Elite Traveler – ET Insider – February 26, 2008
ET Insider – February 26, 2008
Elite Traveler Insider –
February 26, 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.
YOUR BEST CUSTOMERS ARE HERE: Elite Traveler delivers more readers (318,000) with a $1 million + Household Income than Departures (34,000), Robb Report (30,000), Town and Country (47,000), Vanity Fair (44,000) and The Wall Street Journal (128,000) combined. Source: Prince & Associates for ET, MMR for others
1. Record Year for Private Jet Deliveries
Mass market auto makers have been reeling on falling sales, but for those who sell the chariots of the Super Rich — private jets — 2007 was another record year. Deliveries of private jets hit a new high last year, supported by increasing demand in global markets, with over half of deliveries outside the United States for the first time ever. Interesting, nearly 40 percent of Elite Traveler’s circulation is now outside the U.S. and in over 100 countries!
Jet makers – led by Canada’s Bombardier, the US’s Gulfstream, Cessna and Hawker Beechcraft and Dassault of France – delivered more than 1,000 jets for the first time. With large order backlogs at most manufacturers and waiting lists of two to three years for the most sought-after jets, deliveries are forecast to remain high this year, according to numerous reports.
Private aviation has enjoyed an unprecedented boom in the past three years, as executives and rich individuals have sought to avoid the hassle, inconvenience and delays of flying through congested hub airports and to use business jets to increase executive productivity.
The General Aviation Manufacturers Association said worldwide business jet deliveries had risen 28.4 percent from 886 in 2006 to a record 1,138 last year. Alan Klapmeier, chairman of Gama, said “a strong worldwide market was a driving factor for general aviation in 2007”.
He said manufacturer backlogs were “strong and we think this bodes well for 2008 and the years beyond”.
The latest forecast by Honeywell Aerospace, a leading supplier to the sector, projects that business jet deliveries will rise to more than 1,300 in 2008. Bombardier was the leading maker of business jets measured by the value of deliveries, while Cessna, a subsidiary of Textron, which dominates the segments for light and mid-sized jets, delivered the highest number of executive jets.
Demand is being stimulated by a surge in product development, and last year marked the first deliveries of significant numbers of very light jets, an emerging segment. Eclipse Aviation delivered 98 of its Eclipse 500 VLJs last year, while Cessna delivered 45 of its entry level Citation Mustangs. Embraer of Brazil is due to start deliveries of its four-seat Phenom 100 very light jets in the summer.
At the other end of the market, Aerion, the US advanced engineering group, is seeking to reintroduce commercial supersonic flight. Last year it said that it had secured its first letters of intent from potential customers for about 20 of its planned supersonic business jets
SUPREME LUXURY: 91% of Elite Traveler readers consider us “higher quality” than other magazines. Source: Prince & Associates
2. Want a Guarantee Your Advertising will Reach the Target? Luxus
The old Victor Kiam commercial for Norelco shavers had the owner pitching a close shave, by saying something along the lines, “I liked it so much I bought the company.”
Well, we are saying the same about Luxus Networks, the world’s largest provider of private jet terminal signage which is now a division of Universal Media and part of the Elite Traveler family.
With some 60 locations in the highest traffic locations in North America, including the East 34th Street Heliport in Manhattan, Luxus offers the guarantee every advertiser wants – the right person is going to see my ad!
Unlike most out-of-home advertising that is in the Mass environment of roadway signs and commercial airports, Luxus Networks provides high-quality back-lit signs in premium locations in the private jet terminal.
The signs are so positioned in a way “only a blind man will miss them,” noted Luxus National Sales Manager Kevin Murphy.
Most important, private jet terminals provide luxury advertisers with the pure demographic of the Super Rich. Typical wait time in the terminal is 20-30 minutes as most private jets go out with four to six passengers typically arriving from two to three separate locations.
Of course Luxus is more than high-impact, can’t miss static backlit signs. Once seated, elite travelers are entertained by Luxus Digital, giant flat screen televisions that play an ongoing loop of sponsored luxury programming, from runways shows in Paris and Milan, to product launches, test drives, the hottest in elite technology, the newest in elite real estate and more.
Luxus provides even more impact by placing collateral for advertising partners in the lounge, making a Luxus program a literal marketing “Triple Play.”
“First the customer walks into the terminal, sees the large back-lit ad. As he or she sits down and has a coffee, they can pick up a collateral piece to see our partner’s latest products, and before the coffee gets cold, they are watching the product come to life on Luxus Digital,” explains Michael Rix, President and Chief Operating Officer.
Luxus Networks’ coverage of prime locations means that Luxus is where your top retail locations and wholesale partners are. This allows you to drive sales to local outlets, promote low traffic locations, invite customers to new stores and much more: Think fashion and accessory displays for fashion companies, pouring opportunities for wine and spirits brands, or car displays for auto companies.
For the full Luxus Networks media kit and list of out-of-home locations, go to www.elitetraveler.com/business/luxus.html or email us at email@example.com with the name of your company and location and a representative will contact you.
OUR READERS LIKE WHAT THEY SEE: 88% of Elite Traveler readers like our “design and format”. Source: Prince & Associates
3. Luxury Guru Larry Pimentel Reveals Economic Outlook Research
In the world of luxury, SeaDream Yacht Club founder and Co-Owner Larry Pimentel is one of the most sought after speakers, known for his customer- focused perspective.
With inventory on his two mini cruise ships (which are designed to be luxury yachts for a mere 100 people) nearly sold out for 2008, Pimentel wanted to get a pulse on what his well-heeled clients were thinking, as apparently, despite all the doom and gloom, they were continuing to book his pricy trips. About half of his capacity is full ship charters, so many of his customers are literally spending millions of dollars or more for a week of pleasure for family, friends and business associates.
Identifying its top 5,000 customers by spend, Pimentel took the decision to email them a survey (after a debate about whether to mail or email). The 24 percent response rate showed that these wealthy travelers are definitely wired in. It also follows that with many of the Super Rich maintaining multiple primary residences, emails are often a good way to catch them (as they get on and off their private jets).
Pimentel asked this lofty group to make predictions not only about their own spending, but about what they expected other Upper Income and Middle Income consumers to do in response to the current economic tremors. As Pimentel left it to each respondent to self-define the categories, the survey doesn’t have the typical Household Income and Net Worth labels to attach to the two segments, but perhaps not surprisingly (and a very close match with some recent Prince Research commissioned by Elite Traveler), the wealthy folks Pimentel surveyed believe the fortunes for the Upper End will be much better than the Middle.
According to the survey, SeaDream’s past passengers indicated the majority of upper income households (65.3 percent) will continue to travel as usual for rest, recreation and other leisure pursuits. About a third (34.2 percent) stated some travel would be curtailed and only .06 percent said Upper Income households would curtail all travel.
As SeaDream’s clientele includes CEOs, Royalty, Billionaires and the like, it was interesting that 71 percent of these opinion leaders believe the U.S. is already in a recession (74 percent of the sample is North America based, with 26 percent based in Europe) but 80 percent said the recession will be short term without defining what period that is. Seventy-one percent also said the US government stimulus package will not help the nation as a whole, and 74.5 percent said the election year is a negative for the economy.
When asked if stock market volatility was “just an inevitable swing,” 78.3 percent replied “Yes.” The question “Will the stock market correct itself?” drew 57.2 percent agreeing, with a majority stating it would correct itself but “Only after several years of volatility.”
BULLSEYE FOR YOUR AD DOLLARS: Only Elite Traveler delivers to luxury advertisers the Super Rich wherever in the world they happen to be via BPA audited distribution aboard private jets and mega-yachts in over 100 countries worldwide!
4. Super Rich Marketing Tip: Where did the Super Rich Come From?
Many of my friends were surprised when they heard I co-authored a book. The main reason, I think, is that I am not really a book reader. I read a lot, but mostly stick to magazines and newspapers unless it’s something by Jack Welch or a particularly trendy business book.
That said, I was very flattered by the positive feedback for “The Sky’s the Limit, Marketing Luxury to the New Jet Set.” While most of the credit goes to researchers Russ Prince and Hannah Shaw Grove, plus our chairman Carl Ruderman who is basically an in-house focus group, I figured I might as well use this newsletter as an opportunity to share with you some of the most insightful soundbites for those of you who didn’t have a chance to read the book.
So consider this the first in a series.
Let me start by saying when we launched Elite Traveler in 2001, I thought being an outsider to the luxury industry was a huge disadvantage. However, the longer I am around, I think it really is a huge advantage. It is the old adage of not being able to see the forest through the trees.
I believe anyone who is in an industry suffers from this challenge. I remember growing up, when my father who was in the airline business and then travel publishing, used to tell all of my mother’s relatives where they should travel to as if they had unlimted budgets. His perspective of course was tainted in that we traveled pretty much for free whereas my mom’s relatives probably were in price shock if they actually tried to follow through on any of my dad’s recommended itineraries.
You may remember in the last Insider (February 12, 2008) I cited a column by The Wall Street Journal’s Robert Frank which laid out that well over 90 percent of today’s Super Rich are self-made.
The insight for luxury marketers is that most of these Super Rich became Super Rich in the past decade.
The second key insight is that they are new to luxury. They came generally from a Middle Class background where Mom could have been a nurse and Dad a teacher. In the case of celebrities and athletes, many times they came from lower income areas.
As they grew up and struggled to make ends meet before hitting it big, they weren’t reading GQ, Vogue, W, Vanity Fair, Robb Report and the like. Let me repeat that: The Super Rich today were not the “Trading Up” aspirational consumer that charged their credit cards to buy a Zegna tie. If they charged their credit cards, it was probably to finance their business, and if they had any spare time to read, it was probably trade magazines and journals as they sweated every drop of energy into securing their livelihood.
Please reread the above paragraph, because it is critical as you think about marketing to the Super Rich.
Here is something that should keep you up at night: You’re best customers and those who can be your best customers may have gone through their first 30 or 40 years on this planet and never heard of your brand!
For savy marketers, this is a gold mine waiting for you. In “The Sky’s the Limit” we closely examined why these newly Super Rich consumers buy what they buy, and created three buying profiles. Next issue we will talk about The Three Faces. In the meantime, remember that when you think about the Trading Up (now Trading Down) consumer and the Super Rich of today, you are talking about two separate people, and today’s Super Rich were not – I repeat – not yesterday’s Trading Up consumer.
WOW: The Average Annual Household Income of the Elite Traveler reader is $5.3 million and Average Age is 41. Source: Prince & Associates
5. Can 10,000 or 300,000 Super Rich Change Your Business?
In 2005, the number of taxpayers drawing in $10 million or more stood at 13,776, and this handful of taxpayers pulled in a combined $376 billion in income for the U.S. tax paying base.
During the period between 2000 and 2005, the number of taxpayers drawing in more than $1 million each went from 239,685 in 2000 to 303,817 in 2005-a growth of 26 percent. These figures have grown even more since! Today, according to the MMR Affluent Survey there are over 223,000 Households in the U.S. Making at least $1 million.
Furthermore, Cap Gemini reports that the Super Rich with at least $30 million in assets to invest are the fastest growing segment of the Super Rich.
“These consumers should be the primary target of any luxury marketer,” noted High Net Worth researcher Russ Prince. Prince makes the case that most luxury marketers, be it real estate developers selling several hundred units, watchmakers selling 10,000 or so high-end watches or automakers selling from a couple thousand ultra-luxury vehicles to even 100,000 vehicles should start at the top of the luxury pyramid where the fish are always biting. Among the book’s findings were that the average private jet owner spends over $500,000 per year on home décor, about $250,000 on jewelry, some $150,000 on watches, and over $200,000 on automobiles.