View all newsletters
Latest in Luxury - Sign up to our newsletter

ET Insider – May 7, 2013

 

More than ever private jet travelers, or elite travelers as we like to call them, are the most lucrative market for luxury brands and service providers. With readers spending $10,000 per hour to fly privately, the over 600,000 readers Elite Traveler reaches each issue provide you a great way to make sure your message is in front of consumers who have the money to be good customers. With our Asia Edition, Elite Traveler Superyachts, our over 60 Elite Traveler Destination Guides at Elitetraveler.com, our global database of private jet owners and our award-winning custom marketing team, we would welcome the opportunity to be of help to you in making sure you get a bigger share of our reader spending.

With a Net Worth of more than $25 trillion, I hope you will agree elite travelers should be a key target for your marketing!

Follow Doug Gollan on Twitter: 

https://twitter.com/EliteTravelerDG

In this edition:

1. Ledbury Interviews Elite Traveler

2. Private Jets Take Off in Malaysia

3. $10 Billion in Sales:  Are You Getting Your Share?

4. CNBC:  Housing’s Big Challenge: $1 Trillion in Student Debt

5. At The Top, Lots of Costs are Covered

6. Private Jets Gain in Macau

 

1. Ledbury Interviews Elite Traveler

Recently I was interviewed by UK luxury research firm Ledbury about the U.S. market.  Below are my thoughts from their hot seat:

LEDBURY: What real impact has the fiscal cliff had on luxury consumers?

GOLLAN: The continuing fiscal cliff saga feeds the insecurity of the Mass Affluents (Under $400,000 Household Income) and causes them to shy away from purchases of luxury goods and services as it undermines their confidence in home prices and job security. For the UHNWs, the continued political situation will put a damper on things like new yachts and private jets that cost a lot of money regardless of how much money one has.

LEDBURY: What are the other issues facing American consumers today?

GOLLAN: The Mass Affluent US consumer is still under considerable strain and will be for the continued future. The pure math is that the luxury boom of the early century was built on increasing home prices driving home equity loans and loose consumer credit that provided Mass Affluent extra cash to spend on luxury goods and services. Today the Mass Affluent consumer is operating nearly entirely off of what’s left after they cash their paycheck. Any luxury purchases by the Mass Affluent is an either/or – either we go to Europe this year or we get the new computer – either I get those two new pairs of shoes or buy ‘the look for less’ and we fix the deck. What is driving US sales of luxury goods is a combination of international visitors and Ultra High Net Worth consumers.

The recent Knight Frank 2013 Wealth Report shows that in the past year UHNWs increased net worth by $566 billion – to put in perspective, it’s enough to buy every Swiss watch exported for the next 25 years and every luxury hotel room and suite in the world for the next decade. Luxury companies need to re-orient their marketing structures to dig deeper into the pockets of UHNWs who are predicted to grow by more than 50% in the next 10 years.

“Elite Traveler is a key media source for us with well over $200,000 in sales we can track directly back to our ads in your magazine over the past year.” – Charles Krypell, Owner, Charles Krypell

 

2. Private Jets Take Off in Malaysia

Private jets are now considered a business tool among Malaysian businessmen, spurring growth.

According to a recent report from Kuala Lumpur, “One Malaysian corporate boss recently visited five cities in China over a span of less than 24 hours. He remarked that this would not have been possible if he did not have the services of a private jet.” Another said arriving by private jets helps gets deals signed.

“When you have a jet, it puts you on a different echelon. It becomes a business tool. You sign the deal faster. Don’t think about the US$50,000 that you are paying for using the jet. You are using the jet to secure a US$50mil (RM155mil) deal. What is the US$50,000 compared with the US$50mil deal?” says DNest Aviation Services Sdn Bhd founder and chief executive officer Capt Earnest K.

Top Malaysia business owners who own corporate jets including Genting Bhd chairman and chief executive Tan Sri Lim Kok Thay, SapuraKencana Petroleum Bhd president and group CEO Datuk Seri Shahril Shamsuddin, SapuraKencana Petroleum Bhd executive chairman Datuk Mokhzani Mahathir, Tan Sri Lee Kim Yew, founder of the Country Heights group of companies and KL Kepong Bhd chief executive officer Tan Sri Lee Oi Hian.

Since 2002, Beechcraft Corp points out that Malaysia is the fourth largest buyer of business carriers and corporate jets in the Asia Pacific region after Singapore, Hong Kong and China. The number of business aircraft in Malaysia has grown by 79% to 61 from 34 in 2002. This is on the back of an average increase of 65% for Asia-Pacific as a whole.

Manufacturer Beechcraft Corp says the number of business aircraft in Asia Pacific now stands at 1,566 in 2012.  Elite Traveler Asia is distributed quarterly to private jets in from Australia to India to Japan which a focus on Greater China reaching the region’s most affluent consumers.

“From the Summer Edition of Elite Traveler Superyachts, as well as the Asia Edition including the May/June issue we are happy to report sales ($437,000) of the timekeepers we advertised” – Patrik Hoffmann, CEO Ulysse Nardin

 

3. $10 Billion in Sales: Are You Getting Your Share?

The Super Rich have their wallets open when so motivated.

One legendary developer knows where the money is. Nick Candy, CEO of Candy & Candy, comments: “By 2017, the UHNWI population is expected to have increased by 20% and their wealth by 30%. A trophy ‘safe haven’ property in a global city is typically at the top of the shopping list for wealthy individuals, and their continuing appetite for such investment is expected to exert even greater influence over global property markets in the next few years.”

The ultra-prime housing markets in London, New York, Hong Kong and Singapore collectively witnessed more than 300 residential real estate transactions in 2012 where the price was over $15.5 million, according to latest analysis from international real estate advisor Savills.

Together, the value of those transactions exceeded $10 billion. The 300 sales over $15.5 million seen in 2012 are expected to grow to 400 per year by 2017 to $13 billion.

Of course the new Super Rich come from all over the world: According to Candy, Africa, central Asia, China and South Korea, Russia, Eastern Europe and Latin America are key markets (Elite Traveler and Elite Traveler Asia are distributed to private jets in all these markets – over 100 countries worldwide).

These uber-purchases also spur demand for plenty of high end goods to fill them from wardrobes to tableware and designer furniture, fabrics, kitchens and so forth. Is your company speaking to these prime customers? Elite Traveler is!

ONLY ELITE TRAVELER – Elite Traveler is the ONLY global publication targeting and reaching private jet travelers to have its circulation successfully audited. View our BPA statement here

 

4. CNBC: Housing’s Big Challenge: $1 Trillion in Student Debt

Many Mass Affluent magazines tout the ‘education’ credentials of their audience, pushing the percentage who are college graduates and have graduate degrees. New research by CNBC shows the loans that led to those degrees could by stymieing their spending power!

Mass Affluent consumers who are already living paycheck to paycheck will be pressed by an ever-growing mounting of student loans in the future. According to CNBC’s Diana Olick, student debt in the U.S. is now second to mortgage debt.

The report features a young couple: “Isaac and Stephanie Adams live in Richmond, Va. and are expecting a baby in June; last year they decided to buy a house. With home prices and mortgage rates both at historic lows, it seemed the perfect time. Unfortunately, student loans stood in their way.”

Between the two of them, the Adams’ student loan debt tops $100,000. They pay $1100 a month for the loans, and that, coupled with the fact that Isaac was working a contract job, was enough to disqualify them from getting a mortgage.

The report continues, their story is getting ever more common, as total student loan balances nearly tripled between 2004 and 2012, according to a new survey from the Federal Reserve Bank of New York. Now $1 trillion in collective student loan debt is directly affecting the housing recovery.

“Short term, you see a decrease in the number of first-time home buyers,” said Brian Coester of Coester Valuation Management. “You’re going to see somebody who would have been able to afford a more expensive house maybe go for the lower version or the downgraded version.

First-time home buyers usually make up over 40 percent of the home buying population, but their share has hovered at or below 30 percent during this recovery, according to the National Association of Realtors.

Luxury marketers should keep this strain in mind as they look at the aspirational consumer.

“Long term it’s going to really affect especially the upper end, because people aren’t going to have the excess income to buy the jumbo property or buy that high end property,” according to the report. “It’s going to affect home prices as a negative, as more of a cap, because it’s really debt that they are servicing.”

It will also strain the discretionary income of the Mass Affluent.

“Again this year Elite Traveler continues to be our #1 source for reservations generating close to $1 million in bookings from your readership of private jet travelers” – Sean Emmerton, Villas del Mar

 

5. At The Top, Lots of Costs are Covered

Top executives still have extra spending money, courtesy of nice employment agreements that save them money. According to the Boston Globe, “Private jets, chauffeurs, financial planning services, Red Sox tickets. Executive perquisites are still alive and well at many public companies, even after a decade of intense shareholder scrutiny.

A review of recent filings shows that personal use of company aircraft remains popular. For example, EMC Corp.’s chief executive, Joseph Tucci, took home not just more than $16 million last year in cash, stock and incentives; he also received $113,545 in side benefits of the job, including private jet travel, the services of a financial planner, and a special medical exam for executives.

EMC’s board, for instance, recently told shareholders that it pays between $10,000 and $15,000 each for several top executives to get tax and financial planning services so they can focus more time and attention on their jobs with the Hopkinton data storage giant. Similarly, personal use of the company’s Gulfstream or other aircraft is permitted “to reduce these executives’ travel time and to allow them to devote more time to work duties.”

Many of the reported perks are small relative to executives’ total compensation. Indeed, the modest amounts are what make some of them stand out.

For instance, virtually every chief executive (and often the entire top rung of managers at large companies) gets annual medical screenings, head-to-toe exams that cost from $2,000 to $3,000 each. At State Street Corp., shareholders paid $2,522 each for doctor appointments covering all five of the top-paid executives at the Boston financial services company. State Street says its general practice is to cover preventive care for all employees.

State Street chief executive Jay Hooley, who took home $15.6 million last year, also had a car and driver, a perk worth $27,852, and received $9,336 for personal and home security.

Both are benefits typical of major Wall Street firms, which say they are necessary to keep top executives safe.

At LPL Financial Holdings Inc., a Boston-based network of brokers, shareholders covered $1,479 in brokerage commissions for chief executive Mark Casady. He also got $28,169 for his car lease, as part of a $4.7 million total pay package.

At PerkinElmer Inc., a Waltham maker of medical and environmental products, chief executive Robert Friel made $10.8 million last year. His perks included a $25,000 car allowance, $20,000 for a financial planner, and a $50,000 donation by the company to match gifts of his own.

Affiliated Managers Group Inc., a large investment company based in Beverly, has not yet released its new proxy. In 2011, the company embraced aircraft benefits and other perks. But the board decided to stop paying executives to hire their own financial planners.

Eaton, the proxy research executive, would applaud the move. While some companies say offering the benefit is a way of ensuring executives don’t get into financial or tax trouble, Eaton asked, “Why can’t they afford to pay for their own financial planner? That’s what everyone else does.”

“Recently we had an American customer who walked in with a copy of Elite Traveler and booked two suites that been directly featured in the magazine.  The value of the booking was in the region of $200,000.”  – Tony Potter, Corinthia Hotels

 

6. Private Jets Gain in Macau

According to InBusiness, a new hangar exclusive to private jets will be ready next year at the MacauInternationalAirport, according to the program.

The new hangar will be an initial step in developing the private jet business, which is a priority in the airport master plan revealed a year ago to make it more profitable.

Private jet travel “has been increasing at a favourable growth,” the Civil Aviation Authority said.  Since the Sands Macao – the city’s first Western-style casino – opened, private jet traffic has grown steadily, leaping from 383 aircraft movements in 2005 to 1,416 last year.

In the first quarter of this year there were 398 private jet movements, an increase of 11.6 percent compared to the same period of 2012, the regulator said yesterday. In the first two phases the number of parking spots for private jets should increase to 38.

 

 

 

 

 

 

 

Websites in our network
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. Be the first to know about the latest in luxury lifestyle news and travel.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED
Thank you

Thank you for subscribing to Elite Traveler.