In 2008, there were about 10 million U.S. households with a net worth above $1 million (excluding home equity). This is almost double the number from 2002, just six years earlier. This growth has led to a boon for retailers who can appeal to the luxury market.
In fact, over the past ten years luxury has seen the most growth of perhaps any market sector. During this time, revenue growth in the regular retail mass-market has been in around 4%-6% annually. Comparatively, growth in the luxury category has been from 20% - 32% annually. Estimates are the luxury segment will continue to grow at a rate of 15% a year to 2010.
It is no wonder cruise lines have been scrambling to fill the increased demand for luxury. From now until 2011 luxury cruise line capacity will increase 30%. The rest of the cruise industry’s capacity will increase 17% over the same time period.
The bulk of this increased luxury capacity is with Carnival’s Yachts of Seabourn. It alone is growing passenger capacity 216% over the next 3 years - from a current three-ship total of 624 passengers to a six-ship total of 1,974 passengers.
Over an entire year this amounts to a considerable amount of new customers to win. Approximately 50% of Yachts of Seabourn’s current consumer base is a repeat customer. Therefore, Seabourn will need to generate significant interest within the luxury niche to find and expand its customer base.
It is interesting to play with the numbers. Assume each of three new ships (the first named Odyssey, with its maiden voyage scheduled to depart Venice, Italy, on June 24, 2009) are at sea for a total of 48 weeks per year with a trip duration average of 17 days. That’s roughly 20 trips per year per ship, or 60 total sailings per year. With 450 passengers per ship, that equates to 27,000 new passengers annually.
How to win them
To win them, Seabourn will communicate its unique experience: industry’s best crew-to-guest ratio, “of coarse” attitude, engaging social environment, well-appointed suites and privileged access to the world’s most desirable ports of call.
According to Greg Furman, Founder and Chairman of the Luxury Marketing Council “In addition to the search for the memorable, the unique and services that have high value, is what I call the rise of connoisseurship and the hunger to know. Never before has the luxury market seen buyers as interested in learning what constitutes the best of the best.” In addition, the luxury consumer has become “more and more demanding of superior service, intelligent communication and a personalized understanding of their wants, likes and desires.”
Seabourn will use marketing to generate positive social conversations about Seabourn within the most discerning ultra luxury travel segment in the world. Conversations that will lead to increased agent, friend and family referrals. Again, Furman: “They want sophisticated marketing, marketing intimacy, one-to-one marketing, what I call intelligent coddling by brands.”
Not to be left out, Regent Seven Seas Cruises recently announced that it will invest approximately $40 million dollars to implement an extensive refurbishment and enhancement of the line’s all-suite vessels. "We are not only refurbishing the ships, we are adding many new luxury features that will enhance the guest experience,” said Mark Conroy, President of Regent Seven Seas Cruises. “This comprehensive enhancement program will see each of the ships emerge essentially brand new and positions our fleet as the standard-bearer in the luxury cruise category.”
- Seabourn Takes Top Spots in Condé Nast Traveler Cruise Ship Rankings (cruisetalk.org)