirits and liqueurs,watches and jewellery, and more. In the U.S., the luxury market hasexpanded tremendously over the last several years, from $1.2 trillionin 2009 to $1.6 trillion in 2011, according to the 2011 Ipsos Mendel-sohn Affluent Survey Program4. While the U.S. will continue to bethe single most important market for luxury in the short term dueto its concentration of wealth and the propensity of Americans tospend China is poised to ultimately be the largest market for luxuryproducts and services in the near future. According to consulting firmMcKinseys Understanding Chinas Growing Love of Luxury report,China is on track to reach $27 billion, accounting for more than 20percent of the global luxury market.6LUXURY HOTELS BOUNCE BACK WORLDWIDEAccording to Smith Travel Research (STR)5, 2010 saw an unprec-edented rebound in the global luxury hotel segment and since then,nearly every global region has seen significant growth; this reboundhas continued in 2011. In the U.S. alone, the travel category totalled$137.3 billion in 20114. Most regions saw substantial increases in akey industry metric: revenue per available room.The global luxury landscape and the luxury customer have evolveddramatically over the last tumultuous and transformative threeyears. The advent of unprecedented new technological innovations,coupled with the increased skepticism left over from the globalfinancial crisis, mean that todays consumers are demanding honest,accurate, timely and engaging information. They are looking forintrinsic value and a deeper relationship with the brands with whomthey choose to support and interact. According to The AffluenceCollaborative1, a research powerhouse that dives deep into the habitsof high-income consumers, the affluent2seek out companies andbrands that can simplify and improve their lives. In the travel sector,this translates into increased expectations around personalization cut-ting across all touch points including digital media platforms asluxury travellers research, purchase, engage in and reflect upon theirtravel experiences.The Luxury Traveller Technology Survey3, commissioned byFour Seasons, coupled with leading luxury market research andbrand insight, sets out to uncover how consumers want technologyto blend seamlessly into their experience, and how those preferenceshave changed in recent years.TODAYS GLOBAL LUXURY MARKETThe world is truly global, and the luxury sector reflects this as brandscross geographic boundaries to reach consumers all over the world.Moderate growth in the U.S. and European markets, coupled withEuropeSouth AmericaAsia PacificNorth AmericaCaribbeanCentral AmericaMiddle East & Africa2009 2010 2011-21.8%-14.8%-21.2%-21.9%-22.3%-30.7%-18.1%4.0%16.0%20.8%8.7%9.4%16.3%2.5%18.2%14.4%10.8%10.5%9.5%4.9%-1.4%CHANGE IN LUXURY CLASS HOTELRevenue Per Available Room (RevPAR) - Percent Change Vs. Prior YearSource: Smith Travel Research (STR) Global offers monthly, weekly, and daily STAR benchmarking reports to more than 43,000 hotel clients, representing over 5.7 million rooms worldwide.The research firm provides information on key metrics including RevPAR (revenue per available room), ADR (average daily rates), and occupancy rates. www.strglobal.com. 3. Luxury Travel Trend Report | 3The year 2012 also promises to be lucrative for the sector globally. WhileSTR predicts that occupancy within the luxury sector will increase by amore moderate 1.3 percent in 2012 in the U.S., key revenue indicatorswill continue to rise. The average daily rate (ADR) will increase by 5.5percent, while the revenue per available room (RevPAR) will increaseby 6.9 percent. These numbers indicate that the luxury consumer is plan-ning to travel more, in all markets. At Four Seasons, we expect to seea worldwide growth in revenue of 9.2 percent in 2012.Digital innovations play a key role in boosting consumer demand forluxury travel by getting consumers interested and excited about the myriadof travel hotspots and experiences available.THE DIGITAL AGE IN LUXURYAgainst this backdrop of a rebounding global luxury market and a smart,tuned-in consumer, the age of digital has taken flight, revolutionizing tradi-tional marketing and transforming it into customer engagement.And the luxury consumer is at the forefront of this revolution.According to The Affluence Collaborative, 57 percent of the wealthystated that they like to have the latest gadgets and be in the know aboutwhats next in technology, compared to only 18 percent of the general pop-ulation. Seventy-two percent of the wealthy are active Facebook members.Theyre also using Twitter more often: Twitter usage increased by 350percent year over year in 2010, and is expected to continue at this rateof expansion through this year.1Today, consumers are savvier and demand accurate, timely and engaginginformation. Thanks to review sites like TripAdvisor, Yelp, ActiveHotels,Ctrip and Agoda, individuals have more influence than ever. Thirty-threepercent of Four Seasonsguests around the globe rate TripAdvisor veryto extremely influential in their selection of a luxury hotel. The new FourSeasons website is bringing those reviews front and centre; each of its 80-plus property pages include customer reviews direct from Twitter, Face-book and TripAdvisor. Where available, managers at Four Seasons hotelsand resorts use Revinate, an online review site monitoring tool, to respondto guest reviews more quickly and comprehensively. Minimum operatingstandards are in place at all hotels for 24/7 monitoring and response.Source: e-tailing group conducts website mystery shopping on 100 ecommerce sites, fact-finding merchant surveysand fields extensive online consumer research to understand what works for industry-leading retailers. www.e-tailing.comInternet users whoread product reviewsReviews influencepurchasing decision92%89%ONLINE REVIEWSWho exactly is the modern luxury consumer?Specific definitions vary according to sourceand geography but research group The Afflu-ence Collaborative classifies the affluentin the U.S. as having a household income ofat least $200,000 and the wealthy have anincome of more than $500,000. This generaldefinition transfers to other parts of the worldas well.According to The Affluence Collaborative, theaffluent and wealthy have a new gratitude fortheir financial status, perhaps due to the refo-cusing of values that came with the challeng-ing financial climate: 54 percent are happiertoday than they were in 2008.With this refocus of values, how do they wantluxury delivered?Customization: 34 percent expect that prod-ucts and services should be customized totheir needs and desires.True distinctiveness: 32 percent expect thatthe company should be an innovator, suc-cessfully rewriting the rules in their category.Constant exceeding of expectations: 32 per-cent expect surprise and delight; many ex-tend that to once-in-a-lifetime experiences,and 25 percent expect to learn from the prod-ucts and services they buy.TODAYS LUXURY CONSUMER:HAPPIER BUT MOREDISCERNING2012 Four Seasons Luxury Travel Trend ReportThe Luxury Consumer in the New Digital World: Then & Now 4. | January 20124CONCLUSION:Luxury brandsshould placea high priorityon monitoringand respond-ing to reviewsites and socialnetworkingsites to engageconsumers in atwo-way con-versation.Word of mouth has always been a key driver in consumer-decision making. But consider today what word of mouthmeans not just the opinions and experiences of family, friendsand business colleagues but also the opinions and experiencesof anyone as evidenced by the explosion of social networking.When Four Seasons asked survey respondents what makesthem decide to stay at a certain hotel they havent visited be-fore, the most important criteria cited was the hotels brand andreputation and recommendations by friends, family, co-workersand others which many now solicit through social medianetworks.Marketing has shifteddollars and resources toward digital chan-nels across electronic, Internet, mobile andsocial platforms. The return on investmentfor this kind of persistent, 24/7 communica-tion for luxury brands is incredibly high,and rivals more traditional, mainstreammarketing methods such as advertisingand print-based collateral. Beyond ROI,companies simply must integrate digitalcommunication if they are to be successful;according to the book Socialnomics: HowSocial Media Transforms the Way We Liveand Do Business by Erik Qualman, the realROI of social media is that your businesswill still exist in the next five years.8CREATING A DIGITALEXPERIENCE ON THE WEBThrough new digital and social media,consumers can now share more informa-tion with their favourite brands so they inturn can respond in a more relevant andcustomized way. Improvements in technol-ogy have enabled marketers to get to knowtheir customers better and have an ongoingdialogue with them, allowing customers tofully experience the brand virtually.THE NEW WAY TO LUXURY-SPENDConscientious spending replaces con-spicuous consumption. The affluent putmuch more thought into their purchasingdecisions to determine whether a product orservice will intrinsically improve their lives.Companies need to consistently reinforcetheir value proposition to ensure their prod-ucts and services are worth the money.Money can buy time and experiences.The strongest contributor to happiness forthe time-strapped wealthy is moments spentwith loved ones1. Save wealthy consumerstime or deliver a memorable experience,and yo