HOTELS

Derek Gale

The Good, The Bad & The Ugly
May 13, 2008

First, the good: The wealthy in America plan to spend more this year than last year on vacations, weekend getaways and resorts and fine hotels, according to an April 9 survey of 638 well-to-do households by the American Express Publishing Corp. and the Harrison Group.

Now, the bad: The same survey found that while the wealthy may keep spending on vacations and hotels, upper middle class, affluent and super affluent Americans are curtailing travel, and nearly 30% of survey respondents planned to spend less on items perceived as indulgent, including restaurants.

Finally, the ugly: Nearly 80% of America’s wealthiest (in this survey, wealthiest representing the top 10% of the U.S. population, who generate 50% of all U.S. retail spending and account for US$4.1 trillion in annual consumption) believe the country is already in a recession.

The cause of this recession is the “free and easy” availability of debt in America, according to four out of five survey respondents. The respondents assigned much of the blame to Wall Street, with roughly two-thirds saying that “big banks and corporations have again put the whole economy at risk.”

Worries among this demographic stem largely from concerns about the collapse of the dollar (61%), and nearly three-quarters of respondents believe “we’re in for a long, rough ride ahead.”

These survey respondents--who have an average discretionary income of US$342,000--are largely insulated from recent economic troubles, yet they seem to be experiencing the same “emotional recession” as the rest of the country.

68% of them say they are looking closely at every spending category to find ways to save; 87% are using the Internet “more and more” to find lower prices.

What are your thoughts? Does this mean trouble for upscale and luxury operators? What does it mean for brand loyalty?

Posted by Derek Gale on May 13, 2008 | Comments (1)