ET Insider – January 24, 2006

Elite Traveler Insider –

January 24, 2006

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 elite luxury market. This information is provided to offer a better understanding of how to target the Elite Affluent market, its 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 uber wealthy 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. An Elite Year for Elite Traveler…

2. CEO’s and Their Golden Pay….

3. The Rich are Getting – At Least Twice as Rich…

4. Super Bowl Brings Out Super Jets…

5. Jewelry Spending By Super Rich Booming…

Famous elite travelers recently spotted reading Elite Traveler in private jet airports: Gwenyth Paltrow, Jessica Simpson, Katie Holmes, Paris Hilton, Dave Matthews, Jennifer Lopez, Heather Locklear, Kid Rock, Jewel, Nicole Richie, Beyonce Knowles, Shakira, Salma Hayek, Arnold Schwarzenegger, Goldie Hawn, Jay Leno, Bill Clinton, Jerry Seinfeld, and Elton John.

“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

1. AN ELITE YEAR FOR ELITE TRAVELER….

As we start 2006, it is hard to believe it’s been five years since we launched Elite Traveler, so with that in mind, I wanted to give you some brief highlights from 2005 and share with you some exciting news for 2006.

When we first launched, talking about private jets was a fairly uncommon subject. Quite frankly, most people were totally unfamiliar with the market even though it had been rapidly growing during the second half of the 90’s. Today, I can’t open a magazine or newspaper without reading stories about private jets or seeing private jets being featured in advertisements. I find it flattering when other magazines talk about having their publications on private jets – usually they are referring to a hundred copies or less in a couple locations. Of course, Elite Traveler’s BPA-audited circulation is over 130,000 worldwide with over 4,000 distribution points! No other publication penetrates and is read by private jet travelers like Elite Traveler.

As Geraldine McKenna, the CEO of Maybourne Hotel Group (you know, Claridges, etc.) recently said to me, “Private jets are the new First Class.”

More and more I find when we chat with luxury marketers, there is an intense interest in how to better tap into the private jet market. After all, the cost of flying by private jet is anywhere between $7,000 to $10,000 per hour, and typically the people aboard have annual incomes of well over $1 million and Net Worth of $10 million +. Even better, a magazine aboard these jets like Elite Traveler reaches these super rich folks when they actually have time to sit back and read. Sure, rich people subscribe to other magazines, but what happens when that copy of Town & Country is sitting in a house in Palm Beach that won’t be seen again for six months? The problem with these mass affluent publications (magazines whose subscribers mainly make less than $200,000 per year) is that they have a tremendous amount of waste, and often the few rich subscribers they have miss most of the issues as they globe-trot on their private jets.

For this and many reasons, I am happy to report 2005 was a banner year for Elite Traveler. We are a small privately held company battling the billion dollar conglomerates. However, we are doing quite well. In 2005, we were able to increase ad sales by approximately 30%, a figure that translates into several million dollars. Small, but for us, a good sign of growth and a reason to say thank you to the many companies that advertise with us. Another measure of our success was ad page growth, which rose from 436 pages to 520 pages in 2005, a gain of almost 20% at a time when many magazines reported figures that were flat or down.

The past year brought us many new advertisers, including the likes of Rover, Audi, Polo Ralph Lauren, British Airways and Brioni while in the March/April issue you will see Louis Vuitton and Gucci.

On the editorial side, 2005 brought Elite Traveler an Eddie Award from Folio Magazine, the 2005 Benjamin Franklin Award for printing production excellence, the APEX Award for Quality Editorial (our third time), and the North American Travel Journalist Excellence in Editorial Award for the third straight year. I know of no other travel or luxury lifestyle magazine that had a bigger take of awards last year!

In our March/April issue (while Travel + Leisure is introducing a Money Editor to advise readers on how to better budget for trips), Elite Traveler will introduce a Fashion Insider column by acclaimed International Herald Tribune Fashion Reporter Jessica Michault, who has studied the past 10 years under the legendary Suzy Menkes. Jessica’s column enhances our leading coverage of fashion, jewelry, timepieces and accessories even further. As you might expect and our elite travelers certainly do, budget will not be an object. Our readers spent over $200,000 last year on jewelry, fashion and accessories according to research by Prince & Associates.

It is nice to see so many in the luxury market are now more focused than ever on finding new ways to get more dollars from the super rich who have the money to spend. For all of you who have supported Elite Traveler and use our publication as a way to target the elite spenders, I want to start 2006 by saying Thank You!

“Other publications fail in comparison when compared to Elite Traveler magazine. ”

– Samuel Huskin – Flower Aviation, Colorado Springs, CO

2. CEO’S AND THEIR GOLDEN PAY….

In 1960, the ratio of the average Fortune 500 CEO’s pay to the U.S. president’s salary was 2-to-1, according to The Wall Street Journal. Today it is 30-to-1. In 1930, Babe Ruth made $80,000. When asked why he made more than President Hoover, he responded: “I had a better year than he did.”

Of course, the Babe’s pay pales by comparison to Tiger Woods, currently the highest paid athlete at $80 million per year. On a per day basis, that’s $219,000 – over 50% more than the average Town & Country reader makes in a year – before taxes! Tiger’s take pales in comparison with Terry Semel who Yahoo’d to the tune of $230 million as CEO of the internet company in 2004 – a cool $630,000 – or more than enough to make the day of any store manager on Rodeo Drive or Madison Avenue. By the way, for companies that want to target big spending luxury customers, note the average CEO’s salary in the U.S. is 475 times greater than the average worker’s salary! In fact, the Median Household Income of the Elite Traveler reader is $1.7 million – about 10 times higher than either Departures or Robb Report, the next two closest magazines as ranked by income. Of course, some times smart CEO’s don’t even have to write the check – they just pick the prize. Case in point: Former GE CEO Jack Welch’s retirement package included floor-level seats at the New York Knicks, Grand Tier seating at the Metropolitan Opera and monthly flower deliveries.

About half of Elite Traveler readers describe their source of wealth as C-Level Executive positions or ownership of large private companies, so for luxury marketers who would like to tap this market, give us a call!

“Our facility exclusively distributes only Elite Traveler because it’s the best high end publication. We have lots of clients who request it.”

– Jim Allbaugh — Career Lab, Paker, CO

3. THE RICH ARE GETTING – AT LEAST TWICE AS RICH…

For luxury marketers who are chasing big spenders, the percent of income that the top half-of-one percent brought home has increased to 11% of all income – more than double over the past 25 years, according to Internal Revenue Service Data evaluated by University of California Berkley economist Emmanuel Saez.

Clearly, something continues to favor the fortunate: Although economic growth in the past few years has been robust and productivity has surged, wages of typical workers in the middle aren’t rising, according to a recent New York Times article. Where’s the money going? The big story isn’t that capital and profits are squeezing labor and wages, say Northwestern University economists Robert Gordon and Ian Dew-Becker. Labor’s share has been shrinking lately, yes, but its slice of the pie hasn’t changed much in the past 20 years. The money is going in wages paid to executives and professionals at the top – mainly in the C-Suite. In fact, think of all those Vice Presidents now flying Economy Class while top executives climb aboard corporate jets. The same is happening in wages and income. Elite Traveler is the magazine that reflects the private jet lifestyle of this top tier, thus providing the perfect marketing environment for luxury brands.

“Women have complimented the jewelry. The following companies keep Elite Traveler in their aircrafts – Net Jets, Charter Communications, Lockheed Martin, US Dept. of Treasury.”

– Anah Joffroy – Signature Flight Support, Engelwood, CO

4. SUPER BOWL BRINGS OUT SUPER JETS…

Marquis Jet, which sells access to the Netjets fleet of private jets in 25-hour increments ranging from slightly over $100,000 to $300,000 depending on jet size, says the Super Bowl will be a super day for private jet travel. The company told Elite Traveler Insider they are estimating over 600 private jets will descend on Detroit for the big game. One Marquis Jet customer confirmed he needed a jet just this past Sunday night – Pittsburgh Steeler Quarterback Ben Roethlisberger booked a plane to fly his family to the game. And while flying privately gives you the option to fly where you want, when you want – some customers like to figure out the details in advance. Even though the flight from New York to Detroit is under two hours, one customer from the Big Apple has already ordered a Porterhouse Steak for 8, plus creamed spinach and home fried potatoes from Peter Luger’s steakhouse. Elite Traveler will of course be with these rich customers – we have copies aboard all Netjets aircraft and we are distributed at all the private jet terminals serving Detroit, so advertisers in our January/February issue are getting bonus exposure to the VVIPs who will go to and from the Super Bowl by private jet.

“I’ve had to increase my copies the magazine goes so fast, I try to keep one for myself when I can. The pictures inside are so breath taking.”

– Donna Reed – YYJ-FBO Services, Canada

5. JEWELRY SPENDING BY SUPER RICH BOOMING…

A recent article in Women’s Wear Daily outlined the boom in super rich spending in jewelry – something we have been reporting on for some time.

High-end jeweler Van Cleef & Arpels unveiled its biggest collection of high jewelry to clients last month in Hong Kong and it was greeted with the “best success for this type of sale for us ever in Asia,” Stanislas de Quercize, its CEO said.

French jeweler Boucheron presented its biggest high jewelry collection in July. Most of the 30 pieces sold in the first two months. By September, 90 percent had found owners, according to WWD.

Cartier last month unveiled an exceptional 13-piece high jewelry collection in Paris to mark the reopening of its flagship store. Cartier president Bernard Fornas said many items – costing as much as 23 million euros, or $27.1 million – were already spoken for immediately after the launch.

Forty more pieces were produced to back up the main collection, said Fornas, who added the house’s Caresse d’Orchidees line, unveiled this past fall, largely sold out before the holidays.

According to WWD, Cartier has the biggest high jewelry business. The daily reported it has had very high double-digit growth in the category during 2005.

Fornas stated in the article, “A lot of people want beautiful things. There’s a lot of cash around: Look at the private aircraft business. It’s booming for aircraft at $50 million and $100 million, without even thinking of upkeep and pilot costs.” We certainly agree with Mr. Fornas, and as he may know, the number of private jets is projected to double over the next 10-15 years meaning the high-end jewelry market is likely to continue its expansion.

Can you have beautiful private jets without beautiful women wearing beautiful jewelry?

“People want to have the impossible. They want the incredible,” the head of Cartier noted.

Price resistance has deteriorated. While the million-dollar mark used to get a you’ve-got-to-be-kidding roll of the eyes, today prices stretch into the eight-figure range.

“You can talk a million dollars today without someone laughing at you,” said Catherine Bove, director of Chopard’s Madison Avenue boutique.

Again, we agree. According to Prince and Associates the average reader of Elite Traveler spent over $200,000 last year on jewelry and timepieces. And with our database of private jet owners worldwide and our exclusive Elite Retreat reader events, only Elite Traveler offers the high-end market a unique way to cover this market comprehensively.

“Of all the magazines we’ve seen, none are as good as this one, keep up the good work!”

– James McDuff — Mercury Air Center Jones Island, SC