Elite Traveler – ET Insider – June 26, 2012
ET Insider – June 26, 2012
Elite Traveler Insider –
August 7, 2012
Elite Traveler Insider
============================================================ More than ever private jet travelers, or elite travelers as we like to call them, are the most lucrative market for luxury brands and service providers. With readers spending $10,000 per hour to fly privately, the over 600,000 readers Elite Traveler reaches each issue provide you a great way to make sure your message is in front of consumers who have the money to be good customers. With our Asia Edition, Elite Traveler Superyachts, our over 60 Elite Traveler Destination Guides at Elitetraveler.com, our global database of private jet owners and our award-winning custom marketing team, we would welcome the opportunity to be of help to you in making sure you get a bigger share of our reader spending
With a Net Worth of more than $25 trillion, I hope you will agree elite travelers should be a key target for your marketing! =============================================================
Follow Doug Gollan on Twitter: https://twitter.com/EliteTravelerDG ============================================================= “Recently we had an American customer who walked in with a copy of Elite Traveler and booked two suites that been directly featured in the magazine. The value of the booking was in the region of $200,000.” – Tony Potter, Corinthia Hotels =============================================================
In this issue:
1. 2013 Outlook: Are These the Consumers Who Can Fuel Your Brand’s Growth?
2. Say Goodbye to the Wall Street Middle Manager 3. For Elite Travelers, A Good House Manager Is Worth Their Weight in Gold!
4. Singapore Lures Super Rich
5. Super Broker Dolly Lenz Offers Advice on Selling to the Super Rich
1. 2013 Outlook: Are These the Consumers Who Can Fuel Your Brand’s Growth?
There are about 10 million households in that statistically fall in the Next 9 Percent. About two years ago when our government decided a Household that brought in $250,000 was rich and should pay more taxes, The Washington Post did a study of households in six markets across the country – Los Angeles, Dallas, Chicago, Miami, New York and of course Washington D.C. The fictional families of four spent about $3,000 on vacation(s), didn’t buy designer clothing and had two non-luxury cars. Like many of the nine percent they had to fix leaky roofs, pay for soccer camps and put some money into 401ks. The bottom line is except in Texas where $250,000 is break even, all the other households spent more than they took in – by nearly $30,000 in New York.
The conclusion was that the 9 percent were off life support but still seriously reorganizing their spending priorities.
Can you sell luxury cars, handbags, shoes, vacations and such to the 9 percenters? Of course! Think of the last time you were in a party that was completely packed and you were trying to edge your way to the bars as you were being pushed and shoved, then if you made it, longingly tried to make eye contact with the overwhelmed bar tender. Yes, feel free to compete for the once every 18 month splurge – not only against dozens of competitors in your category but against other categories. Maybe a vacation instead of a handbag? Maybe paint the house instead of a handbag?
Think it’s getting better anytime soon?
A recent report showed 11.4 million or 23.7 percent of all residential properties with a mortgage were in negative equity – when borrowers owe more on their mortgages than their property is worth – in the first quarter, according to a new report by CoreLogic.
CoreLogic ranked the 12 states with the highest negative equity share in the first quarter of 2012. On average, the five worst states had a combined average of 44.5 percent of mortgages underwater.
Now remember the glory days of aspirational buyers were driven by….drum roll please…increase in home values that were cashed out into home equity loans.
At the same time, there is an interesting discussion about just how much the Ultra High Net Worth families are worth. According to Wealth-X there are some 185,000 UHNW families – families with at least $30 million Net Worth. How much do they have in total? Depending on whose numbers you looked at, the range was that these 85,000 families were worth between $25 trillion and $40 trillion.
Using these numbers, we estimate that the UHNW segment could spend as much as $1.7 trillion MORE on what you are selling than they are currently spending – probably in the $300 billion range. Of course it would help if you let them know about what you have for them (smile). Now you want a kicker? As the question about overseas assets and holdings of the Super Rich comes under scrutiny, recent reports estimate that these Ultra Wealth families may actually be some $23 billion richer than first thought.
If I was Chief Marketing Officer of a luxury company, what would be my first move? Own the Ultra-High Net Worth market worldwide.
============================================================ “Elite Traveler is a key media source for us with well over $200,000 in sales we can track directly back to our ads in your magazine over the past year.” – Charles Krypell, Owner, Charles Krypell ============================================================
2. Say Goodbye to the Wall Street Middle Manager… A recent Bloomberg article noted, “New York’s biggest investment houses are shifting jobs out of the area and expanding in cheaper locales in the United States, threatening the vast middle tier of positions that form the backbone of employment on Wall Street.
“The shift comes even as banks consider deeper staff cuts here, which could undermine the state and city tax base long term.
“Places like New York or London will remain financial centers, but most of the players are taking a much harder look and asking whether they can move large numbers of jobs,” said James Malick, a partner at the Boston Consulting Group who advises banks on relocation. In addition to higher taxes in the New York region, employers face real estate and labor costs significantly above the national average.
“Consultants say they have seen a sharp pickup in this trend, known as near-shoring, as opposed to offshoring overseas. Goldman Sachs, during a presentation to investors in late May, even boasted of the cost savings that relocating jobs can bring.
“Some functions need to stay in the United States, but they don’t need to be in New York City or near the client,” Mr. Malick said. And with most investment giants facing anemic revenue and more stringent regulation that cuts into trading revenues, relocation is more tempting than it was before the financial crisis.
“Low-level jobs have already migrated to call centers and back offices overseas, while top-end traders and bankers are secure in the New York area, experts say. Instead, services like accounting, trading and legal support, and human resources and compliance are being shifted to places like Salt Lake City, North Carolina and Jacksonville, Fla.
“Garry Douyon enjoyed his job helping process trades and working with clients and traders at RBS in Stamford, Conn., earning nearly $100,000 a year, but when the firm decided last fall to move his team to Salt Lake City with a salary of $60,000, he said he really didn’t have much of a choice.
“I didn’t even consider moving,” said Mr. Douyon, who founded a biofuels company, All-City Clean Energy, in Brooklyn with four partners. “I liked RBS but I have my roots here, I have a home, I have kids in school.” A few members of his team decided to go, he added, but most chose to stay in the New York area.
The potential shift has profound implications for New York’s tax base and economy because of Wall Street’s outsize financial profile. Last year, the industry contributed 14 percent of New York State’s tax revenue.
For luxury companies, the implications are important. That mid tier $100k white collar consumer in major metro markets where you have stores is turning into a $60k worker in lifestyle markets such as Jacksonville and Salt Lake City where they no longer need or long for status-building luxury purchases.
============================================================ “From the Summer Edition of Elite Traveler Superyachts, as well as the Asia Edition including the May/June issue we are happy to report sales ($437,000) of the timekeepers we advertised” – Patrik Hoffmann, CEO Ulysse Nardin ====================================================================
3. For Elite Travelers, A Good House Manager Is Worth Their Weight in Gold!
Got seven houses like one politician we know? (By the way, if we had his money, we would have a dozen!) Well, if you are an elite traveler with a private jet, the private jet lifestyle is they way you live! And while you spend over $400,000 per year on hotels, resorts and spas, you do also own houses – and generally big and nice houses.
A recent Financial Times article took a look at what keeps elite travelers up at night:
“Good staff is so hard to find.” There are issues of trust, security and training. Butlers, much in demand, are thin on the ground. Multiple homes demand a battalion of staff when their owners are in residence, and even when they are absent staff is needed to sort out everything from security to maintenance. Fortunately for those cash-rich, time-poor individuals who lack private offices to deal with such problems, help is at hand.
Hotel villas – from the Four Seasons and Aman chains to one-offs such as the Trisara in Phuket – are a neat turnkey option, offering all the advantages of a private home with the benefits of five-star facilities, full service, security and even a lettings management service if required.
Capitalising on this trend, and on the growing dependency of the helplessly rich on concierge companies to smooth life’s little creases, is the resident “house manager”. Often with a background as a hotel concierge, these unflappable factotums inhabit the new super-prime residential developments, such as Walpole Mayfair, whose penthouse recently sold for £4,542 per sq ft. With just five “state apartments” in the building, the house manager – a more glamorous reincarnation of the humble porter – tailors his service to the requirements of each individual homeowner, providing everything from domestic staff to opera tickets, 24 hours a day. The cost of his services is subsumed into the not-inconsiderable service charges.
For multi-homeowner Rob Hersov, a private house manager – which he employs for each of his properties – is the answer. “They check that everything is in order while I am away. And I will call to let them know when I am coming, so they can stock up, prepare the house and hire any staff we require on a temporary basis,” he explains.
It is a modest arrangement when viewed against properties permanently staffed with some 20 employees, which are used for just one week a year. “Too many people doing too little is a dysfunctional arrangement,” says Philip Eddell, director of management and consultancy services for high-level homeowners at Savills. “We will interview and recruit potential employees, downsize to a skeleton permanent staff if necessary, then upsize with temps as circumstance dictates. We take financial control of the estate, make regular visits to ensure everything is running smoothly, and build a long-term relationship with our clients.”
================================================================= “We sold two DeWitt Golden Afternoon timepieces retailing for $86,500 from your March/April issue – in the first week the magazine was out.” – Jon Omer, Vice President, DeWitt ============================================================
4. Singapore Lures Super Rich
From the Sydney Morning Herald, Singapore is fast becoming a tax haven for rich Australians. The report states, “The attractions are large. Capital gains are not taxed. Individuals are only taxed on income earned directly in Singapore, and for the super wealthy, there are no inheritance taxes.
“Mining magnate Gina Rinehart – the largest shareholder in Fairfax Media – is the latest to buy up big in the city state. The billionaire has reportedly spent $S57 million ($A43.8 million) on two units, off the plan, in the Seven Palms Sentosa Cove condominium project.
“A company linked to Mrs. Rinehart’s Hancock Prospecting purchased a unit on the third floor of the four-story complex for $S23.3 million as well as a top-floor unit for close to $S33.9 million, according to Singapore’s Business Times newspaper.
“The director of Savills international residential sales in Singapore, Julian Sedgwick, said Mrs. Rinehart’s purchase would set a new residential price record for the cosmopolitan hub.
“Seven Palms Sentosa Cove has been designed by Australian firm Kerry Hill Architects, which was responsible for some of the Aman resort developments. Touted as Singapore’s only beachfront condominium, the 41-unit development, due to be completed next year, is located between the Sentosa Golf Club and the South China Sea.
“But Mrs. Rinehart is not the first Australian mining magnate to head to Singapore. Billionaire Nathan Tinkler of Whitehaven Coal recently put his plans for a $13 million beachfront pad in Newcastle on hold and moved his family to Singapore.
“Eduardo Saverin, who co-founded Facebook at age 21, also lives in Singapore. His Facebook stake was worth more than $US3 billion when the company went public in May. That may have since been reduced, but he is still phenomenally wealthy. Born in Brazil, Saverin, 30, has renounced the US citizenship he gained as a teenager to become a permanent resident of Singapore. This led to claims in the US he was avoiding tax.
What has attracted attention is his billionaire playboy lifestyle in Singapore. ”It’s a misperception, especially the playboy,” he said. ”I do have a Bentley. I do go out. I’d rather not go into personal details.”
Personal tax rates in Singapore are among the lowest in the world, with a cap of 20 per cent, compared to the top tax rate of 46.5 per cent in Australia.
Mr. Sedgwick said ”Singapore is turning itself into a mini-Switzerland.”
”It’s got the banking secrecy laws, it’s becoming a financial centre, new casinos and now a lot of the big banks are operating out of Singapore purely because it’s becoming a very exclusive place to live.”
Singapore is also the second largest distribution point for the Asia Edition of Elite Traveler as it attracts wealthy elite travelers from around the region and the world!
============================================================ “Again this year Elite Traveler continues to be our #1 source for reservations generating close to $1 million in bookings from your readership of private jet travelers” – Sean Emmerton, Villas del Mar============================================================
5. . Super Broker Dolly Lenz Offers Advice on Selling to the Super Rich
This column on CNBC.com by New York real estate super broker Dolly Lenz really is a great read for any company selling to the Super Rich and just any salesperson in general. By the way, she’s sold over $8 billion in real estate.
1) Focus On the Relationship, Not the Transaction
Brokers are instinctively transactional in their thinking. This stems from the fact that if there is no deal they don’t get paid. Not surprisingly this leads them to focus on how they can bring about a meeting of the minds between buyer and seller. This approach may be good in closing a particular deal, but it is not always conducive to serving your client. I have always strived to achieve long term relationships, where appropriate, with my clients by representing them to a very high standard. I make it my business to represent their interests even if this means advising them to back out of a potential deal if the terms are unfavorable to them.
No one deal is worth losing the confidence and respect of a client. I live that.
2) Don’t Avoid Confrontation. It’s Part of the Job
Dennis Kozlowski, the former CEO of Tyco, nicknamed me “Jaws.” When I was asked by Bill Griffeth, the CNBC anchor, whether I liked that name and I responded, “I don’t know if I like it, but sometimes it’s necessary.”
It is amazing to me how many people in all walks of life, but especially in my business, are so uncomfortable with confrontation that they avoid it like the plague. Look, who doesn’t want to be liked? I know I do, but you can’t let that interfere with your responsibility to represent your client to the fullest extent possible. Real estate transactions are confrontational by nature because you generally have a buyer and seller with diametrically opposed interests. Because of that, negotiations sometimes get heated, and you better be prepared to hold your own. Your client is watching and evaluating your performance and couldn’t care less about your comfort zone. Get the job done, no excuses, and you will have a client for life. If you want to make it in the high-end pressure cooker that is New York real estate, that’s what it takes.
3) ‘The Customer Is Always Right’ Myth
The clients I deal with are extremely intelligent and savvy, and they negotiate mega-deals for a living. Many of them are household names, and they know what they want and how they want it. But one of the main reasons they seek me out is I have something they don’t have, and that’s specific information. And it is my job to listen to their preconceived ideas and give them the good, the bad and the ugly of what they are telling me. I don’t tell them what I think they want to hear, I tell them what they need to hear. Then they make their own decisions and I help them bring it about. Only a fully informed customer is always right, and if I believe a client is making a mistake I will tell him so. It is all part of gaining trust and respect, which are fundamental tenets of a fruitful business relationship.
4) ‘The Property Sells Itself’ Myth
If the property sells itself, then what do they need to pay you 6 percent of the purchase price for? To open a door? They can get a robot to do that and for a lot less than 6 percent. The homes of the mega-wealthy are unique, one-of-a-kind properties that have unique features that are highly valued. These sellers don’t just want you to sell their property; they want you to achieve the highest possible sales price in the market you’re selling into. They want your guidance as to what that number is, and believe me they will hold you to that number. Achieving that number is the added value that a savvy broker can provide, and that is why they are paying you a commission. Otherwise they can give the listing to cousin Ricky, who got a real estate license last week.
5) The Rich and Powerful Work in Real Time – You Better, Too
Many of the wealthy clients I deal with are no nonsense, “give it to me straight and give it to me now” kind of people. They didn’t get to where they are by having lots of patience, and they expect you to respond to them in real time. That’s how they work, and they expect you to act accordingly. Lucky for me that is exactly how I work and always have. In an active market, I will typically get hundreds of client emails per day, and I will respond to each and every one within a matter of minutes. New clients are initially surprised by such fast responses, but I don’t know any other way of working. I guess it is partly due to the fact that over 50 percent of my clients are based in Asia and it is my way of dealing with the time difference. Yes, I sleep with my BlackBerry. Does this impact my private life? It sure does, but that’s what my clients expect, and that’s one of the reasons they keep coming back and referring their friends.
============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY global publication targeting and reaching private jet travelers to have its circulation successfully audited. View our BPA statement here. ============================================================
All the best,
Douglas D. Gollan Group President and Editor-in-Chief Elite Traveler, the private jet lifestyle magazine Elite Traveler Superyachts, the superyacht lifestyle magazine Elite Traveler Asia, Asia’s private jet lifestyle magazine Elitetraveler.com, the private jet lifestyle online Elite Traveler Update, our weekly e-Newsletter to private jet owners worldwide