Luxury Hotelier - September 2007 - (Page 65)

Insight | 65 Conerly Consulting Income gains bode well for segment Top 1 percent will continue to earn more faster, resulting in a deep pool of prospective guests A re the rich getting richer? Unfortunately, this question has become so politicized that it’s nearly impossible to tell what the truth is. The key for businesses trying to target this market is to understand the causes of the increased income of the very upper class, which answers key questions such as: Will the very upper class soon lose its recent income gains? Who are these people in the top 1 percent? Are they recession-proof? Conservative skeptics have made some good points about data inaccuracies, but the facts still support a significant income gain by America’s top 1 percent of families. That should bode well for businesses selling luxury goods and services—as long as the trend continues. Plenty of causes discussed by politicians are purely bogus. Neither the tax cuts by President Bush nor excessive corporate compensation explain the shift. The factors that survive rigorous statistical testing are more complex. First, the population has become more educated, and the baby boomers are in late middle age. Both educated and older workers tend to have more variation of their incomes. “Assortive mating” plays a big role, as bright, educated men increasingly marry bright, educated women, creating high-earning families. The biggest factor explaining high incomes at the top is performance-based pay. More executives garner income from bonuses and stock options. The best salespeople have moved into commission-based jobs, forcing more companies to pay high commissions. Small business has grown rapidly, and small business is the ultimate pay-forperformance system. Which of these trends will continue in the coming decade? They all will, except that the baby boomers will start to retire. Overall, income of the top 1 percent of the population will continue to grow faster than the population’s total income. These high-earning people include many two-earner families, many entrepreneurs and others with variable pay. However, inherited wealth is less significant than it used to be. With so much of their incomes based on work performance, the top 1 percent is vulnerable to recession. For example, the 1990-91 recession clobbered sales of luxury yachts. The bottom line for luxury hoteliers is that there still will be plenty of people who can afford top-quality lodging. Many of these people will BILL be in busy, two-earner CONERLY families with high-stress jobs or businesses. The Bill Conerly is an industry’s business challenge economic consultant based in Lake is to capture this market by Oswego, Oregon, catering to their varied needs and author of while surviving the occasional the new book “Businomics: recession. From the Headlines to Your Bottom Line—How to Profit in Any Economic Cycle.” Contact him at Bill@conerlyconsulting.com. The bottom line for luxury hoteliers is that there will be plenty of people who can afford top-quality lodging. The business challenge is to capture this market by catering to their varied needs while surviving the occasional recession. www.LuxuryHotelier.com | September 2007 | Luxury Hotelier http://www.LuxuryHotelier.com

Table of Contents Feed for the Digital Edition of Luxury Hotelier - September 2007

EDITOR’S LETTER PUBLISHER’S LETTER INFORM NETWORK PERSONALITIES INSIGHT INSIGHT PROPERTIES ROPERTIES INSPIRE DELIVER PROTOCOLS INSIGHT INNOVATE DEVELOPMENT INDULGE INSIGHT CONNECT UPDATE DOSSIER

Luxury Hotelier - September 2007

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