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When the Wealthy Start Traveling Again, Will Your Store Sales Drop? | February 01, 2021 (0 comments)
Merrick, NY--Close to $800 Billion was spent on Air Travel in 2019 that was NOT spent in 2020. A recent USA Today article pointed out that America's 614 Billionaires grew their net worth by a total of $931 Billion between mid-March and mid-October 2020. So it seems the rich got richer and haven't traveled much during the pandemic. We all know this underlying trend helped to bolster the retail jewelry business since May of 2020.
However, it's now time for jewelers to plan how they will keep their stronger-than-expected business position as travel for wealthier clientele resumes.
Consider these important facts about the relative strength of your Travel "Competition":
- Private Jet and Luxury Hospitality companies that serve the wealthy are poised to regain their momentum when travel begins to open up again, no small thanks to important Federal Government support they received duringh the pandemic.
- The hospitality (primarily Hotels and Restaurants) business, for example, got a recent boost against the backdrop of difficult times with updated SBA PPP rules that allow Loans of 3.5 X average monthly employee salaries while most American businesses must follow the former 2.5 X average salary rules.
- The Private Jet industry, which is known to serve primarily the wealthy, received a tax break in 2020 with a waiver of the 7.5% Federal Excise Tax (FET) on Air Transportation. This also meant that buying Jet Card hours in 2020 for future travel also qualified for the waiver. Domestic and international segment fees were also suspended as part of the aid package, as well as the 6.25% tax on the transportation of property. And the tax holiday also offered savings to Private Jet companies on fuel, with a suspension of the 4.3 cents per gallon excise tax on kerosene for commercial aviation use.
- The private aviation industry is made up of about 1,900 companies, including everything from charter services to sightseeing operations and employs about 1.2 million people, accoprding to BusinessInsider.com. And yet out of the $2 trillion CARES act, it scooped up a disproportionate $666 million.
Time to Get Creative
We believe that Luxury Travel will resume this year and grow stronger and stronger as we move toward Holiday '21.
What jewelers and the designers and manufacturers they work with can do to protect their business when this begins to happen is to create Travel Incentives that reward jewelry purchasing. These incentives need to be carefully constructed to provide flexible travel dollars to the jewelry customer in exchange for qualifying purchases.
Getting creative with connections to Jet and Yacht Charter companies and Destination Hotels and Restaurants may also work to impress the customer.
After all, it's clear that Luxury Travel will want their business back as soon as possible and they will want to travel, have fun and get back to the experiential lifestyle they had been leading pre-pandemic.
Will you be able to leverage this inevitable shift for your store?