Elite Traveler – ET Insider – August 15, 2006
ET Insider – August 15, 2006
Elite Traveler Insider – about the private jet lifestyle …
August 15, 2006
By Douglas D. Gollan, President and Editor-in-Chief, Elite Traveler, the private jet lifestyle 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, that 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.
- New Terror Threats Spike Private Jet Demand….
- Must Read – Adjustable Rate Mortgages Put Crimp in the Mass Affluent
- Private Jet Travel Boom Increases Demand for Private Jet Hangars…
- Private Jet Travel Booms in The Middle East…
- How U.K. Elite Travelers Decorate…
- Private Jetting Into His Golden Years…
- The Russians are coming – to Montenegro…
“Fascinating, they always want to buy something they see. The products offered and destinations are just what my customers are looking for!”
Mary Bullock Bagosy – Galaxy Aviation, Orlando, FL
New Terror Threats Spike Private Jet Demand….
Prior to last week’s London terror threats on commercial airlines, the Federal Aviation Administration was already projecting private jet flight hours to triple in the next 10 years. In the two days that followed, no fewer than a dozen stories from The Times of London to The New York Times to The New York Post and The Wall Street Journal, as well as reports on CNN and CBS interviewed both consumers and private jet companies.
From a story in Businessweek: “ Shampoo, suntan lotion, toothpaste, and even makeup piled up at checkpoints, as travelers suddenly had to dump any liquids (save baby formula and prescription meds) from their carry-on luggage to comply with new heightened safety regulations. Airlines are warning people it could now take up to three hours to get from curbside through security and onto a plane. “It was complete, complete chaos,” says William Federman, an attorney who had a flight out of Newark International Airport on the morning of Aug. 10.”
The result: various private jet companies reported call volume from travelers interested in looking at private jet options was up over 100% that and current customers who mix and match between commercial and private jet travel depending on trip were planning to fly more of their travel aboard private jets.
Another result of last week’s news from London: The private jet family. Heads of families are chartering jets or buying jet cards so spouses and other members of the family can fly privately for their trips as well.
Still, all these reports suggest private jet travel isn’t cheap. A roundtrip on a small private jet from London to Toulouse in France, was being quoted at $10,000 for same day travel compared to $400 on Air France. Of course, those taking the former option knew they would get to their meeting.
More travelers though are tipping towards private jet travel. Another piece out of the U.K. quoted a 20ish investment banker saying his boss had told him to spend about $20,000 to make sure he made it to his meeting with a German company they were courting as a client.
Adjustable Rate Mortgages Put Crimp in the Mass Affluent
Keep in mind two numbers as you read this piece — $137 billion and $524 billion.
As we have been reporting in Elite Traveler Insider for more than a year, Adjustable Rate Mortgages (ARMs) are a subject that should be of interest to any luxury company marketing to the Mass Affluent (Household Income $100,000 to $250,000).
These flexible “new style” mortgages enabled aspirational consumers to badly overextend themselves financially. A cover story in The Wall Street Journal’s Personal Journal Section was titled “Feeling the Pain of Rising Interest Rates.”
Unlike traditional mortgages in which borrowers put at least 20 percent of the home purchase price as a down payment and then have a fixed interest rate – so steady payments over the 30 year term of the loan, ARMs entice consumers with sometimes no money down and interest rates that two or three years ago were as low as two to three percent. The nasty surprise is that after several years interest rates spike three or four-fold. In a market with increasing interest rates and static or declining housing prices, homeowners are finding not only can they not afford the new higher mortgage payments – they have no equity in their homes because not only did they not put money down – or they put very little – but they were only paying interest and not principal.
The Wall Street Journal article quotes a California real estate broker from upscale Temecula saying in recent months she has gotten numerous calls from customers looking to unload houses they can no longer afford. “They’ve put in a pool and bought themselves Hummers and BMWs. Now they can’t get refinanced and can’t sell.”
Is this an issue you as a luxury marketer should worry about.
According to UBS $137 billion in residential mortgages will be re-set this year – that means an increase in interest rates and a decrease in disposable income available for luxury goods. In the next four years, $524 billion more in ARMs will also be re-set.
For luxury marketers that spend a lot of resources targeting the Mass Affluent, I think the above raises the question, “Are we doing enough to make sure we are increasing our business from the Superrich?”
Private Jet Travel Boom Increases Demand for Private Jet Hangars…
The boom in private jet travel is causing a crunch on parking spots for private jets. Ascend Development of California, builders of corporate hangars, has signed a lease with National Express to build similar facilities at Stewart International Airport near Newburgh. The facilities will total 538,000 square feet in size and include 41 hangars.
The $60 million facility will provide hangar space for corporate and private airplanes from small private jets to Boeing business Jets and will be modeled after their facility in California. Ascend will build, sell and manager aircraft space in long-term sub-leases for the facility that will be built in the general aviation area of Stewart. Over a 10-year build-out, the project will be constructed on some 32 acres of land. A recent story in The New York Times said on busy weekends in Aspen as many as 150 jets have to land, drop off passengers and fly to park at another airport as there isn’t enough parking space! The Federal Aviation Administration projects private jet flight hours will triple in the next decade, so expect more projects like this.
“It’s a fabulous magazine to travel with, especially if you’re at a location that was featured in the magazine”
Meredith Hunter – American Flight Services, Bryan, TX
Private Jet Travel Booms in The Middle East…
North America isn’t the only place private jet travel is booming. Despite recent outbreaks of violence in the Middle East including the conflict between Israel and Lebanon and the ongoing insurgency in Iraq, the region has seen unprecedented growth levels throughout almost all of its major business sectors, according to an article in a leading Middle East business magazine. And, in turn, according to Merrill Lynch and Capgemini’s tenth joint World Wealth Report, the region is producing more millionaires then ever before.
Not surprisingly, the luxury travel market is reaping the benefits of this rise in prosperity and an increasing number of chief executives are turning to the private aviation sector to flexibly jet from one meeting to another in luxury, privacy and, above all, security.
According to Airclaims, a leading international consultancy and claims management services provider to the global aerospace industry, Middle East fleet growth in 2005 soared by 18% last year. Canadian plane manufacturer Bombardier, for example recently announced at the Farnborough air show in the UK that it predicts 600 to 700 corporate jets will be sold each year in both 2007 and 2008.
Paras Dhamecha, CEO of Elite Jets, has seen both his business’s turnover and profit more than double in 2005. And he adds that the projections for 2006 are “even better” due to increased sales and charter activity.
“I love to see our client’s reaction; they go crazy for the magazine. It inspires us here to make it rich some day”
Jennifer Masse – Sun Western Flyers, Bullhead City, AZ
How U.K. Elite Travelers Decorate…
What are elite travelers in the U.K. decorating their homes with? A recent piece from a British newspaper took a look at these dream houses, which are often second or third residences:
“We asked a few of them what the latest must-have interiors are for today’s millionaires.
All mansions these days, of course, should have a gym for those days when it’s too wet to jog around the estate. Lyndon Evans of Bridgend based Expert Fitness UK, an independent gym equipment company, recommends millionaires splash out on the best commercial machines, made by companies such as Johnson, Life Fitness or Powerjog.
“If you equip a room for two people to work out together with a full range of cardio-vascular, weights and resistance equipment you’ll be looking at spending £60-70,000,” he says. Add to that mirrored walls, air conditioning and a suspended wooden floor suitable for dancing or jumping on.
Outdoor pools with an infinity edge are all the rage at the moment, says a spokesperson for the Swimming Pool and Allied Trade Association.
“The water looks as if it’s rolling off the edge which is particularly effective if your pool is leading onto a panoramic view. Sometimes the pool is tiered like a wedding cake,” she says. Meanwhile, indoor pools with moveable floors are very flash. The floor of the pool can be raised to form its lid or a lid can be lowered from the ceiling at the push of a button to transform your spa into a glamorous ballroom.
The minimum you will need is a three-car garage with a remote controlled door. For those after extra security however, an underground garage is the latest must-have.
The Hot Tub
You could settle for a few bubbles at the end of your pool but if you’re stinking rich you’re more likely to want an outdoor swim spa. This is an elongated pool featuring a current which you can swim, row or even jog against before relaxing at the warm end.
The Master Bedroom
Not so much a room as a whole suite, or even a wing comprising his’n’hers double ensuite bathrooms and dressing rooms. “Our wealthy clients go for beds with mattresses hand made in natural fibres, such as silk, cotton and wool, which stop you sweating at night,” says Yvonne Jones of Chameleon Interiors, Cardiff. “Walk-in dressing rooms are a must – the women’s tend to be a whole room, fitted with wardrobe units, a wall of mirrors and perhaps a sofa in the middle. The men’s are more functional.” For the Rolls Royce of beds, seek out a Hastens. It’s the ultimate status symbol, says a spokesperson from Maskreys furniture retailer, ranging in price from £2,000 to £30,000. “It’s chemical-free and hand-made from natural materials. It has a solid base of Swedish pine. The king of Sweden has one.”
Forget your roll-top Victorian bath, today the emphasis is on the shower. It’s a walk-in affair with a powerful jet, glass walls and a natural stone floor. “The whole look is ultra-modern with natural products, lots of storage and good lighting,” says Yvonne Jones.
You’re unlikely to call it this if you’re super rich – what you’ve got is an Orangery. This is more of a breakfast area with a glass-domed roof and grand Georgian windows, fully air conditioned, of course. Sadly, it probably won’t have the oranges or much in the way of other plants as you probably won’t be at home long enough to look after them.
Wooden kitchens are the look of the moment. Team the units up with natural stone floors, granite work tops and a wall mounted, or even fridge mounted plasma television and surround sound. Naturally you’ll have an Aga, even if you don’t know how to use it.
Exclusive is the key word here. If you’ve got money to spend you want something individual or even unique, says Yvonne Jones. “People don’t want to spend a fortune on something and then see it in someone else’s mansion,” she says. “We source handmade, unusual pieces largely from Italy. The classical look is popular as people don’t want their purchases to look dated in a few years.” The Barcelona chair, designed by Mies Van der Rohe, is a classic for a millionaire’s home. Masculine and chic, it’s padded in Italian leather, punched with buttons and framed in X-shaped steel.
Discerning millionaires are often keen to decorate their walls by investing in good local artists and buy from commercial galleries such as the Martin Tinney Art Gallery in Cardiff.
Jazz up your walls with K&K digital wall art. Sahara is priced at £271.95 for a panel of 232 cm x 280 cm. Another to look out for is Brian Yates wallpaper which starts at £69 a roll.
Light up your mansion with anything by Italian brand Flos, recommends Maskreys.
For minimalist design with maximum effect, Globall by Jasper Morrison will create a glow in any room. “
Elite Traveler brings marketers over 60,000 U.K. based readers every issue via our BPA-audited distribution aboard private jets and First Class cabins of British Airways.
“We place the magazine everywhere is our building and on every one of our planes”
Maria Fente – Starlink Aviation, Dorval, QC
Private Jetting Into His Golden Years…
Decent length of service has its rewards. It can make you super rich. BHP Billiton director and executive president Mike Salamon knows that more than most after a 21-year career in which he played a key role in Billiton’s out-of-Africa growth strategy — one that led to the 2001 merger with BHP. Under his defined benefits scheme, the London-based Mr. Salamon, 51, can take a $24 million lump-sum payment or an annual pension of $975,000. Then there is the $35 million worth of direct and indirect shares in the group that he has accumulated over his lengthy service. BHP chief executive Chip Goodyear said in a stock exchange release that Mr. Salamon had given “invaluable service” to the group for more than two decades. “We understand Mike’s desire to take some time off and to eventually move into some new challenges, but will greatly miss his enthusiasm and wise counsel,” Mr. Goodyear said. In a statement on his retirement from BHP, Mr. Salamon is believed to have said that while there was never a perfect time to retire, he felt privileged to have played a part in the creation of the world’s biggest diversified mining group. Fortunately, he will be able to stay in touch via lifelong rights to use the company jet so, even though Mr. Salamon may be taking his millions into the sunset we will keep him with Elite Traveler.
“Our clients enjoy reading the magazine cover to cover. They enjoy the high quality and look forward to the Hotel, Spa and Resort issues which are an extra perk”
Jeanette Wuisman – Landmark Aviation, Dallas, TX
The Russians are coming – to Montenegro…
Private jet arrivals are up over 1000% in Montenegro this year, so it shouldn’t be surprising Montenegro’s first five-star hotel has opened its doors on the outskirts of the Budva holiday resort on the Adriatic coastline.
The Russian owners have spared no expense in the luxury refurbishment of the once rundown Hotel Splendid. A few miles to the south, another Russian investor has bought the Hotel As; an establishment promising the ultimate in accommodation is in the making, including a spectacular underwater restaurant. Parts of the hill abutting the hotel are to be blasted to make way for the building works.
“The Russians are coming,” is the order of the day in Montenegro and its northern neighbour, Croatia.
Money is no object to these new investors, the real estate agents say.
“If you’ve got it, flash it,” is the motto. A Russian investor has demanded a change in the local building regulations on the Croatian island of Mali Losinj so that he can extend his hotel to 2,100 beds from the current 1,200.
In Herceg Novi at the entrance to the Bay of Kotor in Montenegro, a Russian consortium has bought a vast property of 100,000 square metres in a prime location. The property is on the Lustica peninsula, which used to be a military zone covering 36 square kilometers and has thus not been developed for tourism.
These top holiday locations have drawn the attention of well-to-do Russians in particular.
According to media reports, Moscow Mayor Yuri Lushkov has bought more than 12,000 square meters for 4 million euro (US $5 million). A short distance away, Russian cosmonaut Alexei Leonov also owns property. The good links with the Russian oil industry mean that a borehole to a depth of 74m has been drilled to provide water.
Russian money has helped drive real estate prices ever higher.
In the Montenegrin city of Tivat, residential property now costs up to 1,200 euro a square metre – this when the average monthly income is a meager 200 euro.
In other towns prices as high as 2,000 euro per square meter have been attained for commercial property. This does not appear to deter the richest investors, who arrive at Montenegro’s two airports in private jets, according to locals.
Nobody knows precisely how many properties are now in the hands of Russian investors; often the ownership is difficult to ascertain as the trail leads through accounts and companies all over the world. They note that Croatia and Montenegro hope in the relatively near future to become members of the European Union, and in Montenegro the euro is already the currency in use. The flood of money from Russia has also meant a change in the origin of the guests in many Adriatic resorts. Russians set the tone, rather than Germans, Austrians or Britons.
Elite Traveler’s worldwide BPA-audited distribution in over 90 countries of course includes Russia, Croatia and Montegro ensuring wherever your top customers are Elite Traveler is with them. And don’t forget, our readers Average Household Income is $5.3 million!
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Jim Gilchrist – Garden City Country Club, Garden City, NY