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Elite Traveler – ET Insider – December 20, 2011

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ET Insider – December 20, 2011

Elite Traveler Insider –

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December 20, 2011

Elite Traveler Insider

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

From the Elite Traveler Media Group team to you, please accept our wishes for a happy holiday season and a fantastic 2012!

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. International Travel Mart Report: Private Jets Take Center Stage

2. IPSOS: Mass Affluent Still Struggling

3. Daily Beast: The Super Rich Haven’t Reined in Their Spending

4. Young UHNW Chinese Fluent in English

5. Prince: Centi-Millionaires to Spend More on Luxury in 2012

6. Bigger Than You Think… The Private Jet Industry

1. International Luxury Travel Mart Report: Private Jets Take Center Stage…

Private Jet travel will surge in 2012 and be the bright spot of the travel industry, predicted a leading editor from The Economist.  Speaking at the 10th Annual International Luxury Travel Mart in Cannes, France, John Andrews said the combination of U.S. economic doldrums and gridlock, the Arab Spring has turned in to summer, and Eurozone woes will impact affluent travel at large.  However, he specifically pointed to private jet travelers as a growing segment so well off they are immune to the vagaries of the daily economy impacting the Mass Affluent.  The Japanese government in a press conference unveiled a new initiative offering “greater convenience for visiting Japan by business jets.”  New and enhanced private jet facilities at both Narita and Kansai are designed to make Japan more attractive to wealthy travelers who fly by private jet, said Gota Otaka, Director of the Ministry of Economy, Trade and Industry. Otaka said improvements will mean private jets can now arrive at Kansai International Airport 365 days a year, 24 hours a day providing convenient access to Kyoto, Nara, Osaka and Kobe.

Speaking at ILTM’s Opening Sessions, luxury futurist James Walton of consultancy LS:N said travel will see an “hourglass economy” of the very high and low doing well, with the middle being squeezed.  Backing up the strength of the ultra-high end market, Franka Holtman, General Manager of The Dorchester Collection’s Le Meurice in Paris, told Elite Traveler in an exclusive conversation that despite the influx of new luxury hotels in the capital, her biggest challenge is not having enough signature suites to meet the demand of global traveling luxury consumers (TLCs) who fly by private jet and take top suites.  Six Senses, the Asia-based spa resort group which features villas and bungalows ranging up to 15,000 square feet and often selling for over $10,000 per night, reaffirmed that the strength of the luxury market is at the top end.  Walton said the Mass Affluent who he described as earning between $100,000 and $250,000 are being squeezed in a tight economy and “have enough stuff” and are simply struggling to survive.

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

2. IPSOS: Mass Affluent Still Struggling…

Below are excerpts from a recent interview with Steven Kraus, Chief Research and Insights Officer at Ipsos Mendelsohn and leader of the The Ipsos Mendelsohn Affluent Survey:

“Demographically, (mass) affluents tend to be married, white, highly educated, and employed in professional and managerial fields. They average nearly $200,000 in annual household income, and fall just short of $1 million in average net worth.

Affluents still feel the impact of the recession that began in 2008, in their lives and in their outlooks for America.  Despite the “official” conclusion that the recession ended in June 2009, affluents tend to disagree.  As of August 2011, only about one-fifth (20 percent) of affluents felt the recession was over for their family or their employer, and fewer than one in 10 felt that it was over for the U.S. as a whole. In fact, when asked affluents to project when the recession would likely end, the most common answer was 2013 or later.

One of the lingering effects of the prolonged economic downturn has been to heighten the affluents’ already strong value orientation, which is rooted in their modest upbringings, and has created a sense of marketplace pragmatism that runs deep in the affluent consumer psyche. Today’s ongoing economic turmoil has only served to intensify that value orientation.

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication in the world delivering 400,000+ readers with a Household Income of $1 million + ============================================================

3. Daily Beast: The Super Rich Haven’t Reined in their Spending…

Tina’s Brown’s The Daily Beast puts it this way:  “People are pissed at the 1 percent.  Will the Super Rich learn to restrain their excesses?  Don’t bet on it.”

For all the small and mid-size businesses such as catering companies and florists to the large global luxury houses, the continued spending by Ultra High Net Worth consumers is a good thing.

As an example of UHNW spending, The Daily Beast notes:  “Sandy Weill is a lucky man. When the financier who built Citigroup decided to sell his penthouse at 15 Central Park West, one of the most lavish and exclusive buildings in Manhattan, The Wall Street Journal wrote a story about how he was listing it for a record sum-and planned to give the proceeds to charity. There should be plenty to go around. Back before 15 opened for business, Weill and his wife paid $43.7 million for the four-bedroom, six-and-a-half-bathroom floor-through condominium. Lately, the recession notwithstanding, similar apartments in the building across from Central Park’s southwest corner have sold for more than $10,000 per square foot. The Weills are asking $88 million.

What’s 15 got that your place doesn’t? Besides all those amenities, its location-the last big piece of buildable land bordering Central Park below 96th Street, at least for the foreseeable future-couldn’t be better. The building’s starchitect, Robert A.M. Stern, the classicist and Yale architecture-school dean, is excellent, too. He consciously mimicked the style of the greatest Manhattan apartment houses like 820 Fifth and 740 Park to the east, and the Majestic, Beresford, and San Remo to 15’s north. But inside, it’s all luxury and convenience.

Downstairs, there are two separate lobbies-one detailed in English oak and three colors of marble-each staffed with several doormen, underlings, and a concierge; a walnut-paneled library; a game room; a conference room; and a waiting room for chauffeurs near the private garage. Upstairs, the rooms are big, the ceilings high, and big windows offer vast views of Central Park, the skyline, and across the river to the land of the 99 percent. On a clear day, 15’s residents can see their neighbors’ Gulfstreams taking off from Teterboro Airport in New Jersey 12 miles to the west. But the main value of living in such a building, and the primary justification for the staggering price of its apartments, is surely (to update Fitzgerald’s Gatsby) the consoling proximity of other billionaires. The halo effect of the right address isn’t priceless, but it comes close.

Yes, the rich got worried after the Great Recession’s arrival, but you can’t keep a good fortune down for long. “The very wealthy are spending,” says Richard J. Kurtz, a New Jersey developer of estates for the rich. “Everyone below that is holding back.” But the rich-rich-rich? “They’re so wealthy it doesn’t change their lifestyle. If they want a boat, they’re gonna get a boat.”

And if they want to rent a private island for a birthday party, they’ll do that, too. Recently, a client of Sanctuaire, a luxury-villa-rental agency, reserved Musha Cay, a private island in the Bahamas, for a nine-night 50th-birthday party with a dozen friends at $40,000 a night. “It made my jaw drop, and I’m in the business,” says Sanctuaire’s president, John Steinle.

Research confirms the anecdotal evidence that American fortunes are being spent again-albeit sans bling.  Retailing’s luxury sector was the first to recover. But it’s evolved.

Aspirational buyers, who consumed low-end products from high-end purveyors, leased fancy cars, or bought on credit, have mostly vanished. Madelyn Hochstein, president of the consumer-research firm DYG, Inc., now calls them the phantom affluent. “They can’t do that anymore,” she says. “Only the really wealthy are buying now. They’ve survived, they’re still wealthy, and they feel they’ve earned it, so they deserve the good life as it used to be led.

Flashy cars are hard to hide, and they’re selling out at Manhattan Motors, which deals in Rolls-Royce, Bentley, Lamborghini, Lotus, and Porsche. There was a brief dip in sales in fall 2007, but things have been looking up ever since. “People found they had to work harder and were entitled to a reward for their effort,” says John Kaufman, the general manager. “We’re having one of our best years.” How good? “Demand exceeds supply,” he says, declining to share sales figures.

At Saks Fifth Avenue, the men’s made-to-measure department is doing better than ever, catering to that same customer. “The Über-wealthy want something more, something special, personalized,” says Ron Frasch, the luxury chain’s president and chief merchandising officer. “We have men who want to go to Italy to our factories to work directly with our tailors. You don’t see crazed shopping behavior like you did prior to the recession, but money is being spent in unique ways. Their planes are decorated by Loro Piana. They’re buying personal casks of Scotch, tweaked to their tastes in Scotland, and they have to wait 15 to 20 years to drink it. They’re not shopping as frequently, but when they do they’re laser-focused on what they want and the average [sales] ticket is higher than before.”

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication targeting private jet travelers with an independent editorial and design team, original photography, award-winning editors, designers and photographers. ============================================================

4. Young UHNW Chinese Fluent in English…

China’s next generation of UHNW Consumers are Western educated and fluent in English, according to Rupert Hoogewerf, Chairman of Hurun Report.  Speaking at the International Luxury Travel Mart in Cannes, the researcher noted the average age of the UHNW Chinese consumer was 39 years old.  Travel is the number one hobby and France is the top destination followed by the United States, Australia, Japan and the Maldives. Destinations rising in popularity included Dubai, Hawaii, Great Britain, New Zealand and Germany.

Underscoring the increasingly multi-lingual aspect of the super rich Chinese, 80 percent made their first overseas trip in 1990 or after. Over 80 percent of Chinese Super Rich send their children overseas and, not surprisingly, 99 percent of Chinese wealth is first generation.

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication that delivers UHNW consumers on private jets from more than 100 countries with a single ad. ============================================================

5. Prince: Centi-millionaires to Spend More on Luxury in 2012…

Super Rich families will in many cases be spending more in 2012 than 2011 with virtually all spending at least the same, according to research by Prince & Associates with the Executive Directors of over 150 Single Family Offices.  Each SFO manages at least $100 million for a single family, and according to Prince spending will be up significantly in 2012.  All families surveyed owned at least one private jet:

–   52 percent will spend more on personal travel and lodging –   46 percent will spend more on watches and jewelry –   48 percent will spend more on fashion and accessories –   44 percent will spend more on home improvements

–   89 percent will spent the same or more on travel and lodging –   86 percent will spend the same or more on watches and jewelry –   80 percent will spend the same or more on fashion and accessories –   82 percent will spend the same or more on home improvements

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

6. Bigger Than You Think: the Private Jet Industry…

Many people are often surprised when they hear Elite Traveler has over 500,000 readers who fly privately every issue.  The assumption is the private jet traveler segment is smaller than it is.

According to the National Business Aviation Association, private aviation contributes over $150 billion per year to the U.S. economy and employs 1.2 million people.

At New York’s Teterboro Airport – the main private jet airport serving New York City – there are 1,700 people directly employed at the field.  According to the NY/NJ Port Authority which runs Teterboro, the airport is responsible for 15,000 jobs in the region and over $1.8 billion in spending.  Flight crews from the private jets flying in and out of Teterboro represent one-third of the 400,000 available hotel room nights available annually near the airport, and the local governments where the hotels are located each collect between $250,000 and $500,000 in occupancy taxes just from the stays of these flight crews. In Los Angeles at Van Nuys Airport, the busiest private jet airport in the world but just one of six that serve Greater Los Angeles, there are 100 separate businesses located at the field alone, ranging from multiple FBOs to charter operators to caterers and maintenance.  The State of California collects more than $80 million in taxes from the businesses using the airport and there are over 12,000 jobs that are connected to use of the airport.

If you sell diamonds, handbags, watches or cars, you may say, Why should I care?

The answer is simple.  The expression goes: “fish where the fish are.”   The private jet traveler market is a very big segment and provides the highest consuming market of luxury goods and services in the world – the users are your best customers, your best prospects and the best customers of your competitors.  Companies like Elite Traveler Media Group which exclusively target this audience provide you a platform far more targeted than any other media, with more reach to UHNW consumers than any other media in the world – and we do it more cost effectively with significantly lower out of pockets. If your company doesn’t have an UHNW Media Strategy, may I suggest one for 2012.  With that, I look forward to seeing you next year and in the meantime, happy holidays and best wishes for continued success!

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication in the world delivering 400,000+ readers with a Household Income of $1 million + ============================================================

 

All the best,

Douglas D. Gollan Group President and Editor-in-Chief

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