Celebrities are often given luxury goods for free in the hopes that they will be photographed wearing or using them and seen by their fans, who might be encouraged to purchase those goods. But what about those tabloid celebrities that brands might not want to be affiliated with? Here’s an interesting trend: companies (“allegedly”) are now sending d-list celebrities their competitor’s products in order to ensure that undesirable celebrities won’t be associated with their brands. It’s devious — but does it cross a line? is it too ‘offensive’ for brands to protect their image by potentially tarnishing the image of their competitors? It’s certainly not ethical for the luxury brands doing the seeding. But I would hope that the ‘celebrity’ in question at least has the sense to pick the swag that she interprets as true luxury. Luxury, whether for d-list celebrities or luxury connoisseurs, remains in the eye of the beholder.

There have been reports lately of promising recovery in the luxury hotel industry. USA Today and Daily Finance tell us hotels such as the Ritz-Carlton, Four Seasons, St Regis and Starwood Hotels & Resorts Worldwide are just some of the big names seeing a boost in their revenue streams.

The Ritz-Carlton’s occupancy levels improved 10% from last year’s on average low of 60%, while Starwood’s W Hotels are seeing a 28% gain in its first quarter from key cities like New York. Across the board, luxury hotels in the US have also sold almost 17% more rooms than the same period last year and increased their occupancies by 20%. This has translated into hotels becoming more comfortable about hiring new staff. The U.S Department of Labour has the figures:

Employment rose by 45,000 in leisure and hospitality over the month. Much of this increase occurred in accommodation and food services, which added 29,000 jobs. Food services employment has risen by 84,000 over the past 4 months, while accommodation has added 18,000 jobs over the past 3 months.

This has contributed to the month’s highest employment rate since the recession. Though this is largely due to the comeback of business and leisure travellers, Barbara DeLollis of USA Today tells us there are also a number of other factors in the works. Attractive offers for instance:

“We just paid $149 per night for the W hotel in New Orleans, which made me feel pretty good,” says Joseph Frohlinger of Tenafly, N.J.

Also, there are fewer perception worries:

“A year ago, as we were in the depths of this crisis, there was a high level of paranoia about luxury travel,” van Paasschen [CEO of Starwood W Hotels) says. "That's clearly gone away."

In addition to this, financial service firms are offering more Wall Street deals, and business activities not only at home but also abroad have also increased. Kathleen Taylor, Four Seasons’ chief operating officer says this ‘strengthening [in] world economies are contributing to an uptick in people’s confidence in the future.’ Simon Cooper, a top executive at Ritz-Carlton confirms this with his report that the Westchester branch in N.Y. has been ‘packed with international business travelers lately’ seeing a 33% leap in revenue in comparison to last year’s figures.

These are all positive signs that the luxury hotel industry is on its way to recovering, though the general consensus seems to be that it won’t be the same as it was before the recession. Cooper tells us:

“The open bar is a little bit less open…couple of spa treatments’ and the big fruit basket in the room for every day are probably something of the past,” he says. “The excesses of two, three years ago are less prevalent today.”

Here, we see how much smarter and money-conscious luxury consumers have gotten. As seen in my previous blogs, other sectors of the luxury industry (art, fashion, watches and internet) have also been improving, albeit in an unexpected way because of new luxury consumer’s habits. One thing that is certain though: it will take some getting used to before the luxury market will become less surprised of more unexpected happenings in the future.

An interesting article in the New York Times looks at how the continued trend in the luxury market of quality and value as being the decisive factors are affecting the sales of luxury watches. In a previous blog of mine, I discussed how people are keener than ever to find value for their money and that Thetas, who seek comfort, belonging and affiliation are more likely to be sensitive about the value of the purchase and of overpaying than their Lambda counterparts. We can see this shift being translated in the current market of luxury watches. High-end watches with unique and intricate designs and mechanisms are selling better than the lower end, ‘fashion’ watches. According to a post in DNA, watches over $25,000 are increasing while figures dropped in those under. Catherine MacDonald-Home, editor of Luxury Briefing says ‘It has to be something that’s limited edition or of very high quality [in order to sell well].’ Rise in popularity of these more costly watches is helped along by the arrival of new revolutionary, technological advances in the art of watch-making. Editor of International Watch magazine, Michael Thompson talks about the new lightweight materials and components:

“These watches are so light and wispy that when you have them on your wrist, you forget they are there,” he said, speaking of watches from Richard Mille that are made from carbon nanofibers.

As well as being lighter and non-obtrusive, other new innovations include Patek Philippe’s silicon moving parts and Montblanc’s Metamorphosis watch of two different faces and functions.

In the general public, these watches aren’t likely to draw attention the way a jewel-encrusted timepiece might.

“If you wear a million-dollar mechanical watch, or even a $40,000 one, in the average room no one will know,” Professor Drèze said. “The watches are actually examples of inconspicuous consumption.”

These new generations of inconspicuous, luxury watches are perfect for the present money-conscious Thetas; without the compromise of quality, you get value for money but in a manner that is more subtle, more Theta-like. Lambdas are not forgotten in this revolution in luxury watches, as Audemars Piguet will release three new versions of its luxury sports watches which are also lightweight, carbon cased but feature ‘brilliant colors reminiscent of racing cars.’ An aspect that is sure to satisfy and catch the eye of any discriminating Lambda.

What comes to mind when you think of luxury? Cars? Homes? Clothing?

In India, think pens.

As India’s luxury market grows, it is also diversifying. According to the Times of India, demand for luxury pens is growing very quickly.

Nikhil Ranjan, CEO, of William Penn, India’s only multi-brand retail store chain housing premium fine writing instruments said:

The luxury pen segment in India is growing and a good brand or a designer pen is a latest must have. Consumers falling into the 51 years and above age bracket buy the highest number of such pens.

Prices for luxury pens in India range from ($350) to Rs. 10 million ($220,000).

Comments made by Dominique Lesueur, export director at S.T Dupont, are sure to put other luxury brands and designers on notice that India is where the action is right now:

India is the second fastest developing economy in the world after China. Plus, it has a promising luxury pen market thanks to the growing consumer base with disposable income and a strong aspiration for luxury brands.

The growing consumer base with added disposable income has become the narrative against which Asia’s luxury rise has come to be what it is today. As other countries emerge from the recession and money begins to flow again, India is likely to have a leg-up in luxe.

This afternoon I read a fascinating interview in The Wall Street Journal with Pierre-Alexis Dumas, of the French luxury house Hermès.

The interview was meant to get Dumas’ predictions about where luxury is heading. I found many of his predictions to ring true with how a Lambda personality views the world. Given his position in the industry, this could be a preview of what’s to come in luxury marketing.

There are two questions from the interview, the answers to which struck me as being especially telling:

Do you have a favorite disposable object?

A pencil. If you throw your pencil away, it means you’ve used it. It means you’ve used your brain, your imagination, you’ve been writing and drawing.

This is classic Lambda personality perspective. The value is entirely personalised, drawn from a sense of personal accomplishment. This outlook doubtless informs Dumas’ views on luxury and indeed life.

But it also takes elements of Theta. The idea that an ‘old’ product (with a history) is more luxurious is a very Theta-centric aspect.

The second question is to do with Dumas’ interest in designing luxury yachts.

And now you want to build yachts?

That’s a very large-scale design.

What is the price tag on that?

Between €80 to €110 million ($109 million to $150 million). The industry standard is €1 million ($1.4 million) per meter. A super-yacht is about 100 meters long. Our boat, which we make with the Wally [yacht-building] company, is 56 meters. And this is why it’s very original: Our boat is extremely wide.

A few key take-aways: Dumas is very candid about the pricing for an object that is, in reality, very expensive. A Theta would be more likely to reply in non-exact terms. There is an attention to detail in his answer, of understanding that price points and standards in the yacht industry. He knows whom he is marketing to with this product

The other point: He stresses originality. This is a key element of any sell to another Lambda personality.

Later in the interview, he makes a prediction about what the ‘future of luxury’ will involve. It’s a very Lambda perspective:

We have this odd shape because we decided to [build a boat that would travel] slow….Speed is so passé. What is the luxury for tomorrow? One of them is time.

In this case, the mantra ‘takes one to know one’ is accurate. Dumas is a Lambda personality. He knows what other Lambda personalities will look for in a luxury product, whether it’s clothing or a luxury yacht.

Earlier this month I reported that London’s luxury commercial property market was heating up. The trend continues to this day. But now it is being helped by a spike in London’s luxury home prices, which is seeing the highest price increase since March 2008.

BusinessWeek has more:

The value of houses and apartments costing more than 1 million pounds ($1.5 million) rose 3.2 percent from January, the London-based property broker said in an e-mailed statement today. The annual increase was the largest since the market peaked in March 2008 and compares with an 11.5 percent advance in January.

Overall this is good news for the luxe market both in the UK and abroad. But read a bit further in the article and you’ll see the emergence of a trend that I referenced in a previous blog post about Chinese Lambda personalities buying Western art and vintage wines, something that is somewhat uncommon in Mainland China:

The pound’s 22 percent decline against the euro in the past three years attracted purchasers from Russia, Italy and Greece, in particular, Bailey said. Foreigners bought 45 percent of properties sold for more than 2 million pounds in the past year, according to the broker.

Theta personalities typically own numerous properties across their homeland, and perhaps one or two smaller properties in other countries. Those properties are likely to cost <$1 million. So when we see that 45 percent of properties sold for >£2 million ($3 million), this tells us that these foreign buyers are likely Lambda personalities. Owning a luxury property in London is seen as an accomplishment, both personally and professionally.

Consumer confidence in the UK is on the rise, which helps to explain why this is happening now. Things aren’t great, but they’re better than than they were. Lambdas are seeing an opportunity to re-assert their dominance and be among the first to polish their images with spashy purchases.

Watch for similar trends in more traditional luxe markets such as Paris and Berlin. London could just be the start of a the new European luxe revival.

Here’s an interesting story about China’s pursuit of luxury goods. Agence France-Presse (AFP) is reporting that increasingly high numbers of wealthy Chinese people are traveling to luxury capitals such as Paris to purchase goods that are discounted.

I wrote previously that the global economic downturn has caused luxe companies and retailers to put products on discount in order the move product. It appears that the Chinese, who have become more involved in the Asian luxury market, are going where the deals are.

The AFP article offers more detail:

The Chinese bought tax-free goods worth 158 million euros (222.5 million dollars) in France in 2009. That was an increase of 47 percent from the level the previous year, according to Global Refund, a company specialising in tax-free shopping for tourists.

The article also notes that this has been part of a larger, growing trend:

Tax-free shopping by Chinese tourists has been increasing for the last two years, rising by 39 percent in 2007 and 23.3 percent in 2008. They now represent 15 percent of sales and 13 percent of transactions.

More Chinese people are going abroad to buy high-ticket items, which suggests a growth in the number of people who might be considered Theta personalities in China.

Year on year increases in the number of Chinese traveling abroad to do this kind of shopping suggest the figures will continue to grow. What will be interesting to watch is the impact this has on China’s burgeoning luxe market.

We are used to associating luxury with expensive cars, plush hotels and exotic resorts. However, once we understand what luxury means, we can find it anywhere, even in the Nazi concentration camps.

As a son of Holocaust survivors, I have encountered many people who survived because of the generosity of their mates who decided to share with them their own daily rations. Many of you might be familiar with the derogatory term “Muselmann”, which describes those victims in the Nazi concentration camps who had been broken psychologically and physically by starvation and life in the camps.

Some gave away their meagre food portions because they lost any hope, but many did so because they hoped to survive and wanted to bring that hope to others, even temporarily by helping them with a bit of extra food. While we have to hail this behaviour as heroic, from a scientific point of view, this is a very interesting example of a form of luxury behaviour.

Yes, luxury is behaviour. Contrary to conventional wisdom, luxury is not embedded in products or services themselves; luxury instead is a type of behaviour characterised by needlessly squandering assets. This activity seems irrational as long as we do not pay attention to the deep reasons behind it.

Research shows that people use luxury for enhancing their self-esteem. Two main schools provide alternative explanations along the Theta / Lambda dichotomy. The Terror Management Theory (TMT), a Theta school, claims that luxury’s role is to confirm one’s self-worth.

On the other hand, the Lambda school promotes the Self-Determination Theory (SDT) which argues that the role of luxury behaviour is to provide individuals challenges in order to grow and develop psychologically as well as to structure their life choices in alignment with their own perceived identity.

Overspending or squandering assets sends us the message that we are able, fit and worthy.  Amotz Zahavi, the Israeli biologist calls this phenomenon “the handicap principle” whereby one proves one’s abundance of assets by destroying them.

Understanding what is behind luxury behaviour, enhancing our self-esteem, demonstrates the importance of the role of luxury in our lives and saying bluntly that luxury is good for us. Nevertheless, Self-Determination Theory emphasises another key factor, that of choice.

When we spend on something because we need it, this behaviour will never be luxury. Luxury is based on a choice, when we do something even when we do not need to. Overspending is a choice that exemplifies the fact that there is a rationality behind the irrational behaviour of overspending in that it enhances self esteem. Spending needlessly enables us to express the element of choice.

When Holocaust victims were ready to share their food with their mates, they sent two messages. The first was that they did not need all of it, at least for the time being and that some of their food was excessive. Secondly, they had a choice between two, equally good options, either to eat up the food or to give it away. Either of these two aspects clearly define this behaviour as luxury.

The heroic behaviour of those Holocaust victims teaches us two lessons; one educational and the other moral. The first lesson is that luxury is beneficial to us and that we should search for it everywhere. It is important because in enhances our self-esteem. Life is full of choices and by identifying them and actually choosing between them we enhance our self-esteem.

Morally, it does not matter what we spend on as long as we act correctly. We do not need a heroic gesture of sharing our last piece of the extremely needed bread to tell us how worthy we are. There are many other, much more pleasurable means of sending this message.  Luxury is a choice of our own behaviour.

As the markets begin to heal and the recession comes to a close, investors are beginning to regain their confidence. A good example of this is the recent investments in a European start-up that is hoping to make an impression in the growing luxury mobile phone market.

Reuters has more:

Celsius X VI III, which was founded by four thirty-somethings a few years ago, has an ambition to take the 500-year old tradition of hand-made watches and use it to make a mobile phone that would replace chips and electronics with moving parts.

In total, about €3.3 million has been invested in the company, according to the Reuters article. It appears that they are marketing to the Lambda personalities in the luxe market. The company’s co-chief executive confirms this:

“Our target is the man who owns a few sports cars and is an aficionado of Swiss watches,” said Edouard Meylan, co-chief executive of Celsius, who plans for customers to keep his mobiles for decades rather than tossing them aside after a year.

Are mobile phones the new “hot item” in the luxe market? Judging by the size of this investment, it appears some have confidence that it will be.

As the global economy begins to recover, so too is the luxury industry. Leading the way is the luxury travel industry.

In Australia’s Sydney Morning Herald, Paul Jones, chairman of One and Only Resorts said:

“We still have business from families, and seasons such as Christmas are booked out. Luxury travellers are not prepared to forgo their annual family trips”.

What we have are a lot of Theta personalities who are hurting financially, however not so much that they forego a vacation, or exclude themselves from the social circle of friends and colleagues who are also going on holidays with their families.

For Lambda personalities, the re-born luxury travel industry is offering up new experiences that offer the kind of exclusivity that they would find appealing:

Given the high cost of real estate in the word’s main cities, space is today’s new luxury, according to Sonu Shivdasani, the founder and CEO of the Six Senses group, which has been a pioneer in sustainable tourism.

If you can say that you’ve got the largest villa, that gives the impression of great wealth. Since space is evidently considered a luxury, we could see more luxury vacation resorts offering fewer rooms, but the ones they do have will be significantly larger.