Recession Hits the Luxury Market: Yacht Business Sinking

That headline overstates the situation, but who can resist?  I especially want to take on the oft-heard remark that luxury goods businesses are recession proof because "the rich will always have money."  I debunked this myth in my book, Businomics, but it bears repeating–because I keep hearing the same idiocy.

The latest debunking comes from Megayacht News (hat tip to the Wall Street Journal's Wealth Report, which has a nice summary).

Megayacht sales are weak because many buyers are having trouble selling their old boats.  Let's say you want to spend $8 million on a yacht.  You may very well have to sell your present $5 million yacht.  And the cheap side of the market is soft, which hurts the upper end.  (You didn't know that $5 million is not the upper end?  You need to get out more.)

This weakness due to recession is partially offset by the widening income distribution, which is helping the very upper end of the market in general.  But be very careful before you pronounce any business "recession-proof."  (I elaborated on this for an article in Luxury Hotelier magazine.  The article is not available online, but I send a draft to anyone interested.  Just email me.)