The Wealth Market Continues to Grow

The population of affluent Americans -- defined as those with household income and income producing assets (IPA) in excess of $100,000 -- continues to grow and now comprises 19 percent of all U.S. households, according to a recent Nielsen Company analysis.

• There are now 22 million U.S. households that earn $100,000 or more
• This is a 23 percent increase in affluent households from a decade ago after adjusting for inflation
• These affluent American households control $22 trillion in assets
  

Source: Nielson Company, May 2008

Luxury Hotel Market Remains Strong Despite Economic Downturn

Despite the current downturn in the U.S. economy that includes a drop in overall hotel occupancy and revenue growth, luxury hotels continue to show strength, according to a new study by Market Matrix.

• Even though luxury hotels have increased their prices, customer satisfaction with these high-priced hotels has increased.
  
• Other positive indicators for luxury hotels: reduced price sensitivity and improved perceptions of value among luxury hotel consumers.
• The luxury brands showing the biggest gains in the study were Starwood's The Luxury Collection (+3.7), Grand Hyatt (+3.6), and Intercontinental (+2.7).

Sotheby's Has Most Lucrative Auction in History This Week

Sotheby's spring contemporary art auction was the most lucrative in the company's history with sales of $362 million, including a record $86.3 million for a 1976 Francis Bacon triptych that Sotheby's expected to sell for $16 million or less.

Source: CNN Money

Inside the Yachting Industry

Some key findings from Camper & Nicholsons (Super) Yachting Index, 2008:

• Orders for superyachts - defined here as yachts over 24m - grew 18% from 2007 to 2008
• 60% of all yacht charters come from American and British consumers
• 56% of all yacht charters are bound for the Western Mediterranean, 15% to the Caribbean and 14% to Florida

Spending Trends Among Wealthy Women

Married wealthy women (wealthy is defined as HHI $150K+) make an average of 64% of a family's purchase decisions. These women make:

• 68% of decisions on home appliances
• 61% of decisions on vacations
• 48% of decisions on home improvement purchases
• 22% of investment decisions
• 31% of real estate decisions
  

72% of wealthy women work on at least a part-time basis and 54% full-time. 60% earn at least $100,000 a year. The median annual income of working wealthy women is $124,000. 33% hold jobs at the vice-president level or higher.

Source: The Luxury Institute

Aggregate Income of Affluent Households Will Increase 27% in 5 years

Market research group Packaged Facts estimates that aggregate income of affluent households - defined as households with HHI $100K+ - will increase from $3.6 trillion in 2006 to $4.6 trillion in 2011. That's a 27.1% increase in only 5 years.

Source: Guideline, 2008

How Luxury Consumers Spend Their Money

Luxury consumers (defined as those with HHI $100K+) have bought the following in the last two years:

• 71%: a vacation valued at $2000+
• 11%: a watch valued at $2000+
• 17%: a piece of jewelry valued at %5000+
  

Source: Guideline, 2008

How the Wealthy Raise Their Children

Research firm Prince and Associates found the following differences between the super-rich (those with net worth over $10MM) and the rich (those with net worth between $1MM and $10MM) in how they raise their children:

• Less than 1/2 of the super-rich cite educational achievement as a major goal for their children, compared with 78% of the rich
• Only 29% of the super-rich say they expect their children to get married, compared with 70% of the rich

Source: Forbes.com May 15, 2008 (full link available by clicking title of blog post)

Spending: Rich vs. the Super-Rich

Only 10% of those with assets greater than $10MM said they have pulled back on personal spending. However, spending among people with assets between $1MM and $10MM is down 71%.

Source: Forbes.com, May 15, 2008

Luxury Consumers Rate Most Prestigious E-Tailers

Net-a-porter (#1), Vivre.com (#2) and Yoox.com (#3) are rated the most prestigious e-tailers by luxury consumers.

Internet and Televison Ads Most Effective Media For Targeting Business Elite

The business elite, defined as execs with 250+ employees and salaries of $400K+, do respond to advertising.

Percentage of the Business Elite Who Recently Made a Purchase
Based on a the Following Type of Ad:

Internet: 55.3%
Television: 43.2%
Magazines: 41.7%
Newspapers: 36.9%
Radio: 17.9%

Source: Brandweek, May 17 2008. Click headline for full story.

Spending Habits of the Business Elite

The business elite, defined as execs with 250+ employees and salaries of $400K+, exhibit the following characteristics:

• 43% take $3000+ per person vacations
• 1 in 4 own vacation homes
• 1 in 4 own jewelry in excess of $4000

Source: Brandweek, May 17 2008. Click headline for full story.

Sales of Fine Art Continue to Break Records

The Monet painting "Le Pont du chemin de fer a Argenteuil" sold for $41 million at a New York City Christie's auction.

The previous record for a Monet painting was $36.5 million for "Nympheas," sold last year.

The sale price exceeded the pre-auction estimate of $35 million to $40 million.

Source: AP Wire; click blog title for full article

Demand for Yachts Among the Wealthy Increases

• The demand for yachts in 2008 increased 18% over the demand in 2007.
  
• From 1997 - 2007, the demand for yachts increased 380%.
  

This reinforces the fact that the super wealthy are not nearly as affected by the economic downturn as those less wealthy.

Source: Showboats International Global Order Book 2008; taken from Camper & Nicholsons' "The (Super) Yachting Index" presentation

Political Preferences of Millionaire Households

A 2008 study of millionaire households by Phoenix Marketing International Affluent Marketing Service (AMS) found that:

• 44% of millionaire households said they would vote for John McCain
• 19% for Hillary Clinton
• 19% for Barack Obama
• 15% are unsure
• 5% for another candidate
  

Affluence Sectors in the United States

Source: Phoenix Affluent Marketing Services, 2007. Link: http://www.phoenixmi.com/travel/ams.phtml

86% of Millionaires Expect Their Spending to Remain the Same or Increase Despite Recession

A 2008 study by Phoenix Affluent Marketing found that:

• Eighty-six percent of millionaires expected their spending to remain the same or increase for the March-May 2008 time period.

This brings up an important point: why do you see so many conflicting stats on how a recession will affect the wealthy? One study says their spending will dramatically increase, another that it won't.

This depends on how "wealthy" is defined. Many studies define wealthy as "HHI of $100K+." But this group is obviously far more affected by a recession than millionaire households. So word to the wise: examine the definition of wealthy when interpreting statistics about the wealth market.

Number of Wealthy Households Up 60+% Over Last 4 Years

A meta-analysis of wealthy households conducted by The Luxury Institute found that:

• In 2002, there were 5 million households with annual income of $150,000+
• In 2006, there were 8 million
  

2/3 of the Wealthy Own More Than One Property

A 2008 study by The Luxury Institute finds that:

• 63% of individuals earning more than $300,000 own more than one property
  
• 74% of penta-millionaires own more than one property

Source: The Luxury Institute, 2008

Luxury Consumers Increased Spending on Art, Antiques, Cosmetics, And More

A new study by Unity Marketing revealed that luxury consumers were more willing in 2007 than in previous years to spend on:

• art
• antiques
• building products
• cosmetics
• beauty products
• fashion accessories
• shoes
• watches

Source: Unity Marketing

Millionaire Households Express Stock Market Optimism

76% of millionaire households expect a market increase of between 1% and 10% in 2008.

Gen X millionaires are the most optimistic generation - a full 28% said they expected a stock market increase more than 10% in 2008.

Source: Northern Trust "Wealth in America" 2008 Study

Number of Millionaire Households Grows 5.7%

The economy may be reeling, but millionaires aren't feeling it quite as much as the rest of us. The total population of millionaire households grew 5.9% in 2007, a slight increase from the 2006 growth rate of 5%.

Source: Wall Street Journal Wealth Report, May 6, 2008

Top 10 Counties for Millionaire Households

From Los Angeles to the Hamptons, research company TNS ranks the top counties for millionaire households in the United States. Millionaire households are defined as those having at least $1 million in net worth, not including primary residence:

	County Name	Number of Millionaire Households
1	Los Angeles Co., CA	261,081
2	Cook Co., IL	168,422
3	Maricopa Co., AZ	126,394
4	Orange Co., CA	115,396
5	Harris Co., TX	107,513
6	San Diego Co., CA	100,727
7	King Co., WA	75,616
8	Santa Clara Co., CA	72,932
9	Nassau Co., NY	71,869
10	Suffolk Co., NY (Hamptons)	71,343

Source: Wall Street Journal Wealth Report, May 6, 2008

The Wealthy Continue to Buy Vacation Homes

Forty percent of wealthy respondents, defined as those with incomes of $500,000 or more, said they plan to buy real estate over the next year. They are mainly looking for leisure properties:

• 1/3 plan to buy a vacation home
• 1/4 plan to buy a third home

The most obvious explanation: the wealthy are not as affected by the economic downturn. In fact, the super high-end of the real-estate market (properties that cost $20 million or more) is the least affected by the mortgage crisis.

Source: Harrison Group, April 2008

Examining Affluent Investors - Current and Future Investing Behavior

A profile of affluent investors:

• 81% own at least one mutual fund other than a retirement plan
• 74% hold an alternative investment:
• Real estate: 45%
• Hedge funds: 25%
• Private equity: 20%

49% of mutual fund owners and 52% of alternative investment owners said they'd invest at least the same amount in the coming year.

Source: ETF Trends, March 14, 2008

Profile of the Most Affluent 10% of U.S. Households

The most affluent 10% of U.S. households have the following characteristics:

• Average value of primary home: $1.2 million
• $316,000 average household income
  
• Average age: 54
• 88% are married
• 57% are male

Source: American Affluence Research Center