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

Elite Traveler – ET Insider – February 11, 2008

Array

ET Insider – February 11, 2008

Elite Traveler Insider –

etlogo

February 11, 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. Luxury Marketing Nugget: Today’s Super Rich are Self Made

2. Elite Traveler off to Fast Start in 2008

3. Elite Traveler featured in Newsweek

4. Luxury Advertisers Caught in Wal-Mart Shocker

5. Egg’s 160,000 card freeze ‘hits prudent customers’

6. Big Banks Now Urge Consumers to Save, not Spend

7. Hey Mate, Want Tourists? Don’t Look to the “Travel” Magazines

A reader of Elite Traveler who splits his time between London, Tokyo and Paris bought a Breguet watch he saw in our Nov/Dec issue for over $100,000 from a New York retailer. It’s why we have distribution aboard private jets in over 100 countries. It’s how you reach elite travelers!

1. Luxury Marketing Nugget: Today’s Super Rich are Self Made

A must-read for any luxury marketer is Robert Frank’s Wealth Report column in The Wall Street Journal, as well as his book “Richistan.” I keep copies on hand just to give to folks who haven’t read it.

One thing that strikes any of us involved in the luxury segment, particularly the study of the Super Rich, is that there are quite a few different numbers being tossed around. I thought Frank’s recent piece on how the Super Rich got Super Rich was great in that it virtually closed the case that the days of hand-me-down money are more or less gone. Below is from Frank’s column:

  1. According to a study of Federal Reserve data conducted by NYU professor Edward Wolff, for the nation’s richest 1%, inherited wealth accounted for only 9% of their net worth in 2001, down from 23% in 1989. (The 2001 number was the latest available.)
  2. According to a study by Prince & Associates, less than 10% of today’s multi-millionaires cited “inheritance” as their source of wealth.
  3. A study by Spectrem Group found that among today’s millionaires, inherited wealth accounted for just 2% of their total sources of wealth.

Each of these stats measures slightly different things, yet they all come to the same basic conclusion: Inheritance is not the main driver of today’s wealth. The reason we’ve had a doubling in the number of millionaires and billionaires over the past decade (even adjusted for inflation) is that more of the non-wealthy have become wealthy.”

The climb of the Super Rich from the masses, often from middle class backgrounds, means that today’s Super Rich consumer probably didn’t go shopping for saddles with Dad at Hermès. In fact, Dad might have been a bus driver and Mom a nurse.

For luxury marketers, I think the implication is that today and in the future they will need to design robust marketing programs targeted at educating the Super Rich about their brand and differentiating themselves from competitors. The implications are vast, spanning from the sales counter to inside the private jets of the Super Rich.

The readers of Elite Traveler had a happy and luxurious holiday – What our readers spent this past Holiday: 79% bought Watches spending an average of $64,600 per household; 95.5% bought jewelry spending an average of $140,800; 68.5% bought electronics at $41,400 per household; 92.4% bought fashion and accessories spending $52,5000; 98.3% donated to charities, giving $80,000 per household, and 55% used spas spending an average of $28,800 per household. Source: Prince & Associates

2. Elite Traveler off to Fast Start in 2008

Despite a shaky economy, Elite Traveler is off to a fast start in 2008. Having just closed our March/April issue, we are up some 36 percent in ad pages, climbing from 209 to 276 pages. First of all, I want to say thank you to all of our advertisers for such strong growth.

There are two key trends that I believe are driving the increase in our business:

  • As marketers seek to connect with top customers and those consumers who could be top customers in uncertain times, Elite Traveler’s BPA- audited circulation aboard private jets and mega-yachts in some 100 + countries ensures them that their advertisements are reaching consumers who are still at the peak of their luxury spending cycle.
  • The second point is that more and more, I believe that luxury companies are seeking quality over quantity. With over 318,000 readers who have a Household Income of at least $1 million +, Elite Traveler reaches more than enough wealthy consumers that advertisers are cutting waste to build their brands and top-of-mind awareness against big spenders. Why spend lots of money to build your brand with consumers who see your ad and think of their unpaid credit cards and rising mortgages when you can focus on top customers?

Our commitment remains the same: reaching the Super Rich as they travel the globe (our reader takes an average of 41 trips per year, including 11 intercontinental trips). It is hard and expensive to do, and we have two full-time executives whose sole responsibility is to increase private jet distribution by literally traveling the world and signing up jet management companies, private jet terminals, private jet operators, etc. on a one-by-one basis.

It is a market segment with an average of 4+ principal residences, and fortunately for us, traditional Mass Affluent magazines have a hard time reaching this lucrative segment with any concentration. The best they can hope for is sending copies of their magazines to houses that won’t be visited for months on end.

I like to say that for elite travelers, the private jet is their living room, and that’s where they can always find their copy of Elite Traveler and hopefully your ad!

With readers whose Average Household Income is $5.3 million, there is a substantial difference between publications such as Robb Report where the Median HHI is $183,000, Departures at $190,000 or Town & Country at $135,000. It is why perhaps Elite Traveler readers spend on average close to $250,000 on fine jewelry, nearly $150,000 in annual watch purchases and well into the six figures on fashion and accessories.

When you think about it, it is truly amazing to have readers who spend more on handbags, briefcases and shoes than the after-tax income of the readers of typical Mass Affluent publications.

As we enter our seventh year with the wind in our sails, now as always is a great time to say thank you for your support.

I am pleased to say in the next few weeks we will be unveiling some new tools to help you build your brand with our Super Rich readers and drive more high-margin sales. Stayed tuned, and again, thank you!

Elite Traveler delivers to advertisers more Super High Net Worth readers (318,000 readers every issue with a HHI of $1 million +) than Robb Report (30,000), Departures (34,000), W (30,000), Town & Country (47,000), GQ (15,000), Conde Nast Traveler (57,000) and Travel + Leisure (86,000) combined! Sources: Prince 2007/MMR 2007

3. Elite Traveler featured in Newsweek

Newsweek tapped Elite Traveler as a key media source in their coverage of the opening of Gucci’s mega-store in TrumpTower. The coverage reflects Elite Traveler’s unique position as the private jet lifestyle magazine and our Super Rich readership. The article appears below:

Despite the economy, Gucci opens the world’s largest luxury store

By Sarah Kliff

Feb 8, 2008

When Prada, Tiffany, Bulgari and Louis Vuitton are among your neighbors, you’ve got to dress to impress. That’s exactly what Gucci is doing Friday with the opening of its new Manhattan location. With 46,000 square feet sprawled over three floors at TrumpTower on Fifth Avenue, it’s being touted as the largest luxury retail store in the world.

It’s a big bet in a bad economy, but Gucci hasn’t hedged on extravagances. The company’s renowned creative director, Frida Giannini, commissioned nearly every element, including the bronzed glass walls and the free-floating Italian marble staircase set against a rosewood backdrop. Classic Gucci designs run throughout the store, and signature touches like the diamond pattern are woven into the black carpets throughout. There is, of course, an exclusive VIP lounge tucked away on the third floor with it’s own dedicated elevator, a bar, as well as private show and dressing rooms.

The Gucci store’s opulent opening makes it hard to remember that it is within mere miles of Wall Street’s economic crisis. With the stock market in continuing decline and big banks still steeped in the subprime mortgage mess, are New Yorkers in the market for a couture gown and a $700 “Gucci Loves New York” handbag? “I’m sure they would have liked better market conditions,” says Claudia D’Arpizio, a luxury-goods analyst with Bain & Company, based in Milan. “For sure, they could have been more lucky.”

But it’s not the $700 bags that are going to make or break the bank for Gucci’s new flagship, luxury goods analysts say. The ultra-wealthy consumers, those with a multimillion-dollar cushion against the market’s turbulence, are likely going to flock to Gucci’s one-of-kind store, and make big purchases-think in the $50,000 to $100,000 range. Their strategy: draw ultra-wealthy shoppers from around the United States and foreign tourists armed with strong currency. Gucci won’t disclose how much they’ve spent outfitting their store, but its upscale amenities and luxurious finishes are designed to reinforce its image as “a major fashion destination for our New York and international shoppers,” says president and CEO Mark Lee.

Luxury brands can go two ways: either make their label more affordable to attract a larger market, or move upward, appealing to wealthier customers who are willing to spend big on exclusive items. Gucci has been looking to position itself among the most high-end, exclusive brands and attract a higher-income bracket. They’re not necessarily relying on the mass market, says luxury-goods analyst Pam Danziger. “Gucci is building a flagship store to make a branding statement,” she says. “I think strategically it’s a very smart move to bring their luxury brand to a bigger presence in the United States.”

That small (over 100,000 households), ultra-wealthy demographic, while tiny, seems the best group to target in this economic decline. Over the 2007 holiday season, the “super rich”-those with a net worth of $30 million or more-averaged $82,800 in fashion and accessory spending. That’s 23 times the meager $3,600 spent by single-digit millionaires. Few, if any, have intentions of tightening their designer belts in 2008. Just over 80 percent planned to increase their spending on luxury goods and services this year, compared to a mere 3.7 percent who plan to decrease spending. “They aren’t scaling back,” says Doug Gollan, president and editor in chief of Elite Traveler, which conducted the survey. “The single-digit millionaires, the mass affluent [between $1 million and $10 million in net worth] who have just had a taste of luxury, these are the people getting impacted.”

If Gucci can attract the super rich, the investment in its ritzy retail store will pay off. “For every 100 or so people they have floating around the store, they only need one or two who came off their private jet to spend $50,000 or $100,000,” says Gollan. “That more than makes up for all the people who are scaling back.”

The readers of Elite Traveler had a happy and luxurious holiday – What our readers spent this past Holiday: 79% bought Watches spending an average of $64,600 per household; 95.5% bought jewelry spending an average of $140,800; 68.5% bought electronics at $41,400 per household; 92.4% bought fashion and accessories spending $52,5000; 98.3% donated to charities, giving $80,000 per household, and 55% used spas spending an average of $28,800 per household. Source: Prince & Associates.

4. Luxury Advertisers Caught in Wal-Mart Shocker

According to a recent article in The New York Post, luxury advertisers in Robb Report and Town & Country were caught by surprise when they found the two magazines had been using Wal-Mart to bulk up their newsstand sales.

The retailing behemoth which made its name on “everyday low prices” is believed to account for as much as 15-20 percent of newsstand sales, and certainly luxury lifestyle magazines are a nice way for its shoppers to extend their daydreams beyond blue light specials. However, it remains to be seen if luxury advertisers want their brands associated with Wal-Mart.

Interestingly, the Wal-Mart connection for Robb (which the Post also reports continues to have a for sale sign on its door) and Town & Country came to light only because the Arkansas-based superstore was dropping them and other titles that perhaps made shopping in their stores a bit depressing.

Elite Traveler delivers to advertisers more Super High Net Worth readers (318,000 readers every issue with a HHI of $1 million +) than Robb Report (30,000), Departures (34,000), W (30,000), Town & Country (47,000), GQ (15,000), Conde Nast Traveler (57,000) and Travel + Leisure (86,000) combined! Sources: Prince 2007/MMR 2007

5. Egg’s 160,000 card freeze ‘hits prudent customers’

If luxury marketers didn’t have enough to worry about in the U.S., the Wall Street Journal Europe last Wednesday reported, “the euro zone’s service sector slowed to near stagnation in January, while December retail sales plunged by a record amount.”

More pressure for Mass Affluent consumers in the UK came in the form of Egg, a UK based credit card, which is banishing over 160,000 cardholders, including many who have good histories of credit and aren’t behind on paying bills.

Egg was facing calls for an Office of Fair Trading inquiry into its decision to stop the 160,000 using their cards, according to newspaper reports.

Financial experts warned yesterday that the bank had “shot itself in the foot” and would struggle to recover as the credit crunch tightens its squeeze on the beleaguered banking industry.

Egg said it was forced to make the unprecedented move to curb overspending after a review revealed 160,000 customers had a “higher than acceptable risk profile”.

Those with a higher risk would typically mean people who spend over their credit limit or fail to make minimum repayments. But hundreds of those affected say they settle their debts every month.

Gillian Cox, of Farnham, Surrey, said she was “absolutely furious” when her credit card had been cancelled, according to a U.K. press report.

She said: “My husband and I have had an Egg card since 2001 and always paid the balance off in full each month. We are retired with no mortgage, no debts and a joint income of about £35,000.

“I phoned Egg who were unable to do anything but recite the same paragraph as was in the letter.”

When Mrs Cox contacted the credit reference agency Experian, she was told she had an “excellent” credit rating.

A fellow Egg reject called Dave from Ware, Hertfordshire, wrote on the BBC website: “My credit record is excellent and I actually took out an Egg loan three months ago.

“My Egg credit card has not been used for over six months and had £0 owing. Some customers are being ditched because in my view they are not making Egg any money.”

Last night an Egg spokesman defended the move, saying the “risk review” of its customers – which was carried out after the banking giant Citigroup bought Egg last year – was “robust and fair”.

Angela Knight, chief executive of the British Bankers Association, said Egg’s action was “a sensible way of looking after a business”.

A reader of Elite Traveler who splits his time between London, Tokyo and Paris bought a Breguet watch he saw in our Nov/Dec issue for over $100,000 from a New York retailer. It’s why we have distribution aboard private jets in over 100 countries. It’s how you reach elite travelers!

6. Big Banks Now Urge Consumers to Save, not Spend

Last year, all over New York there were ads plastered everywhere urging consumers to “Live Richly.” I assume the not so subtle message was to take out more credit cards and charge them up, and of course, adjustable home mortgages were probably on offer as well.

Of course, that was last year. Walking around the city I now notice billboards from ING Direct urging consumers, “Save Your Money.”

Times sure change fast, and I guess the big banks need some more cash now as well.

The readers of Elite Traveler had a happy and luxurious holiday – What our readers spent this past Holiday: 79% bought Watches spending an average of $64,600 per household; 95.5% bought jewelry spending an average of $140,800; 68.5% bought electronics at $41,400 per household; 92.4% bought fashion and accessories spending $52,5000; 98.3% donated to charities, giving $80,000 per household, and 55% used spas spending an average of $28,800 per household. Source: Prince & Associates.

7. Hey Mate, Want Tourists? Don’t Look to the “Travel” Magazines

With Median Household Incomes of $135,000 and $152,000 respectively, and more than 85 percent of their readers making less than $250,000, Travel + Leisure and Condé Nast Traveler have personified the charge-your-credit card, Trading Up Mass Affluent vacationer.

Of course with the Mass Affluent now Trading Down (see Elite Traveler Insider January 29, 2008 – Unity Marketing Mass Affluent Luxury Spending Index at Record Low), new research by MMR, the holy grail for ranking readership of Mass Affluent titles shows that the “suite” spot for destinations is consumers with a Household Income of at least $250,000 and preferably much more!

According to MMR, “Travel becomes more frequent as income increases. The pattern is similar and even more dramatic for destinations that may require greater spending and great affluence” and, of course, travel time.

Below is an index which shows how much more likely a consumer with a HHI of $250,000+ is to visit a country than a Mass Affluent traveler whose HHI is between $100,000 and $250,000.

  • Israel, where consumers with a HHI of $250,000 were 433 percent more likely to have visited than the Mass Affluent traveler
  • United Kingdom, where the $250,000 + HHI sector as 369 percent more likely to visit
  • Greece/Turkey at 336 percent
  • Switzerland at 330 percent
  • Spain/Portugal at 326 percent
  • Japan at 319 percent
  • Australian at 311 percent
  • Europe at 295 percent
  • Asia and South Pacific at 294 percent
  • Hawaii at 199 percent
  • Caribbean at 175 percent
  • Mexico at 154 percent

Meanwhile, new research by Prince & Associates shows in 2008 over 95% of the Super Rich with a Net Worth of $30 million + will spend as much or more this year on leisure/personal travel while 30% of the Mass Affluent are planning to spend less.

Elite Traveler delivers to advertisers more Super High Net Worth readers (318,000 readers every issue with a HHI of $1 million +) than Robb Report (30,000), Departures (34,000), W (30,000), Town & Country (47,000), GQ (15,000), Conde Nast Traveler (57,000) and Travel + Leisure (86,000) combined! Sources: Prince 2007/MMR 2007

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.