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Elite Traveler – ET Insider – December 10, 2008

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ET Insider – December 10, 2008

Elite Traveler Insider –

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December 10, 2008

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.

CONTENTS:

1. What Meltdown? Elite Traveler Readers Continue to Shop

2. Private Jet Travel Booms in the Middle East

3. Encourage the Super Rich to Spend

4. In Brazil, The Elite Private Jet Lifestyle Is Booming

5. Bloomberg: Super Rich Keep Shopping

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. What Meltdown? Elite Traveler Readers Continue to Shop

Below is a sample of purchases from Elite Traveler readers since the financial market meltdown started in September:

  • Ms. B. H. from Naples, FL spent $2,000 on a 3-night stay at The Breakers
  • Mr. S. L. from Princeton, NJ spent $6,000 on a Breitling Navitimer World watch
  • Ms. A. C. from Salerno, Italy spent 6,420 Euros on Chanel clothing and accessories
  • Mr. R. V. of Greenwich, CT spent $2,000 on a pair of Isaia shoes
  • Mr. J. P. of Tarzana, CA spent $71,000 on Kiton clothing and accessories
  • Mr. R. V. of Greenwich, CT spent $6,000 on a Kiton leather coat
  • Mr. S. P. from Doha, Qatar spent over $1,500 on Louis Vuitton accessories
  • Ms. P. Q. from West Newton, MA spent $1,000 on a Louis Vuitton handbag
  • Ms. J. W. from New York, NY spent $1,600 on Louis Vuitton shoes
  • Mr. G. A. from Miami, FL spent $7,000 on a Louis Vuitton Taiga briefcase
  • Mr. M. S. from Quogue, NY recently used $175,000 worth of his 2 Marquis Jet cards
  • Mr. M. R. of The Hague, Netherlands spent 218,000 Euros on a Maserati GranTurisimo S
  • Mr. R. D. of Scottsdale, AZ spent $100,000 on a Mercedes SL550 Roadster
  • Mr. M. D. of Clifton, NJ spent $110,000 on a Mercedes S550 4Matic
  • Mr. M. S. of Mabelton, GA spent $7 million on 2 properties at Molasses Reef
  • Mr. R. G. of Federal Way, WA spent $80,000 on a Range Rover HSE
  • Mr. Z. F. of Chicago, IL spent $54,000 on a Range Rover HSE
  • Mr. N. U. of Houston, TX spent $50,000 on a Range Rover

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. Private Jet Travel Booms in the Middle East

Demand for private jet travel and for bigger private jets was strong at the recently held Middle East Business Aviation Conference in Dubai.

Al Jaber Group’s new aviation division, Al Jaber Aviation (AJA), has placed a new firm order for two Airbus Corporate Jetliners (ACJs) and revealed a previously undisclosed order for two A318 Elites, adding to a previous deal for two A318 Elites. When you fly on these planes commercially, expect 130 friends. The AJA configuration will have bedrooms, boardrooms and showers. Maximum capacity will reach about 25, so there’s still plenty of space to bring along your chef and security team.

Abu Dhabi’s Airport Corporation has announced a new identity for Abu Dhabi’s new dedicated private jet airport. The airport, which was formerly the Al Bateen airbase, will be renamed CityAirport, Abu Dhabi as part of its overhaul. Of course you will find copies of Elite Traveler there via our BPA audited circulation to over 100 countries, ensuring your ad reaches the super rich.

“Our plans for CityAirport, Abu Dhabi will put it firmly at the centre of the incredible growth of business aviation services in the region. It is the first airport in the Middle East to be dedicated solely to business jets, part of the Abu Dhabi government’s strategy to develop the emirate’s economy over the coming years,” said Khalifa Bin Mazrouei, Chairman.

The demand for such an airport is clear. The number of private jet flights departing out of Abu Dhabi airport has increased 46 percent year-on-year since 2004, and the General Civil Aviation Authority has recently had applications from more than two dozen new firms for licenses to fly out of the UAE.

Dubai Airports has officially launched the all-new Executive Flights Centre (EFC) – a premier VIP terminal and executive travel facility at Dubai International.

Located close to Dubai International’s Terminal 2, the new VIP terminal for EFC includes a 5,500 square-meter two-story main building, a 3,700 square meter hangar, a 3,700 square meter ramp area for aircraft parking, and a special VIP car park for long term parking.

His Highness Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority, and Chairman of Dubai Airports, said: “This development is part of our strategy to cope with the rapid growth of the business aviation sector in Dubai and in line with the greater objective of making Dubai the most preferred destination for international business and tourism.”

Hailing the Middle East’s business aviation sector as the fastest growing in the world, Paul Griffiths, CEO of Dubai Airports, said Dubai has immense potential to continue leading the regional industry and sustain the existing growth rate.

According to local reports, he added: “The larger, state-of-the-art EFC facility translates into additional capacity and the latest in technology to enable us to serve our customers better.”

Commenting on the new EFC terminal, Jamal Bin Krishan, Head of Executive Services at Dubai Airports, said the demand for EFC services has been increasing at a rapid rate, especially over the recent years. “In 1988, the year that EFC was opened, 208 flight movements were recorded. Last year, the total number of flight movements at the EFC terminal reached 9,432, while this year the figure already stands at 7,050 for the first three quarters of 2008,” he said.

EFC is very popular among celebrities – from showbiz figures to sports stars, businessmen, as well as large corporate entities – for the VIP treatment, prompt service and privacy the terminal offers.

EFC terminal has its own dedicated immigration and customs sections – it is the only terminal in the Middle East to boast e-Gates for quick immigration clearance; its very own Dubai Duty Free outlet, a fully equipped business/conference center, eight luxury private lounges, and a limousine service between aircraft and the terminal. Customers arriving into Dubai at EFC can also book for a wide range of exotic cars.

The terminal’s ramp area can accommodate up to 22 small-sized private jets such as the Lear Jet or Hawker; or between eight to 12 medium sized jets such as the Challenger or Falcon. It can accommodate up to three large sized jets like the Boeing Business Jet (BBJ), the 727 or the Airbus 319.

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. Encourage the Super Rich to Spend

First of all, let’s remember the credit crunch was not brought to us by the Super Rich. It is courtesy of the Mass Affluent who desired a lifestyle they couldn’t afford and borrowed money they couldn’t pay off. We won’t debate whether or not they should have been loaned the money in the first place, but the fact is that the Mass Affluent readers of the Conde Nast and American Express publications are now sunk.

So what’s my point? Let’s not penalize the people who still have the money, the same people who were the biggest customers of luxury goods providers in the first place.

Extensive research by Prince & Associates and others show that in a full year, the average Super Rich household spends over $250,000 on jewelry, some $150,000 on timepieces, about $500,000 redecorating, over $100,000 on fashion and some $300,000 + on travel (not including the private jet). The bottom line is that these folks can afford it, and the ones still on their private jets today are still doing well.

Elite Traveler continues to showcase the private jet lifestyle to these more than 400,000 super affluent readers whose Household Income is over $1 million.

New York Magazine recently spelled out why Super Rich spending is critical:

“How many of the 2.2 million jobs in Manhattan are dependent on the Super Rich?

There are plenty of obvious ones, like those of chauffeurs idling on Park Avenue in the morning, as well as the bankers who ride in the backseats. There are also the antiques dealers on Madison Avenue and the pedigreed interns at the auction houses, the officers at the major foundations, and, naturally, those hyperkinetic real-estate brokers jabbering into cell phones.

But the downward flow of money carves many indirect routes too. Consider, for example, the sommelier at a four-star restaurant who makes about $90,000, edging into six figures when Wall Street bonuses are up. This sommelier, let’s say, lives in one of those rapidly upscaling Brooklyn neighborhoods, renting a brownstone floor-through that, not so long ago, was inhabited by a $30,000-a-year secretary who feasted on Cup-a-Soup three nights a week. The sommelier’s extra spending gets spread all over the neighborhood-to the butcher who now sells grass-fed lamb from New Zealand, to the dry cleaner who charges a premium for removing the stains from his silk ties, and to the bistros on Smith Street that now have fancy wine lists (and sommeliers) of their own.

First, how to define the very rich? Having $1 million in assets as of 2001 placed you in the top 7 percent of families nationwide, according to the Federal Reserve. In New York, it means you own an average co-op in Manhattan outright. “In the old days, a millionaire was someone who had a million dollars. Today, it’s someone who makes a million dollars a year,” says Stuart Becker, an adviser for high-net-worth individuals with J.H. Cohn LLP. And it’s probably what you need to take home-before taxes-each year to be considered rich in Gotham.

The influence of the Super Rich on job creation is similarly fuzzy. “Any hard number on that is surely premature and almost surely something like fiction,” says Edward Glaeser, an economist who runs the Taubman Center for State and Local Government at Harvard. But here’s a stab at it. One way is to look at service jobs. Rich people tend to spend tons of money on services-decorators, art dealers, accountants, personal trainers, etc., and New York is just a more highly concentrated version of the U.S. economy, a service economy on steroids.

Ken Goldstein, a labor economist at the Conference Board, notes that, crudely speaking, $200,000 in spending on services creates or sustains a job paying $50,000-the rest is eaten up in overhead, benefits, taxes, and profits. But industries also have what are known as multiplier effects. A law firm that takes in $200,000 in revenues may pay out $50,000 in wages, but will also spend money on other services-meals and couriers, accountants and entertainment. When employees spend their own wages, they also stimulate economic activity. Figures provided by Mark Zandi of Economy.com suggest that in New York, the multiplier for financial-service jobs is 4.1. In other words, $200,000 in spending can effectively create 5.1 jobs.

Let’s say that the number of New Yorkers with more than $500,000 in adjusted gross income has risen to about 30,000, which is surely conservative. If, on average, each of these folks spends $200,000 a year on services locally (remember, the $500,000 is a floor, not an average), then the top 1 percent of earners supports about 153,000 service jobs. One hedge-fund manager who spends $1 million annually on services-a driver and house staff, investment management and real-estate brokers, restaurants and psychotherapists-probably sustains 25 livelihoods.

Even the public sector owes a lot to the Super Rich. About 1 percent of New York City filers in 2000 paid enough city taxes ($2.338 billion) to support the wages of roughly 50,000 government employees.”

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 318,000 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

4. In Brazil, The Elite Private Jet Lifestyle Is Booming

According to The Telegraph of the U.K., while the credit crunch wreaks havoc elsewhere, Brazil’s Super Rich have so far emerged relatively unscathed. Glossy lifestyle magazines are filled with full-page ads for spa resorts, designer handbags and diamond bracelets that cost more than many Brazilians earn in a lifetime. High-end estate agents say they are as busy as ever, while a new wave of so-called “extra-class” hotels are packed to the rafters each weekend.

A recent study conducted by MFC Consultoria e Conhecimento, a Brazilian research group specializing in luxury goods, claimed that Brazil’s luxury sector, known by some here as the Mercardo AAA – Triple-A Market – grew by 17% last year with a similar rise expected for 2008.

Brazil is a world leader when it comes to growth in numbers of high net-worth individuals. In the last two years its number of millionaires jumped from 130,000 to 220,000 and for now at least, the economic slump has not stopped them shopping. “The main players [in Brazil] are Louis Vuitton, Dior, Versace, Armani, Valentino, Gucci and Prada,” said Carlos Ferreirinha, director of MFC.

From the Amazon city of Manaus to the southern metropolises of Rio de Janeiro and São Paulo, a growing number of luxury shopping centers and condominiums are opening their security gates, pools and tennis courts to the country’s wealthy. Brazil’s president, Luiz Inácio “Lula” da Silva came to power in 2003 promising to haul millions of his compatriots out of poverty. But his time in power has also coincided with an unprecedented boom for the rich. Lula currently enjoys an historic approval rating of 57% among Brazil’s wealthiest citizens.

“From an economic point of view Lula is not a leftist, he is not a revolutionary. He is a conservative,” said Lucia Hippolito, a well-known political commentator. “He feels very at home around businessmen.”

“The bankers are happier here than ever before,” said Hippolito. “In Brazil we joke that Lula is the father of the poor and the mother of the rich.” Brazil is one of 100 countries you reach when you advertise in Elite Traveler via our worldwide BPA audited distribution aboard private jets, helicopters and mega-yachts!

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!

5. Bloomberg: Super Rich Keep Shopping

Targeting media that reaches the Super Rich, whether it’s through magazines on private jets or advertising in private jet terminals, has never sounded better. Witness the following report from Bloomberg:

The black crocodile Birkin handbag displayed at Hermes SA’s Milan boutique in October was one of a kind, with a diamond-studded clasp and a 150,000-euro ($191,000) price tag. It had already been sold.

In Tampa, Florida, Gucci sold a pair of gold and topaz earrings for $73,000, the price of a small suburban house. Also in the U.S.,Bottega Veneta sold a $75,000 crocodile Cabat handbag and a $61,000 gold-link necklace.

Some wealthy shoppers continue to splash out on exotic-skin bags, fine jewelry and custom-made pieces while the U.S., Japan and the 15 European nations using the euro slip into a recession, cutting the value of their assets. Their purchases may offer some consolation to the 175-billion-euro luxury goods industry bracing for the worst holiday shopping season since the Sept. 11, 2001, terrorist attacks.

Most people worth at least $30 million “are not facing a personal liquidity crisis and expect to spend as much or more this holiday season than they did last year,” said Russ Prince, the president of Prince & Associates Inc. The private-wealth researcher surveyed 518 people, each of whom own at least one jet.

“They aren’t cutting back because of some kind of moral rationale,” Prince added. “They don’t feel guilty about spending.”

Sales of luxury goods at Milan showroom Winwood have grown 20 percent this year on repeat orders for items such as Nancy Gonzalez crocodile handbags, which start at 1,500 euros, said owner Morena Zabeni. “People with money either want Hermes or something that isn’t recognizable.”

Kathleen Beckett, who runs personal shopping service Beckett’s Black Book in New York, said an Australian lawyer spent $100,000 this year on clothes, including Tom Ford, Alan Flusser and Duncan Quinn designs. Last month, a Finnish lawyer spent $20,000 in four hours on clothes with brands such as Jussara Lee and Shelly Steffee.

“Wealthy consumers will continue to buy luxury,” said Milton Pedraza, chief executive officer of the Luxury Institute, a New York-based research firm. “People who were worth $10 million now are worth $7 million. That’s a big drop, but they still have a significant amount of money.”

In Milan, jeweler Mario Buccellati sold a 150,000-euro handmade silver set with a champagne cooler to a Russian client, while a U.S. customer ordered a 90,000-euro pair of gold and diamond earrings for his wife after seeing a photo on the Internet. “Quality is expensive, crisis or no crisis,” according to Gianni Versace SpA Chief Executive Officer Giancarlo Di Risio, who said the 140,000-euro gold and diamond limited edition Gianni Versace Couture watch has a six-month waiting list.

To be sure, the world’s wealthiest shoppers may not offset the recession’s impact on high-end brands. Luxury goods sales may decline 15 percent next year in Europe, which accounts for almost half the industry’s revenue, Morgan Stanley analyst Louise Singlehurst said in a report.

She predicted a 14 percent drop in the U.S., where luxury brands make 16 percent of revenue.

Rich people’s assets may contract this year for the first time since 1996, when Capgemini SA began tracking “high net worth individuals,” who have liquid assets of more than $1 million, and “ultra high net worth individuals,” said Ileana van der Linde, who helps produce the company’s annual wealth report.

Before the financial crisis, shopping for luxury goods was “a ‘Sex and the City’ thing,” said Karina Bignone, an American interior decorator based in Milan. It was “psychologically an ‘I want to feel better’ moment, and you’d go shopping.”

Now she buys clothes and accessories that won’t go out of style in a season. She purchased some 2,000 euro dresses from Lanvin and Balmain for year-end festivities, 600 euro shoes from Jimmy Choo and a 5,500 euro brown Birkin, while canceling her 10th wedding anniversary party in April because “it doesn’t feel right” to send out invitations.

Sixty percent of those in Prince & Associates’ survey “don’t care about how much they spend” on luxury goods, said Prince. While they may reduce spending on items such as yachts and helicopters, they “will still buy the $200,000 necklace for the wife.” Yves Saint Laurent last month sold two Uptown crocodile handbags for 19,000 euros and a mink coat for 17,000 euros. Mulberry Group Plc sold all 20 of its 2,000-pound ($3,000) Ostrich Bayswater bag in six weeks.

In Moscow, shoppers continue to spend even after Russia’s benchmark Micex Index plummeted 55 percent in the three months through November and the price of crude oil, the country’s main source of export revenue, fell 50 percent in the same period. Chanel sold a 6.3 million ruble ($225,000) white alligator purse with a diamond-encrusted clasp last month, while Louis Vuitton’s Stoleshnikov store sold five out of six mink coats in stock for between 620,000 rubles and 1.1 million rubles. Vuitton’s Gum store on Moscow’s Red Square also sold a made-to- order Louis Vuitton steamer trunk for 610,000 rubles, store manager Vera Zenkovskaya said.

“The crisis won’t hit those society elements who buy these things,” Zenkovskaya said. “They are unlikely to save. Such exclusive things will continue to get sold.”.

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

 

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