Elite Traveler – ET Insider – May 1, 2007
ET Insider – May 1, 2007
Elite Traveler Insider –
May 1, 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? Harry Winston just sold a $95,000 necklace to a reader who walked in with a copy of the magazine!
1. High Net Worth Household Surge as Super Rich Population Becomes Big Business…
The number of U.S. households with a net worth of more than $5 million, excluding their primary residence, surged 23 percent to surpass one million for the first time in 2006, according to a survey released on Tuesday. The survey by Chicago-based Spectrem Group found that the number of U.S. households with more than $5 million rose from 930,000 in 2005. In 1996, there were only 250,000 U.S. households in the “ultra-rich” category, Spectrem said.
“The past few years have been nothing but astounding for wealthy Americans,” said Catherine McBreen, managing director of Spectrem, a consulting group that researches the affluent and retirement markets. McBreen said the surge in household growth is underpinned by economic growth in recent years, which has fueled both stock market gains and also the market for private companies. She also ascribed gains to rising real estate valuations and favorable tax policies. “The wealthiest households are the business owners,” said McBreen. She also said broader ownership of stocks has helped overall household wealth.
Does Elite Traveler work? A reader of Elite Traveler recently made a four night, $40,000 booking at Soneva Gili!
2. New Research Shows Mass Affluent Go Conservative on Luxury Spending…
Many Mass Affluent households with Household Incomes under $200,000 are planning to curb spending on luxury goods and services, according to The Spring Affluent Market Tracking Study by The American Affluence Research Center, and are taking a “conservative” approach to purchases.
The twice-annual survey focuses on the wealthiest 10 percent of U.S. households and respondents have an Average Household Income of $256,000, which is on the high-end of the readership for Mass Affluent publications such as Town & Country, Departures, Travel +Leisure, Robb Report and Conde Nast Traveler that each focus on readerships below $200,000 Household Income. By contrast, Elite Traveler’s Average Household Income of $5.3 million.
Slower consumption by the Under $200,000 Household Income crowd was backed up by General Motors Vice Chairman Bob Lutz last week who noted the crisis in the U.S. mortgage market has hurt U.S. auto sales.
“The market as a whole has been a little weakish. That has come as a result of the housing market problems and the mortgage industry meltdown,” Lutz told Reuters. “A lot of people are finding themselves in a position of reduced affordability and that has had an impact, not just on us, but across the industry.”
As I reviewed the 100-plus pages of charts in this most recent survey, I always like to compare those respondents with Household Incomes below $200,000, which is solidly Mass Affluent, with the highest percentile, households with a Net Worth of $6 million+, which in this survey have a $728,000 Household Income.
Among the variances:
Planning—Next 12 Months HHI Under $200,000 Net Worth $6 Million+Purchase/Lease New Vehicle 20.0% 37.0%Major Home Remodeling 16.0 29.0Take a Cruise 15.0 31.0Purchase Powerboat 1.2 5.9Purchase Secondary Residence 0.0 11.8Build Secondary Residence .04 7.3
Moreover, the Mass Affluent (HHI under $200,000) appear likely to cut back spending on a number of categories where those with High Net Worth ($6 million +; $728,000 HHI) are planning in many cases to maintain or increase spending on luxury goods and services:
Spending LESS—Next 12 Months Household Income—Under $200,000Antiques, Art 34.4%Designer Apparel 29.5Golf, Skiing, Boating 24.6Major Home Appliances 29.8Home Furnishings 36.2Home Entertainment 37.2International Vacation Travel 27.2Dining in Upscale Restaurants 18.8Jewelry or Watches 39.4
At the same time, those surveyed who had a Net Worth of at least $6 million with Household Incomes well over $500,000 showed they plan to maintain or even increase their spending on luxury goods.
Spending Same/MORE—Next 12 Months Net Worth—$6 million +Antiques, Art 85.1%Designer Apparel 89.6Golf, Skiing, Boating 92.7Major Home Appliances 77.9Home Furnishings 86.8Home Entertainment 76.5International Vacation Travel 85.3Dining in Upscale Restaurants 97.0Jewelry or Watches 77.6
So where are the Mass Affluent planning to maintain or increase spending? Over 90% of Mass Affluent will maintain or increase spending on casual dining while over 85% will spend the same or more on movies. In other words, with sales of high-priced luxury items seemingly stronger than ever, now is probably a good time to think about strategies to target the Super Rich.
Does Elite Traveler work? Two readers of Elite Traveler just made real estate purchases with Ginn Sur Mer for over $15 million!
3. Watchmakers and Jewelers Dig Deeper into Super Rich Pockets…
While a poll of readers by jewelry trade publication JCK News showed that over a third of readers are concerned about the American economy, watchmakers and jewelers exhibiting at the Basel and Geneva Jewelry and Watch fairs who cater to the Super Rich had a very optimistic outlook.
Mikimoto U.S. President Meyer Hoffman told us his company is seeing significant growth in purchases over $20,000, and a tour of his two-story stand showed an array of offerings well into six-figure territory.
Getting deeper into the pockets of Super Rich consumers seemed a major theme of both fairs. Watchmaker Breguet was offering cufflinks made from watch dials — in white gold with diamonds—at around $10,000. Other versions were priced at around $5,000.
Ultra-creative DeGrisogono Owner Fawaz Gruosi was taking visitors in his stand to the Board Room where he was unveiling his first-ever collection of accessories for women—handbags starting at $4,000 and going up well into five digits.
Damon Dashon watch company Tiret decided to take diamonds beyond its watches by unveiling a line of jewelry, much priced over $100,000. CEO Daniel Lazar claimed despite its high profile with celebrities and athletes, much of the brand’s customer base is Super Rich businessmen and their significant others.
Jaquet Droz unveiled a special trunk created with French leather goods company Pinel Pinel designed to hold up to eight watches in a showcase format. An Austrian customer had already ordered one for slightly over $300,000 to house.
Geneva-based F.P. Journe, known for its unique dials and numerous awards for innovations, was showing watches well above $50,000, while Michel Jordi was showing off more accessible timepieces from previous collections—starting price: $39,000. Bovet, which offers wristwatches based on its heritage of pocketwatches created for Chinese royalty, offered case after case of concepts priced well over $200,000 and was reporting brisk sales.
Showing from the Presidential Suites in the Four Seasons Hotel des Bergues, Richard Mille noted his brand had grown from 450 watches to 1,800 in just four years with average prices around $50,000 and many watches well over $100,000. Boutique watchmaker Urwerk, which produces 170 pieces a year, has a price range starting at $55,000 and going up to $172,000, while Jorg Hysek’s HD3 is up to 200 watches in only its third year with prices starting at about $50,000 and moving to well over $300,000.
Franck Muller, know as the master of complications, showed vitrine after vitrine of watches which routinely price in the mid-five digits and many that go over six digits. The company also announced a collaboration of diamond laden timepieces with British jeweler Backes and Strauss targeting the global Super Rich.
So how strong is the market of the Uber Wealthy when it comes to watches? One London retailer told me a banking client who bought a $150,000 Patek after getting his multimillion-dollar bonus bought a second duplicate watch. The reason? He didn’t want any colleagues to buy the same watch when he found out the store had two in stock.
Of course, Elite Traveler has become the favorite place for the Super Rich to go shopping with our BPA audited distribution aboard private jets in over 90 countries!
Does Elite Traveler work? Villas del Mar in Los Cabos booked over $500,000 in villa rentals last year from their advertising in Elite Traveler!
4. Private Jet Travel Grows for London’s Elite…
Private jet flights from London have reached a new high water mark. According to British reports, in 2006 there were more than 300,000 private jet flights from London, which translates to over 25,000 per month!
Air Partner, the charter group, has seen its profits jump as wealthy people fed up with mass air travel have turned to private jets. Pre-tax profits at the company, whose clients include members of the Royal family, more than doubled to £3.5m in the six months to January 31.
Chief executive David Savile said: “There’s been plenty of evidence that the increasing sales of private jets over the past four months have not been freak occurrences.”
The U.K. is the second biggest country for Elite Traveler distribution (after the U.S.) with 18,273 copies.
Does Elite Traveler work? A reader of Elite Traveler booked the Presidential Suite at The Mandarin Washington D.C. right off a page in Elite Traveler!
5. Aruba Targets the Super Rich with New Private Jet Terminal…
Aruba has opened a new airport terminal for private jets in a bid to attract more upscale travelers to the Dutch Caribbean island, according to reports. The new terminal replaces a makeshift terminal that Aruba Airport Authority N.V. installed to begin offering faster service for private planes in 2005.
The facility has its own customs and immigration so private jet travelers no longer have to go through the main terminal.
Peter Steinmetz, managing director of the Queen Beatrix International Airport, said the number of private jet flights increased 21 percent in the first quarter of 2007 compared to the same period last year.