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Taylor encouraged operators to pursue the most lucrative slice of the limousine customer market, known as the five-star traveler. The luxury study paid close attention to this elite demographic group. The five-star traveler consists of a 16% share of Americans who overall are considered wealthy and affluent. They generally fall into the top 20% of the top 10% of wage earners in America.
“2% is what you have access to,” Taylor said. This small segment resorts to “extreme spending” of an average of $32,000 annually on travel. Of the five-star travelers, 32% are Gen X, ages 33-46, and 49% are Baby Boomers, ages 47-65.
Some key characteristics and traits cited by Taylor:
- The average annual discretionary income of the most likely customers is $862,000 per year; the average asset pool is $54.7 million; the median asset pool is $7 million.
- 65% of five-star travelers grew up middle class, lower middle class, or poor, while the remaining 35% were raised in the upper middle or wealthy classes.
- 53% of five-star travelers book lodging directly with a provider, and 67% buy tickets directly from airlines, the study shows. About one-third own a tablet and a smartphone.
- About 18% of the five-star wealth market is considered newbies, with one to five years in that category. About 35% have been wealthy for 6-14 years, and 48% have been wealthy 15 years or longer. “The art of being wealthy and spending and using money is developed over time.”
Luxury-based services that survive are those who reject sacrificing profit margin to preserve market share, Taylor said. It ultimately devalues a service and hurts the ability to recoup profits in the future. “This is not a market for economic cowards; this is a market for resolution. Be bold.
“This is an industry where the losers will disappear, Taylor said. “Discounting will approach the price of taxis. The new taxi in New York is the new benchmark. But it’s not good enough for craftsmanship, quality, and service in this industry. Those who outlast this problem are those who understand not to be cheap or skittish.”
He advised operators to define offers by what it does for clients now. “Put your service into the category of things people need; not only something they do when they want to.”
The veteran business traveler added, “I wouldn’t give up my limo.”