There is no official definition for what is considered a luxury watch. In general, manually manufactured watches of extraordinarily high quality and with a premium price are classified as luxury watches. Unlike quartz watches, mechanical watches are not powered by a battery.
The most important element of creating luxury brands is the brand's ability to create and communicate symbolic value for its customers. Unlike many of the mainstream brands, luxury brands are all about creating a sense of social standing for customers, for which they don't mind paying premium prices.