ET Insider – August 25, 2009

Elite Traveler Insider –

August 25, 2009

Elite Traveler Insider

By Douglas D. Gollan, President and Editor-in-Chief, Elite Traveler Magazine  

Welcome to the latest issue of Elite Traveler Insider, the bi-weekly newsletter designed to update our top partners on trends in the private jet lifestyle. This information is provided to offer a better understanding of how to target these globetrotting elite travelers, their impact on your business and other trends that affect you. Remember, private jet travelers are paying up to $10,000 per hour to fly by private jet, so these super rich consumers could be and should be your best customer. We talk about them and how you can get more of them and more from them.

IN THIS ISSUE:

1. Getting Social on Luxury: Notes from the Leading Hotels Conference

2. Leading Hotels: Back to Basics To Get To The Future – Andrew Sacks

3. McKinsey Analyzes What Conde Nast Should Do. We Take A Look, Too

Over 90 percent of today’s Super Rich are Self Made and over 80 percent of the Super Rich have made their fortune in the past 10 years. Now is the best time to make sure they know your brand. 86% believe Elite Traveler is a good showcase for luxury products.

1.Getting Social on Luxury: Notes from the Leading Hotels Conference

Over the weekend I was able to escape the tropical weather of New York for the conference rooms of Southern California where I attended The Leading Hotels of the World (LHW) Annual Sales & Marketing Conference at The Island Hotel in Newport Beach.

The actual venue proved an interesting choice for interesting times. Born as a Four Seasons, it now operates as an independent luxury property as member of the some 470 hotels that make up the Leading group. Despite its name, which perhaps brings thoughts of Ricardo Montalban and the Seventies television hit “Fantasy Island”, the property is more of a business travel address but located just across the street from one of Orange County’s major upscale shopping addresses, called “Fashion Island.”

It was a fitting venue to discuss what’s important – and what’s not – in the most difficult period luxury has faced in over 50 years. In the end, The Leading Hotels conference provided an interesting forum under the direction of Senior Vice President, Marketing & Communications Claudia Kozma Kaplan.

“Engaging Consumers Through Emerging Online Technologies” was presented by Steve Rubel, Director of Insights for Edelman, the public relations company, and Cathleen Johnson, EVP, Global Practice Lead of Edelman’s Tourism & Lifestyle Revolution.

In the audience were a number of executives from various print and multi-platform media, who I think had to snicker when Rubel predicted that print will virtually be gone within five years. It was an assessment few in the room agreed with, and unfortunately probably took away somewhat from the rest of his ideas, many of which were interesting.

I do think that as I listened intently, and tried to put myself in the chair of a Marketing Director of a luxury hotel or brand, there were many very interesting issues that were talked about, some not really answered:

• The emergence of social networks and the like have led to a trend Rubel titled “Satisfaction Guaranteed.” The ability of disgruntled consumers to post their complaints, valid or not, on Facebook, Youtube and the like, mean that companies need to be proactive in monitoring the web for what I might call “brand terrorists.” Rubel cited an example of a passenger on United Airlines who happened to be a musician. As he was watching his guitar loaded, he claimed to see some baggage handlers throwing it around. When he got it, it was broken. Not happy with United’s compensation, he wrote a song “United Breaks Guitars” and posted it on Youtube. Some three million views later, United, according to Rubel, increased the compensation.

To me, this also warns for luxury brands the importance of watching who they do business with. In a time of great discounts, chances are more likely than ever that brands will attract new consumers who probably aren’t a right fit for their product. Rubel’s message was clear. The Internet gives a disgruntled consumer a lot of power to express their unhappiness.

• “Media Reforestation” is the part about your favorite print publishers going the way of the dinosaurs, and clearly some of them have and are. However, Johnson made the interesting point that as a Public Relations company they are telling clients to change the way they are judged: “From column inches to return on involvement.” Rubel made a very valid point that everyone needs to “take a very broad view of the Media Ecosystem.” He spoke of being a “Content Curator” which in fact has been a major reason for Elite Traveler’s success in both print, on the web, as well as events and unique marketing venues such as private jet terminal. For all the power of the web, enter “Luxury Hotels in New York” and some 11.2 million links return. “Deals at Luxury Hotels in New York” gets you 11.4 million options. I did enjoy a slide from Conde Nast Traveler Publisher Chris Mitchell later on showing a person at his computer getting advice from some chat board friends. On the other end were a couple stray dogs sitting at the computer.

For media companies that have unique content and established a brand and loyal following, the question then becomes, can they ensure that they are providing multiple platforms to distribute their content so users can get it in the way they want? Let’s face it, if I am an award winning author, whether or not people buy my book and read it the old fashioned way, on their laptop, download it and print it, or read it on their cell phone or via Kindle doesn’t affect me. From our perspective we already do it: Elite Traveler print editions are available in a digital flip-book format on our web site; historical content (Top Suites of Los Angeles, Rome, New York, etc.) is updated and reformatted to be available 24/7/365 during the trip planning process at elitetraveler.com, our digital print edition can be accessed via iPhone, Blackberry, and other devices, and we were selected by Vertu as a content provider for their high end hand held phones. We actually have a unique distribution model where we place copies of our print magazine around the world in over 100 countries where our readers are going to be so we don’t have to worry about copies sitting in a mail stack somewhere.

• “Less is the New More,” according to Rubel, is the new mantra for web users. Citing Nielsen statistics he said that the average web user only goes to 111 domains per month, including for email and basic functions such as online banking so the bandwidth to get their attention is difficult. To me it sounded like being a player in the National Basketball Association: It is a great job, but there just aren’t that many of them and the competition is brutal. I thought that was probably the strongest reason that Media Companies as opposed to bloggers and service providers have the best future. With multiple ways to reach out to their audience (in our case our print magazine, web site, weekly e-newsletter, events, private jet terminal venues and more) smart Media Companies provide an entrance to those web users.

My thought is the truly endangered species may be the traditional public relations company that hasn’t moved beyond churning out press releases and hosting events. Squarely public relations companies are going to have to become “The Navigator” (my term) for clients and also be able to execute social network-based public relations programs, something much easier said than done, when some of Rubel’s suggestions included using Concierges and Chefs to represent hotels on line. As one hotelier I was sitting with noted, “My Chef has a full time job. It’s called cooking.”

• “Corporate All-Stars” references the above, making your concierge, maid and Maitre D’ your spokespeople. It is an idea that certainly has some interesting applications, but Rubin couldn’t answer the tough questions about the liability of hotels whose selected All-Stars may have alter-on-line personalities that don’t mesh with the brand image of a luxury provider. It is an idea that is interesting, but perhaps better suited for sectors where image is less important.

 

• “Power of Pull” is about making sure you are found. Again, while Rubel’s ideas make sense for mass brands, does a 120-room hotel in New York City need to be one of the most popular pages on Facebook? Does putting an exclusive hotel out to the masses in the wide open domain of the wild, wild web take away from its exclusivity or perhaps turn off existing customers who value the privacy one expects with a luxury hotel? I don’t know the answers. I thought Kozma Kaplan the next day did a good job of providing some examples of how LHW and its hotels can use networks like Facebook and Twitter. Her example was reaching out to current customers who use them so that hotels can then communicate to those customers via the social networks they use, as well as encourage loyal guests to post positive experiences that their friends will then see.

 

I can’t say I shared the unbridled enthusiasm for being part of every mass social network and talk board on the web unless it is part of a specific strategy. As always, with luxury it is the quality of the contacts, not the quantity in my opinion. That said, I view the web a bit like the telephone: It’s how you use it. Are you making personalized calls, reading off a telemarketing script, or doing thousands of those annoying computer generated calls? Clearly luxury brands are going to have to think how they want to use the web and make sure they figure a way that matches their Brand DNA.

Elite Traveler’s BPA audited circulation aboard private jets and mega-yachts in over 100 countries means your ad is guaranteed to reach the highest spending luxury audience in the world no matter where they are from and where they happen to be today – each issue is read by 407,000 readers with a Household Income of $1 million +, the highest of any magazine or newspaper in the world! Sources: 2007 Prince ET/MMR for others

2. Leading Hotels: Back to Basics To Get To The Future – Andrew Sacks

Any luxury marketer who wants to get a grounded and practical view of ways to improve their business should make sure they make time for a lunch with Andrew Sacks, the young and astute Owner and President of New York-based Agency Sacks.

After numerous presentations about Internet this and Internet that, Sacks provided the group with probably some of the best stories and advice of the entire conference.

Reiterating what everyone in the industry has come to know, the Mass Affluent luxury consumer – Sacks defines this person as having at least a $250,000 Household Income – has gone from “Living in Luxe to Living in Flux.”

While “wealthy by any other standards,” this affluent consumer base feels “not wealthy” and they don’t want a great deal, they want a “steal.” This, combined with Mass Affluent consumers “discovering they can live with less stuff,” means that they are re-thinking how they live. Sacks believes they won’t be loosening their purse strings any time soon, “not until they feel confident they will earn big again.”

So what’s the game plan Sacks is talking about to his agency’s clients?

At the top of the list is “connection.”

He noted, “If there’s no attention, there’s no connection” but once that connection is established, “facility and service issues are less important.”

Sacks recalled a recent lunch he had at The Modern, one of Danny Meyer’s New York restaurants. Sacks and his guest both had trouble finding each other as they asked for reservations under different names at the reception. Later in the meal, the Maitre D’ came over to the table. Politely, she told Sacks and his guest, “I understand you had a problem earlier, so I wanted to give each of you my card. Any time you need a reservation with us, please feel free to call or have your assistant call me directly.” She didn’t offer a free dessert or some other amenity.

As hotels struggle with a combination of discounting and value added amenities that also cost money, Sacks pointed to the power of connection, as a consumer: “I can buy a bottle of wine, I can’t buy a relationship.” He now uses his relationship to always get a top table whenever he needs it, while the bottle of wine would have been long gone.

Sacks gave his hotelier audience a list of action points he provides to his clients:

Start Dating: Sacks notes when a person goes on their first date with somebody, they “look their best” and tend to be more active listeners. After the first date, you don’t send an impersonal email as follow up for the second date. Yet Sacks notes in all the years he has stayed at luxury hotels he has never gotten a personal note thanking him for staying. He noted a story about eating at Del Frisco: Towards the end of the meal, his waitress asked him if she could add him to their database. A week later, instead of getting an email he got a personalized letter from his waitress that even made note of something specific to the dinner. Sacks’ advice: “Hire a letter writer, an English grad.”

Stay Independent: Speaking to LHW members, who are mainly independent hotels, Sacks urged them to look at their independence as an asset that provides them the ability to be creative without corporate restrictions that restrain what competitors can do.

Be Memorable (not beige): Sacks used Shutters in Santa Monica, California as an example. Each bathtub has a miniature Black Whale. Sacks noted how the small effect reminds guests right away about Shutter’s unique position on the ocean, and provides the opportunity to connect to “being a kid again” and going down to the Santa Monica Pier or just having fun. “Have a schtick that’s unique to your hotel and your destination.”

The Quarterly Ideathon: Sacks gets clients to assemble their advertising company (in this case himself) with PR company, management from various areas and top guests. They talk about prospecting, customer acquisition, on-site opportunities, CRM, partnerships, event marketing, media and public relations. With one resort client, they took a page from the cruise lines and started making offers to book the next vacation while the customer was at the hotel. In the event/PR space, instead of waiting for various charities to approach a particular client looking for free stays, Sacks did an analysis of charities in the client’s key feeder markets that best matched the guest target and created a program to proactively place product in their charitable auctions in exchange for tangible promotion to constituents.

Sacks warmed my heart by making some points I often try to as well: “It doesn’t take a lot of people to make a difference” for luxury hotels and brands, meaning finding and reaching the right target is critical.

He also made a very important point I try to make, too: “Education is important. The affluent consumer today doesn’t know your hotel. They didn’t grow up with money.” In fact, Sacks’ point ties right into the entire editorial format and mission of Elite Traveler and Elitetraveler.com: “more product intelligence, less hype.” I always make the point that we are the only magazine in the world with pictorials of top suites, and detailed reviews of amenities and special services, plus the direct contact information of the General Manager, or in the case of spas, telling readers the best spa therapist for a particular treatment, or for destinations, which specific tour guides to hire. There’s no prose about the sun setting over the Pacific as the dew dripped off the petals of a rose.

Sacks urged the hoteliers to take stock in their brand – “it delivers predictable quality” – and commented how beautiful hotels often have collateral with poor photography or on lower quality paper. He urges clients to “be something or nothing.” In other words, if you don’t have the budget to do it right, don’t do it.

While the world’s economy today is unsteady, one thing is for sure: The wealthy consumers flying aboard private jets are your best bet, and only Elite Traveler delivers these elite travelers to our advertisers through our BPA audited circulation aboard private jets in over 100 countries, including Russia, the UAE, Kuwait, Qatar, Bahrain, Oman, India, Singapore, Korea and China. All with one ad buy!

3. McKinsey Analyzes What Conde Nast Should Do. We Take A Look, Too

With the brutal environment for media, particularly print, it is no surprise that the magazine publishing titan had to bring in McKinsey to evaluate its business after advertising fell off a cliff and circulation was battered badly, particularly with its good time formula of targeting aspirational consumers by offering subscriptions of 12 issues for $12 per year.

My interest in Conde Nast’s dilemma was further peaked when I read a post on a media news site about the publisher’s troubles. The poster asked if McKinsey will notice that Conde Nast’s appetite for luxury advertising dollars really doesn’t match its readership of nearly 8 million consumers who in fact buy very few luxury products very rarely.

With those thoughts in mind, I had our Marketing and Research team take a look at the most recent (2008) Ipsos Mendelsohn Report which, if anything, portrays Conde Nast titles in a positive light in that it only surveys households with at least a $100,000 income.

So is the Conde Nast reader more Target or Hermes? Well I found them interesting reading off a spreadsheet, so let me let the numbers speak for themselves:

Where do Conde Nast readers shop?

In one word, you’re more likely to find a Conde Nast reader in a strip mall than Madison Avenue or Rodeo Drive:

– 86 percent shop at Target averaging nearly one trip per month – Vogue, Vanity Fair, GQ, W and Conde Nast Traveler readers all seem to like the red spot with nearly 90 percent of CNT readers being patrons.

– 73 percent shop at Wal-Mart with Vogue readers doing so more than 10 times per year

– 68 percent shop at Kohl’s

– 56 percent shop at J.C. Penney

– 63 percent shop at Lowe’s, better known for lawn fertilizer than fashionable hemlines

On the flip side, an easier question might be where Conde Nast Readers don’t shop, again according to Ipsos Mendelsohn:

– Only 3.6 percent of Conde Nast readers set foot inside Ferragamo

– For YSL, only 1.6 percent of Conde Nast readers shopped there in the previous 12 months, including only 2.5 percent of Vogue readers and 4 percent of W readers

– Still, you have to feel for Chopard, where only 7 tenths of a percent of Conde Nast readers shopped there, including a mere 1.2 percent of Arch Digest readers, who supposedly are among the publisher’s most affluent audiences.

– A mere 4 percent of Conde Nast readers shop at Cartier, not quite the 9 percent that shop at Gucci, but better than the 6 tenths of a percent of Conde readers who shop at Van Cleef & Arpels.

Of course, even for the very few Conde Nast readers who do make it to luxury boutiques, they don’t make it often: The Median number of times readers who shopped at luxury boutiques was about three times.

Since we know most of Conde Nast readers don’t go to luxury boutiques, could it be that the ones that do spend lots of money. Again, the bad news for Conde Nast is the answer is relatively no. Again, the numbers speak:

– Only 2.7 percent of Conde Nast readers spent over $10,000 for all fine jewelry purchases in the past 12 months (remember this research was done in Spring 2008 before the crisis!)

– Only 3.1 percent of Vanity Fair readers racked up $10,000 for all their jewelry purchases, let alone a single item

– 5.6 percent of W readers spent $10,000 on jewelry and only 11 percent spent $5,000. In fact, only 21 percent of W readers even spent $2,000 over an entire year!

– Only 2.8 percent of Conde Nast readers spent over $5,000 on watch purchases over the previous 12 months for those surveyed.

– For GQ and Details, only 5 percent of their supposedly dressed for success readers spent over $5,000 on watch purchases, a figure that drops to 2 percent and 2.5 percent respectively for watch purchases over $10,000.

– For food books, only about a quarter of Bon Appetit (25 percent) and Gourmet (27 percent) readers spent over $2,000 on fine dining in 12 months, or less than $200 per month! Of course the readers of Conde Nast must not spend too much on dining when they travel either – only 34 percent broke the $2,000 annual spending market.

Then again, maybe they don’t do that much traveling to far flung destinations. Only 49 percent of Conde Nast Traveler readers had been to Europe in the past three years, while 68 percent of all Conde Nast readers could also say the closest they have come to Paris may be in Las Vegas. Since 73 percent of Conde Nast Traveler readers have not been to Hawaii in the past three years, and 86 percent have not been to anywhere in Pacific/Asia, it begs the question as to where are they traveling. Certainly in these times, they are not going farther afield.

But the while Conde Nast salespeople and editors are reportedly encouraged to look the part, it would seem their look doesn’t really represent their readers:

– Only 5 percent of Conde Nast readers spend over $10,000 on Men’s Fashion

– Only 13 percent of Conde Nast readers spend over $10,000 on Women’s Fashion

– Only 5 percent of Conde Nast readers spend over $2,000 on total handbag purchases over the course of a year!

– Only 9 percent of Vogue readers and 13 percent of W readers exceeded the $2,000 handbag threshold

So what will be the result of McKinsey’s audit of Conde Nast?

As Chairman and Founder of The Luxury Marketing Council Gregory Furman recently said, “Publications that deliver readers who can actually buy the advertisers’ products have the brightest future, and those tend to be the targeted publications such as Elite Traveler.”

Elite Traveler’s BPA audited circulation aboard private jets and mega-yachts in over 100 countries means your ad is guaranteed to reach the highest spending luxury audience in the world no matter where they are from and where they happen to be today – each issue is read by 407,000 readers with a Household Income of $1 million +, the highest of any magazine or newspaper in the world! Sources: 2007 Prince ET/MMR for others.