Conclusions on UHNWI and COVID-19 — Travel, lifestyle and more

*Press embargo until July 15, 2020

Northrop & Johnson recently conducted a survey of ultra high net worth individuals in order to gain a better understanding of their wants and needs with regard to yachting, travel and lifestyle, particularly as the world deals with the COVID-19 pandemic. The survey garnered interesting results, the conclusions of which can be explored below.

Suppliers of goods and services to ultra high net worth (UHNW) households in many cases will need to rethink how they do business if they expect those high-yield customers to partake at pre-COVID-19 levels.

While pundits are talking about pent-up demand and revenge shopping, these highly affluent consumers are, for the time being, taking a much more measured approach, prioritizing reducing possible exposure to the virus.

These findings are from research conducted in May 2020 with both UHNW customers of Northrop & Johnson, and its brokers who provide yachting services to them.

The Survey of UHNW Customers Found

►68% will decrease or stop entirely attending sporting events and live entertainment venues, a blow to professional sports where up to 50% of stadium revenues come from luxury boxes and premium seating

►65% will reduce travel via airlines

►56% expect to decrease or stop entirely dining out at restaurants, one of the hardest-hit segments economically

►57% will cut visits to shopping malls and 52% will stay away from even small boutiques

►57% will cut back attendance at trade shows and conferences, a $1.03 trillion industry

►57% will entertain less or stop entertaining in-home, a potential blow for charities who often use UHNW residences for fundraisers

►53% will decrease stays at luxury hotels and resorts

Winners include providers who sell online and travel options that are perceived to be safe, such as private jets and yachts.

► Online shopping will increase by 55%, pushing retail operators to rethink how they do business with their highest spending clients

► UHNWIs expect to increase use of private jets by 39%

►77% of customers who had yacht charters booked for 2020 said they will move forward or are taking a wait-and-see approach

The survey of brokers also showed that when it comes to sources of wealth, the customer base for superyachts is more diverse than many expect. In other words, you don’t have to be an oligarch. While 40% of N&J brokers have clients who own their own business, 88% also have customers who are corporate executives of publicly traded companies, including 46% who are executives at publicly traded companies they don’t own.

Other Highlights from Brokers & UHNW Consumers

►34% of brokers say their clients are getting younger

►69% are active on a regular basis on at least one social media platform, with LinkedIn, YouTube, and Facebook all essentially tied for popularity

► Wines and Spirits (80%), Fine Dining and Culinary (78%), Cars (76%), Real Estate (74%), Watches (54%), Art (52%), Attending Sporting Events (50%), Philanthropy (50%), Wellness (43%), Jewelry (37%), Personal Foundations (37%), Fashion (35%), Architecture and Design (24%), Competitive Sports (20%), and Sports Team Ownership (15%) are among their diverse interests and passions

In regard to yachting

►71% plan their yacht charters 3 to 9 months in advance

►58% charter for 7 days

►The Caribbean (46%), Western Mediterranean (41%), Eastern Mediterranean (38%), and Florida/Bahamas (30%), Alaska/Pacific Northwest (19%), New England/Atlantic Canada (19%), and the South Pacific (19%) are the areas clients are most interested in visiting for future yacht vacations

►58% combine a yacht vacation with a pre-or-post cruise land vacation

► Availability of yacht (74%), Budget (61%), Number of staterooms and guest capacity (57%), Style of the yacht (55%), Reputation of the crew (45%), Website photos (43%), Water Toys (32%), Pre-Booking call with Captain/Key Crewmembers (30%), Year Built (30%), Chef’s Reputation (28%), High-Speed Internet (27%), and Video Tours (24%) are the most important drivers of yacht selection

► Being a guest on a superyacht (78%) or recommendation from a friend who owns a superyacht (76%) are the biggest drivers for first-timers (both 76%), followed by reading about yacht charters (22%)

► Outside advisors, including wealth managers, are only involved in the charter process 1 in 8 times, while spouses are involved 67% of the time

►71% of brokers have seen an increase in first-time charter customers

►67% are seeing an interest in larger yachts

► Nannies (76%) are most likely to come with their families, followed by Personal Assistants (26%), Personal Trainers (13%), Security and Personal Chefs (both 9%)

About the Research

Two online surveys were conducted during May 2020. The first survey was to Northrop & Johnson advisors who work on a daily basis with UHNW clients. The second survey was completed by approximately 200 Northrop & Johnson customers. Northrop & Johnson customers have bought, sold, or chartered yachts through the company. The average sale price is $9.8 million and weekly charters average $152,000. An undisclosed donation to Feeding America’s COVID-19 Response Fund was provided as an incentive. The broker survey had 100% participation. The UHNW consumer survey had a +/-4% margin of error at a 95% confidence factor.