Elite Traveler – ET Insider – July 17, 2007
ET Insider – July 17, 2007
Elite Traveler Insider –
July 17, 2007
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.
Does Elite Traveler work? Two readers of Elite Traveler just made real estate purchases with Ginn Sur Mer for over $15 million!
1. 30 % of New York Flights Now by Private Jets…
How big has the private jet market become in New York? According to the Air Transport Association, growth of private jets operating from Teterboro, White Plains, Morristown and other airports serving New York in addition to Newark, JFK and LaGuardia mean that private jet flights now account for 30 percent of flights to and from the New York area.
I think you’ll agree that for any luxury company that considers New York an important market – even more so if they are opening a boutique or expanding their presence here – they will want to target these Super Rich spenders to drive sales.
To cite some examples: 89% of private jet travelers bought jewelry last year, spending an average of $247,000; 32% bought watches with an average spend of $147,000; 90% purchased fashion and accessories (handbags, shoes and briefcases) spending $117,000 per household.
Elite Traveler can bring luxury brands closer to these high-spending consumers in New York with distribution at over 15 private jet terminals (FBOs) serving six airports, as well as heliports, charter operators, corporate flight departments and private jet caterers. Ask us about placing collateral in New York area private jet terminals and gift bag placements on planes as well our database of New York-based private jet owners.
Does Elite Traveler work? “Very beautiful magazine, our CEO’s wife loves it when the new shipments arrive, it’s her favorite magazine” Ronn Nelson – Northwestern Mutual Air, Operations Milwaukee, WI
2. The Super Rich Pull Away and Spend…
The world’s 100,000 “super-rich” last year extended their lead over the merely affluent, according to a new study published by Merrill Lynch and Cap Gemini.
Last year, the assets of those with more than $30 million to invest – the so-called ultra-high net worth individuals – expanded by 16.8%. By comparison, people with assets of $1- $5 million saw their wealth grow by 6.4%.
The number of ultra-high net worth individuals also swelled by more than 10 percent – more than the growth in the total pool of wealthy individuals, according to the survey.
About 35 % of all worldwide wealth is in the hands of just 95,000 people with assets of more than $30 million, the report noted.
The study, prepared by Merrill Lynch and Cap Gemini, highlights a growing gap between the super-rich and those who would normally consider themselves wealthy.
The developed world continues to dominate the ranks of the world’s rich: 64 percent of high net worth individuals live in the United States, Japan, Germany, France or the UK. But in Singapore, India, Indonesia and Russia, the number of high net worth individuals grew by more than 15% last year.
The world’s rich devote about a quarter of their “investments of passion” to yachts, planes and other big-ticket collectibles and about a fifth to art, according to a rare breakdown of their spending.
The 2007 World Wealth Report, widely used as a benchmark for the wealth management industry, estimated that assets held by the world’s richest people rose by 11 percent to US$37 billion last year, driving demand for luxury lifestyles and brands.
About 18 percent of “passion” spending went to jewelry, 14 percent to “other collectibles” such as wine, antiques and coins, and about 6 percent went to investments in sports such as buying teams, race horses or sailboats, the study showed.
For luxury marketers, there is a simple way to reach these Super Rich spenders: private jet marketing!
Does Elite Traveler work? “Our clients enjoy reading the magazine cover to cover. They enjoy the high quality and look forward to the Hotel, Spa and Resort issues which are an extra perk” Jeanette Wuisman – Landmark Aviation, Dallas, TX
3. In St. Moritz, The Halls of Luxuria Were Alive with Private Jet Talk…
Private jets, I am happy to say, were a continued reference point during the recent Luxuria/Wall Street Journal Europe/Luxury Marketing Council Summit 2007 at Badrutt’s Palace in St. Moritz.
While conference co-chair Mary Jo Jacobi, who was responsible for building HSBC as a Global Super Brand literally overnight through its advertising on jet bridges at key international hubs back in the 90s, started the day by describing the hassles of commercial travel today, former Harrod’s Director Michael Cole told the group of luxury marketers, their target market of core consumers “aren’t on commercial aircraft. They have their own jets and shares of jets or sometimes jets and helicopters. They want more and expect to pay more,” he said.
During a break, Janelle Jenvey of Bulgari noted it’s not unusual to meet top customers on their jets, often flying from one place to another with them while selling the latest baubles.
Oberoi’s European Vice President Glenn Carroll noted the Indian luxury group will soon debut new programs using private jets to shuttle customers between its resorts in style, while NetJets Europe’s Sam Ekyn spoke of 40% annualized growth and Air Partner’s Richard Thomas projected the number of managed jets at its Biggin Hill location serving London will mushroom from seven to 30. Its marketing department has grown from just himself to eight in just over two years.
Bringing the daylong conversation to media, former top editorial executive at British GQ and Esquire Peter Howarth spoke about how the distribution model for traditional glossy magazines is broken. He recounted a recent conversation with Sir Richard Branson who noted that the magazine model of selling on newsstands and highly discounted and incentive laden subscriptions is the same model used 50 years ago.
It did make me feel good in that one of our beliefs in launching Elite Traveler was that magazines today are not effective in targeting the Super Rich. Our successful BPA-audited distribution model of placing Elite Traveler aboard private jets in over 90 countries around the world ensures that wherever these modern day tycoons happen to be, our magazine and advertisers’ advertising are there with them.
Dan Bobby, the managing director of brand-building company Dave (whose clients include Vertu and Jumeirah International), said 90 percent of today’s Super Rich are self-made, a figure that exactly matches the research Elite Traveler has commissioned from Prince & Associates.
Karen Bacchus, the Global Business Development Manager for the Reserve Brands Group at Diageo, spoke about the importance of “desirable venues” for branding her spirits.
Karen and Dan’s comments made me think about the huge opportunity for luxury brands as this first generation of Super Rich learns about luxury. From the research we have done, many of these consumers had very little knowledge of luxury or luxury brands prior to achieving their fabulous wealth. A recent American Express study notes that many of these Super Rich came from blue collar backgrounds.
My point is that advertising and editorial in Elite Traveler is key to this education process. Obviously, these brands also advertise in Mass Affluent media; however, when they are positioned in Elite Traveler it is a clear signal to that reader on his or her private jet that this brand wants to be part of the reader’s private jet lifestyle.
I particularly liked a point made by Michael Hayman of The Communications Group whose company counsels De Beers (DTC), Coutts & Co. and the Government of Dubai.
He noted that in the drive to create brand awareness, target consumers only have a limited bandwidth to absorb the multitude of marketing messages that barrage them. “As attention goes up in one area, it goes down in another,” he said.
For me, that really underlined the tremendous marketing opportunity of advertising to the Super Rich within the confines of their private jet – the ultimate luxury environment where they are relaxed and able to really focus on expanding their shopping list!
Does Elite Traveler work? “I’ve seen a lot of people reading Elite Traveler; they love the magazine they can’t believe our FBO gives it away for free” Carol Hammonds – Hammonds Air Service, Houma, LA
4. BBC Piece Points to “Two Britains”…
According to a new BBC report, the recent trading statement from Savills, the property agent, is fresh evidence of a decoupling between Britain’s two economies, that of the super-rich and that of the majority of Britons.
The report summary talks about a cooling of the UK mainstream residential market, with the market for new homes in “certain provincial cities” showing signs of “over-supply”.
Savills says that housing demand in London and the South-East remains strong, which may reinforce the determination of the hawks to raise interest rates this week.
However interest rates have almost zero influence over is what Savills calls the “super-prime markets”, or homes selling for many millions of pounds each.
These are still soaring in value, due in large part to “interest from international purchasers” (the Russians, the Chinese, Arabs, the non-British partners in hedge funds and private equity).
The country-hopping billionaire class is untouched by whether the Bank of England raises interest rates by ¼ per cent or not. They are the human manifestation of another phenomenon which the Bank can barely influence at all – the loose international credit conditions which have led to the boom in hedge funds and private equity, whose spoils have swelled the ranks of the super-rich.
The economy for most Britons can and probably will slow without much of an impact on the very wealthy. But if the wealthiest were to feel the pinch from chillier conditions in global financial markets, well then we’d all have a bad case of the sniffles, or worse.
Does Elite Traveler work? “We distribute average stuff like Controller and GA News, but Elite Traveler is the best by far. I love your magazine!” Sherri Palmer – Pacific States Aviation, Concord, CA
5. The Private Jet Lifestyle…It’s a Family Thing…
The Wall Street Journal recently featured a great piece about how the private jet lifestyle is not just a CEO thing anymore — it’s about the entire family. Here is an excerpt:
When Nicki Mulally wants to travel, she can usually hop on one of Ford Motor Co.’s Falcon twin-turbo jets. The reason: She’s married to Alan Mulally, Ford’s chief executive.
To woo Mr. Mulally from Boeing Co. last fall, Ford promised that his wife, five children and guests could fly on corporate aircraft without him, as long as he authorizes the travel. Personal flights by Mr. Mulally and family members cost Ford $172,974 during his four months with the auto maker last year. A Ford spokesman declines to disclose the family-member and guest component of that sum.
The families of top corporate executives lead gilded lives, supported by multimillion-dollar paychecks and cushy perquisites. But many relatives of executives and directors get perks of their own.
The regal treatment is hardly new. But new federal executive-compensation rules are making public more spousal perks. The rules require companies to disclose executive and director benefits valued at $10,000 or more; prior rules covered only managers and set a threshold of $50,000.
The most common goody? Travel. Seventy of 350 major U.S. businesses pay for some flights, hotel stays or other travel expenses for senior officers’ spouses, concludes an analysis of their latest proxies by Mercer Human Resource Consulting for The Wall Street Journal.
Like Mrs. Mulally, the wives of CEOs at American International Group Inc. and Raytheon Co. can fly unaccompanied on company jets at corporate expense. Until recently, so too could Diane Smith, wife of FedEx Corp. founder Frederick W. Smith. A new FedEx policy adopted in March requires Mr. Smith to pay for most “incremental” costs of his and family members’ personal flights, a company spokesman says.
Ford spokesman Tom Hoyt says directors agreed to let Mr. Mulally’s relatives and guests use corporate jets so the CEO could “remain on the job while his family travels to meet him.” Citing security concerns, Ford requires Mr. Mulally to travel on company aircraft, even on personal trips. Ford paid Mr. Mulally $28.2 million last year, including an $18.5 million bonus.
AIG’s security rules require Antoinette Sullivan to travel on one of the insurer’s six corporate jets even when CEO Martin J. Sullivan stays behind. Christopher Winans, an AIG spokesman, says Mrs. Sullivan “very rarely uses the corporate aircraft alone.” He declines to discuss specifics for security reasons. Mr. Sullivan’s 2006 pay package was valued at $21.2 million; that included $257,498 for personal use of corporate planes by Mr. Sullivan and his family.
Cheryl Swanson twice flew by herself to Raytheon-related business events in the four years that husband William H. Swanson has been CEO, says Pam Wickham, vice president of corporate affairs. She declines to discuss specifics. The defense contractor spent $3,184 last year for Mrs. Swanson’s travel, Ms. Wickham says.
Rockwell Automation Inc. paid for “less than $4,400” of “leisure activities” for mates of executives and directors during two board retreats in the year ended Sept. 30, the manufacturer states in its latest proxy. Spokesman John Bernaden declines to divulge details. Leisure activities at board retreats often include spa treatments, golf or sightseeing excursions.
There’s a rich tradition of such perks. Lorna Wendt says she accompanied ex-husband Gary C. Wendt on lavish sales-incentive trips abroad, including a two-week cruise, when he was a top General Electric Co. executive. “It was totally R&R,” Ms. Wendt recalls. “If I wanted to have a massage every day, I could have one.”
Occidental Petroleum Corp. CEO Ray Irani received compensation last year valued at $416.3 million, among the richest corporate pay packages ever. That includes $61,000 covered by shareholders so his wife could accompany him on trips to the Middle East, Asia and elsewhere.
Under a policy approved by independent directors, the oil company also reimbursed Dr. Irani $45,306 for the taxes he would owe on his wife’s flights. An Occidental spokesman says the company covers Mrs. Irani’s travel “where it is expected that participants’ spouses will attend and where it is believed to be beneficial” to the company.