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Elite Traveler – ET Insider – June 15, 2010

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ET Insider – June 15, 2010

Elite Traveler Insider –

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June 15, 2010

Elite Traveler Insider

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. Household Income? Net Worth? Maybe its time for a New Measurement of Who is a Top Luxury Prospect

2. Elite Traveler Superyachts: A New Magazine from Elite Traveler

3. Yes, It’s Flattering to be Copied (Again)

4. Leaving Las Vegas, Happy With Money

Not another magazine or newspaper in that stack of unread mail: With over six private jet trips every two months, that’s at least six chances for wealthy private jet travelers to see your advertisement in Elite Traveler. And even better, share it with friends on the jet!

1. Household Income? Net Worth? Maybe its time for a New Measurement of Who is Top Luxury Prospect?

Scott Burns, a principal in Asset Builder and a syndicated columnist, recently put together a word chart every luxury marketing executive should tape to the wall, desk, cube or even forehead. I think more and more the recession is making everyone understand that while many luxury products and services have fans, ambassadors, etc., the key to sales is finding those consumers who can actually afford to buy the product. Many fans can’t and never will.

The interesting point is that for those who want to use Net Worth or Asset Value to determine what makes a good prospect, probably a new formula is in order that will combine Household Income and Net Worth. The point, as you will see, is that somebody with a Net Worth of $3.7 million generates less than $70,000 in annual income from that money.

Burns’ view: “We can answer the question with a visit to our friends at the Internal Revenue Service. On its website, the IRS regularly provides a distribution of income analysis that shows the threshold income needed to be in the top 1 percent, 5 percent, 10 percent, 25 percent and 50 percent of households in America.

Describing all rich people as filthy rich isn’t very useful. So I have created five categories of rich that match the percentile distinctions used by the IRS. They are:

The merely dirty rich. This is entry-level wealth, the kind you need to get to the middle of the income heap, the 50th percentile. This year, that requires $34,511 of income, which, in turn, requires having $1,845,500 in savings. It’s a good reason to keep your day job, because it’s like having more than a million dollars – as long as you don’t try living the way you think millionaires should live.

The soiled rich. This is the entry level for the top 25 percent – the level used in my Life of Riley Index. You’ll need an income of $69,834 to join this group, which will require having $3,734,300.

The lousy rich. This level, the top 10 percent of households, requires an income of at least $118,626, or capital of $6,343,600. This may seem like a lot of money, but Harvard doesn’t even consider it “middle income.”

The filthy rich. This year you’re probably in the top 5 percent of households if your income is $167,983. To have that income without working, you would need $8,983,000.

The truly smutty rich. Being in the top 5 or 10 percent is a bit like winning the silver or bronze in the Olympics. It’s certainly an accomplishment – way, way better than most people – but it isn’t the top 1 percent. To be there, you need an income of $430,446. That, in turn, would require a whopping $23,018,500 in savings and investments.”

With 41 trips per year, including 11 intercontinental trips and 3+ principal residences, we know where you’ll find elite travelers: in their private jets and in private jet terminals. It’s why we’ve invested in providing BPA audited circulation to private jets and private jet terminals in over 100 countries.

2. Elite Traveler Superyachts: A New Magazine from Elite Traveler

Many of you know that earlier this year, in a period when many magazines were closing down, hunkering down and doing whatever could be done just to survive, Elite Traveler was acquired by Progressive Media Group via an investment into a new company, Elite Luxury Publishing. With substantial investment we have been busy hiring, and now we are happy to announce our first new product: Elite Traveler Superyachts.

Copying the Elite Traveler circulation model of finding the Super Rich wherever in the world they happen to be via our BPA audited circulation in private jets and private jet terminals (Elite Traveler remains after 10 years the only publication targeting private jet passengers to have its circulation claims successfully audited)Elite Traveler Superyachts will be distributed worldwide in private jet terminals on the way to cruising destinations, in marinas and aboard super yachts (defined by the industry as 80 feet and up) with two seasonal editions, one for the Winter Season and the second for the Summer.

A New Approach: The yachting industry is not short of excellent magazines on these beautiful superyachts. I enjoy flipping through the pages with stunning photography of the yachts and boat after boat. That’s not what we will be doing, however.

Elite Traveler Superyachts is about which yacht to choose if you are chartering, be it a family vacation, a group of friends, etc. and more importantly where to go once you are on the yacht. As Elite Traveler is the private jet lifestyle, Elite Traveler Superyachts is the super yacht lifestyle. Coverage of best beaches for families at various islands and ports, VIP access to must-see sights and activities in various ports, great spas and resorts to patronize, elite dining experiences and how to arrange them, of course, shopping, shopping, shopping, and much more.

Published in the same oversize format and on the same high quality paper as Elite Traveler, superyacht owners and charter customers will find Elite Traveler Superyachts in their living room. Content will be relevant to the yacht’s location, hence the seasonal focus which gives us the ability, for example to intensively cover the Caribbean in the Winter edition and the Med during the Summer.

Written in Elite Traveler’s award winning style and format (89 percent of ET readers say they find information in our magazine they don’t get in others), Elite Traveler Superyachts will have names and phone numbers of key contacts just as Elite Traveler provides. Specific information such as boutique managers, restaurant owners and best tour guides will provide that same “in the know” information that makes Elite Traveler an essential guide to the private jet lifestyle.

Spotting Fakes: How can you be sure that a publisher is really sending out the number of copies he or she says? How can you make sure they are actually putting copies on private jets? Ask for the BPA or ABC audit statement. You can find our BPA statement here.

3. Yes, It’s Flattering to be Copied (Again)

It is rare you see publishers saying they are launching a new luxury lifestyle magazine and they are targeting poor people who can’t buy the products being advertised, so we are never surprised when folks attempt to copy the Elite Traveler model of distribution aboard private jets and in private jet terminals, either regionally or worldwide.

Someday, someplace, another publisher may figure a way to really do it. There have been at least half a dozen attempts since we started in 2001. None of them has been able to have their circulation successfully audited, something akin to the certificate when buying a diamond. I guess one could say, ‘if you wouldn’t buy a diamond without certification, why would you buy media that hasn’t been certified?’ I mean, losing money on diamonds or magazine advertising is pretty much the same thing.

I think there are a couple interesting points next time you hear a pitch about a publication being distributed on private jets. Ask the salesperson to show you their audit statement (BPA and ABC are the two main audit bureaus; Elite Traveler is audited by BPA; it costs less than $10,000 annually), and in the first 18 months of our launch we spent $7 million, so does the publisher pitching you truly have the resources to deliver what they are selling? Call me a cynic, but if they can’t afford $10,000 to get audited or aren’t able to get audited, I start to wonder about the rest.

For our latest BPA audit statement, please click here.

Would you buy a diamond without a certificate? Would you fly on a plane that hadn’t been certified as safe to fly? Would you buy milk in the supermarket that didn’t have a ‘sell by’ date? Before you buy advertising, next time a publisher says they have distribution on private jets or in private jet terminals, ask for their Circulation statement from ABC or BPA. Ask for them to show you the number of copies going to private jet travelers. You can find our BPA statement here.

4. Leaving Las Vegas, Happy With Money

Our team and I just returned home after five days and over 50 appointments with leading jewelers and watch brands ranging from designers such as Roberto Coin to new entrants such as Sutra. Yes, Las Vegas is sometimes known as Lost Wages, but for 2010 the two major jewelry and watch shows that run concurrently, JCK and Couture, provided good business for the brands attending. According to most of the companies we talked to, many retailers made significant orders for the first time in nearly two years, since the 2008 shows.

While few companies were saying business is back to 2008 levels (in fact, most are still far from it despite increases of 30 to 50 percent in the first quarter of 2010, showing how far business fell), there was a nice sense of optimism despite the continuing schizophrenic news on the economy.

In a number of candid conversations, it seems many companies have learned significant lessons from the recession. Some of it has meant building more solid relationships with retailers based on putting the right amount of product into the system and also more carefully assessing what type of financial arrangements make the most sense.

The consensus nearly two years into this crisis (are we still in it or coming out? I’m not sure), is that size matters. And in this case I mean size of wallet. Clearly until the banks start loosening up credit to the Mass Affluent in terms of secondary mortgages, larger credit card spending limits and more credit cards into the market, consumers under $400,000 Annual Household Income will be squeezed.

If one theorizes “proportional leverage” we can explain why even people who were supposed to have money got squeezed. In other words, lots of people were living over their means, but the fact remains that those trading-up households, Mass Affluents or whatever label you prefer, are still frozen while the top of the pyramid continues in a two- step dance: Some of the Super Wealthy, after perhaps a modest breather in Fall 2008 when they wanted to asses their own situation, were back in a major way over the past 18 months. More than a dozen companies told me they sold pieces at record prices in 2009 up until now, and that higher price points continued to move. On the second front, some UHNWs who were highly impacted – say going from $150 million Net Worth to $75 million Net Worth – realized they are still amazingly rich, life is sometimes short, so enjoy it while you have it.

The result was a positive mood, and seemingly a positive future for the jewelers and watch brands who are targeting the UHNW in a meaningful way.

With 41 trips per year, including 11 intercontinental trips and 3+ principal residences, we know where you’ll find elite travelers: in their private jets and in private jet terminals. It’s why we’ve invested in providing BPA audited circulation to private jets and private jet terminals in over 100 countries.

All the best,

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

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