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Elite Traveler – ET Insider – March 3, 2009


ET Insider – March 3, 2009

Elite Traveler Insider –


March 3, 2009

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.


1. Private Jets Continue to Flock to Anguilla

2. Reaching The Rich or Not; Who’s Seeing Your Ads?

3. Before You Co-Brand with American Express, Read This

4. Luxury Marketing Council Founder Greg Furman 1-on-1

Over 90 percent of today’s Super Rich are Self Made and over 80 percent of the Super Rich have made their fortune in the past 10 years. Now is the best time to make sure they know your brand. 86% believe Elite Traveler is a good showcase for luxury products.

1. Private Jets Continue to Flock to Anguilla

There was no sign of an economic fallout on the island of Anguilla this holiday season with some 215 private jet flights into the island. Famous for its pristine beaches, luxe resorts and celebrity clientele, the island’s WallblakeAirport came alive during the Christmas and New Year holiday season with a record-breaking number of executive jets roaring in and out of Anguilla.

The heavy load of private jets actually caused traffic jams on the tarmac with activity beginning December 19, 2008 continuing through January 5, 2009, with celebrity and VIP passengers staying at the signature luxury resorts and renowned super villas that dot the island.

Elite Traveler’s BPA audited circulation aboard private jets and mega-yachts in over 100 countries means your ad is guaranteed to reach the highest spending luxury audience in the world no matter where they are from and where they happen to be today – each issue is read by 407,000 readers with a Household Income of $1 million +, the highest of any magazine or newspaper in the world! Sources: 2007 Prince ET/MMR for others

2. Reaching The Rich or Not; Who’s Seeing Your Ads?

We know that now more than ever, luxury marketers need to aim higher to sell their products. Of course, I’ve never met a publisher who told a prospect, “Our readers are those aspirational consumers who are now out of business.”

While there is no doubt those lucky folks flying by private jet still have money, and are still spending it (in fact, Elite Traveler has over 400,000 readers with a Household Income $1 million + and 649,000 readers at $400,000 +), a study of recent research by MMR and MRI shows that only a small percentage of readers from Mass Affluent titles even make over $400,000, now considered the baseline in terms of targets for luxury providers:

Architectural Digest – only 4.76% of readers have a HHI of $400,000 + Bon Appetit – 3.41% BusinessWeek – 2.88% Cigar Aficionado – 2.56% Conde Nast Traveler – 5.27% The Economist – 5.31% Esquire – 1.84% Food & Wine – 2.74% Forbes – 2.96% Fortune – 3.83% Golf Digest – 3.55% GQ – 1.19% Harper’s Bazaar – 1.74% InStyle – 1.97% The New Yorker – 3.23% Town & Country – 2.51% Travel + Leisure – 5.88% Veranda – 5.26% Vogue – 1.53% W – 2.90% Wine Spectator – 5.74% Sources: MRI for total readership; MMR for readership $400,000 +

While the world’s economy today is unsteady, one thing is for sure: The wealthy consumers flying aboard private jets are your best bet, and only Elite Traveler delivers these elite travelers to our advertisers through our BPA audited circulation aboard private jets in over 100 countries, including Russia, the UAE, Kuwait, Qatar, Bahrain, Oman, India, Singapore, Korea and China. All with one ad buy!

3. Before You Co-Brand with American Express, Read This

Cooperative marketing programs with American Express are likely to get more scrutiny from luxury marketers, based on an article in yesterday’s Wall Street Journal which detailed how the company’s tighter credit policies are irking many of its well-heeled customers.

“AmEx is reeling from late payments and defaults by customers it aggressively wooed before the U.S.New York company to a 12-year low… economy tumbled into recession. Its sterling reputation for customer service is under attack from longtime clients. Even cardholders with plenty of money are putting away their plastic, pushing shares of the “If we had known this was coming, we would have ratcheted back some of our investment and put tighter guardrails on our credit decisions,” says Alfred Kelly, the company’s president.

The course reversal is causing problems of its own. Last fall, AmEx slashed a line of credit for David Sewell’s small business to $10,200 from $80,000. Mr. Sewell, who owns an online computer-accessory store in Provo, Utah, had been an AmEx cardholder for 15 years, but he only signed up for a business line of credit in 2004. In January, that line was canceled altogether when AmEx abolished the program.

“It has tarnished my view of American Express,” says Mr. Sewell.

AmEx recently reported that defaults on its securitized loans, or loans that are bundled and sold to investors, rose to about 8.3% in January, up from 7% in December and from a trough of about 2% in January 2006. Overall January defaults are likely to be even worse, because those figures don’t include small-business customers and some of AmEx’s newest cardholders.

Card companies also are being bruised by consumers who are leery about spending. That means lower interest payments and transaction fees generated by swiping plastic. According to the Commerce Department, consumer spending fell 1% in December, the fifth monthly decline in a row. Spending on AmEx cards tumbled 10% in the fourth quarter, with no improvement since then, the company says.

AmEx CEO Kenneth Chenault faces pressure over credit-card loans.

The problem: While card-issuing banks make a big chunk of their profits by charging interest, AmEx relies just as heavily on fees it gets from processing each transaction. Each time someone swipes his AmEx card, AmEx collects a fee from the merchant. Its business model, therefore, is based on convincing people to pile on purchases.

As it expanded its customer base, the company doled out more and more credit to its new cardholders. And when customers didn’t spend up to their limit, AmEx gave them even more credit to encourage spending.

“The timing was incredibly bad,” says John Williams, an analyst at Macquarie Research in New York who worked in AmEx’s finance department between 2003 and 2006. He has been a harsh critic of AmEx since he started covering the company in September, recommending that investors sell the stock.

AmEx charge-card customers routinely were encouraged to apply for Blue credit cards. The company pitched a business credit-line product to small-business owners who already were using its cards. Customers who exceeded their credit limits often could get them increased with a single telephone call.

“We felt they had the capacity to spend more,” Mr. Kelly says. The company estimates that about 35% of its customers have both an AmEx charge card and an AmEx credit card. By the summer of 2007, AmEx had accrued nearly $70 billion in credit-card loans, or about double the amount they had in 2002.

Last summer, the company began reducing credit lines for people who live in states hardest hit by the housing slump even if they hadn’t shown any signs of being in financial distress. AmEx also began reducing credit lines or canceling the cards of people who worked in industries that are among the most vulnerable to the financial crisis, such as financial services and real estate.

In October, AmEx infuriated thousands of customers by reducing their credit limits based on where they shopped and the lenders that held their mortgages. The reason: Other AmEx customers who frequented the same companies were having trouble making payments on their cards, according to the company.

Still, says Mr. Chenault, AmEx customers are “a group that is not used to getting bad news. To call someone who has never imagined they would go through this experience is not easy.”

Elite Traveler’s BPA audited circulation aboard private jets and mega-yachts in over 100 countries means your ad is guaranteed to reach the highest spending luxury audience in the world no matter where they are from and where they happen to be today – each issue is read by 318,000 readers with a Household Income of $1 million +, the highest of any magazine or newspaper in the world! Sources: 2007 Prince ET/MMR for others

4. Luxury Marketing Council Founder Greg Furman 1-on-1

Greg Furman started his communications career as a policy advisor and speech writer, and went on to lead Sun Oil’s public affairs division, serve as managing director of advertising for the NYSE, head J. Walter Thompson’s corporate image PR business and operate Bergdorf Goodman’s various communications initiatives. In 1994 he branched out on his own to form The Luxury Marketing Council, a group of 1,600 CEOs and top marketing executives. Additionally, his strategy consulting practice focuses on helping his clients define their missions and corporate positioning. In February, Elite Traveler sat down with Furman in New York to discuss the new luxury message for the recessionary economy, how companies are changing the way they speak to wealthy clients, and his own passion for the arts. Below are excerpts from a recent interview I conducted with Greg. The full interview can be seen by clicking here.

On the Aspirational Market:

The aspirational market, the folks with household incomes of $250-$500K is gone, just gone. So now it’s people that still, even after the shakeout, have liquid portfolios of $10 million or more. And those are the ones, everybody thinks of them as their best customers. Those are the ones that if courted and engaged properly still have money to spend, but it’s a whole different ballgame, as you well know.

Wasn’t the Luxury Market supposed to be immune?

Up until probably I’d say mid-September, the luxury market was on a tear. As I know you know, like you have never seen in history. I mean, I would say the last 14 years, if you looked at mass retail, and looked at mass retail from the standpoint of revenue growth, mass retail, if it did 5 to 7 percent gross revenue growth, would do the happy dance. And if you looked at our constituents, the top brands that are courting your readership and my constituents, community buyers, those people were allowing these folks in the high-end luxury brands to grow at 15 to 32 percent gross revenue a year. And especially with the Bentley’s and the Louis Vuitton’s and the Hermes, and many of them have still not been restrained by this, as I know you know.

Having said that, once things started to spiral down, and the media frenzy of feeding the flames of the fire, and all of a sudden, luxury itself became a bad word. I had a discussion today with a woman from AdWeek who told me, and she wanted me to comment on an anecdote that she was told by a person of some repute in New York, that said when she shops in Hermes or Cartier, she went to the store, and she said she wants a different bag.

How are your members reacting?

We did a survey of about 4,000 individuals: CMOs, CEOs of luxury brands. And what we asked was, “How are you, as an organization, a luxury brand, from a marketing standpoint, re-investing your dollars in the marketing mix, and where’s the money going?” And the answers were, One: coming out of anything that resembles mass media, they shall go un-named; Two: moving in to niche, targeted publications where the traditional agency doesn’t have the guts to really make the recommendation, because it’s a smaller reach relative to mass. And now what’s happened is many of the luxury brands that are thinking on their feet are driving their spending to the niche publications.

Is there a new role for charities?

One of the things I’ve said is that the issue for luxury brands, most of whom are very generous in their corporate giving, but are very, historically–I think this is changing, and I think it’s been changing even before the recession started to hit–the issue for brands has been, one: to not be so diffuse in their giving, meaning spread it all around the community, as we did in the old days when I was at Bergdorf Goodman. You know, this big budget, maybe $2 million, and it was spread very broadly so that they could touch a lot of people within the community. What is happening because of the spotlight on luxury brands, and all of this “luxury shame” phenomenon that is occurring, and this was happening as I say before, what brands are doing is consolidating their giving and putting a strategic emphasis to their giving, so that the not-for-profit, or charity, that they contribute to is aligned with the business itself. You know, a cliché might be Women’s Apparel and breast cancer. Or you know, the men’s store at Bergdorf Goodman and AIDS, because of the powerful gay community that shops there.

So for a while brands have been doing that, but I think it behooves brands to think much more aggressively about strategic giving, which means focus, if not all your giving, most of your giving on a single thing. And here’s the thing that was really seen as déclassé and anathema. It was seen as really low browed to promote one’s giving in the community. Well, now, I contend that a brand must publicize its giving in a tasteful way. People must know, more than ever now, about a brand’s good corporate citizenship. And if I were a brand and had an agency, I’d put an agency onto making the right communities aware of what I’m doing. So I think it’s changed the nature of how brands are thinking about corporate giving.

The other thing that’s kind of interesting is in Richistan, Robert Frank talks about the evolution of corporate giving, and one of the trends that I don’t think has hit quite yet, but is going to hit, and I think he’s right on the money, is the corporate side. And this is America corporate and luxury arena as well are increasingly going to look for not-for-profits that have a for-profit mentality, that are not just looking for a dole or a handout, but are looking for ways to engineer giving and giving back on a businesslike premise, where the giving goes into some form of a social mechanism that is self-profiting and regenerating somehow. So I think more and more not-for-profits are going to be pressed to find out ways to profit from what they do in an intelligent way and recycle that. You know, create an organization that can do that, and I don’t think many of the not-for-profits are even thinking along those lines yet.

What changes is the Council making?

A lot. One of the things that we’re doing, and people have pressed us to do for a long time, is that our traditional programming tends to be one or two two-hour sessions, speakers and panels, breakfast, lunch or an evening event with reception. And we started, I created a series called “The Winning Edge Series: Sharing Best Practices to Drive Profits.” And for the first time in the history of the Council, I have never charged for any of our events, because all our members have hosted all of the events. So the one-time membership fee covers everything. And we experimented last year in October with the pay-to-play full morning, and the first focus was customer service, and we had Jack Mitchell, who wrote Hug Your Customers and Hug Your People, and Lewis Schiff, who wrote The Middle-Class Millionaire, and the former chairman of Bergdorf Goodman who took it from a $30 million business to a $250 million business. And the focus was “News You Can Use.” Full morning presentations, but each presentation followed by an aggressively moderated panel and breakout sessions from 8 to 12:30 and charged. So we’re charging members $350 and non-members $500. And the first one, we had 40 people sign up. And I had a concern initially that people might see it as presumptuous, because they might have felt that that was included in the fee, but I didn’t have a single call. And the reviews we got from the first one were off the charts. I mean, they said it was spectacular, so much so that instead of just doing one breakout session, as I do them now, we’re going to do two. And every other seat we’ll shift. So they’re highly interactive, highly customized, and I think the need now for really interactive, highly focused exchanges of ideas with peers is critically important.

I’ve realized two things. You know, at 40 events a year, think about it. You know it’s almost one a week. The hunger for content in this community, which I think is a good thing for both of us, has only increased. I mean, and the beauty is if I do 40 events a year, you know, people have a lot to choose from. If they want to come in, you have choice on good content, practical content, news you can use. So, in addition to that, to the point about this Winning Edge Series, Sharing Best Practices to Drive Profits, we did the first one on customer service. We had 40 people show up and great reviews. So, now, coming into the year, I’m going to try and do six, maybe seven, a year.

So we’ve got two booked already. We have got one that’s going to be on the nature and extent of the crisis, so that’s going to be a full morning where we have a guru, Fred Nazem, who is a turnaround specialist, super-investor, still doing 15 percent now return on his portfolio.

For the full interview, click here.

While the world’s economy today is unsteady, one thing is for sure: The wealthy consumers flying aboard private jets are your best bet, and only Elite Traveler delivers these elite travelers to our advertisers through our BPA audited circulation aboard private jets in over 100 countries, including Russia, the UAE, Kuwait, Qatar, Bahrain, Oman, India, Singapore, Korea and China. All with one ad buy!

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