Elite Traveler – ET Insider – May 6, 2008

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ET Insider – May 6, 2008

Elite Traveler Insider –

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May 6, 2008

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.

CONTENTS:

1. The Private Jet Lifestyle is Expensive

2. BMW Ripped By Mass Affluent Credit Woes

3. The $200 Million Apartment

4. Britain’s Super Rich Get Richer and Give More

5. Not For the Rich? Travel + Leisure Trades Down

6. Consumer Confidence Hits 26-Year Low

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

1. The Private Jet Lifestyle is Expensive

It is often hard to pin down what gets spent on private jets except when divorce cases turn nasty or investors are upset at their CEO. Thus we bring to you the case of BJ’s Wholesale Club from various reports:

The nearly $11 million in total compensation that the top executive at BJ’s Wholesale Club Inc. was awarded in 2007 included more than $762,000 for private jet flights, according to an analysis of a regulatory filing by the nation’s third-biggest discount warehouse club. Herbert Zarkin’s travel expenses break down to about $2,088 per day for the year. The trips included commutes between Zarkin’s Boca Raton, Fla., home and the company’s Natick, Mass. headquarters.

The 69-year-old Zarkin is a former chief executive of the firm that owned BJ’s in the mid-1990s. More than a year ago, he returned as BJ’s CEO and retained his chairman position – forgoing plans to retire — after the abrupt resignation of the previous CEO amid disappointing sales.

A footnote in an SEC filing earlier this month notes that Zarkin’s $762,299 for 2007 commuting expenses “reflects the amount billed to BJ’s by third-party aircraft charter companies.” BJ’s said it “provides Mr. Zarkin the use of jet aircraft as an expedient and efficient means to commute to work and to travel to various company and other locations that are dispersed over a broad geographic area.”

The filing says a March 2007 policy approved by BJ’s board just after Zarkin’s 3-year contract was negotiated requires him to travel on private planes “on business and personal matters to improve security, efficiency and productivity.”

The 2007 jet expense total is up about 46 percent from the $523,034 he was awarded for such travel in 2006.

In response to an inquiry from The Associated Press on Friday, the company issued a statement: “In establishing its travel policies, BJ’s weighs carefully the costs and benefits of executive travel options including factors such as convenience, efficiency and the safety and security of key executives.”

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!

2. BMW Ripped By Mass Affluent Credit Woes

One thing is clear about the current economic downturn: Companies that put their fate against the Trading Up group are certainly feeling the pinch led by these “aspirational” consumers who are now trading down.

A report from Automotive Week noted that “the flow of easy credit that helped fuel auto sales in early 2007 has come back to bite BMW AG, with the German auto maker announcing a $375 million first-quarter charge to shield against a drop in used-car prices and to cover possible defaults on loans for leased vehicles.”

The article quoted the company as stating “a drop in pre-owned car selling prices, particularly in North America, and consequently in a reduction of revenues that can be generated on vehicles at the end of lease contracts” is hitting the company as a result of pushing about 70% to 80% of its sales through cut rate financing rates, according to Credit Suisse. The result: about 450,000 leased vehicles on its balance sheet in the U.S.

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.

3. The $200 Million Apartment

Last weekend I was in London for the A1GP, an Olympic-style version of Formula One Racing that concluded its season at Brands Hatch in the Kent countryside.

From my hotel overlooking the British capital, one can barely count the cranes despite the growing woes of the Mass Affluent here. Therefore it was no surprise when I picked up the paper and noted an apartment in London reportedly had been sold for £115 million (about $230 million).

The flat in St James’s Square, equidistant from 10 Downing Street and BuckinghamPalace, was granted planning permission last week. The value of the off-plan sale indicates that the world’s most expensive properties are not yet being hit by the international financial crisis.

It is to be carved out of a seven-story 1930s office block, which will be used to create a total of six extravagant apartments, according to The Times of London.

The figure exceeds the £100m asking price for the most expensive apartment at One Hyde Park, the Candy & Candy development designed by the Richard Rogers Partnership.

It is also far in excess of the highest completed sale of £80m, the amount paid for a house on Upper Phillimore Gardens in Kensington last month. Four years ago Lakshmi Mittal, Britain’s richest man, achieved a world record by paying £70m for a 12-bedroom mansion near Kensington Palace.

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, the U.S., Mexico, Brazil, Kuwait, Qatar, Bahrain, Oman, India, Singapore, Korea and China. All with one ad buy!

4. Britain’s Super Rich Get Richer and Give More

Britain’s super-rich doubled their generosity by giving away £2.38 billion (just under $5 billion) to good causes last year, according to the Sunday Times Giving List 2008.

The credit crunch has failed to curb the burgeoning growth of Britain’s richest people, according to the Sunday Times Rich List.

Over the last 12 months the collective wealth of the 1,000 richest people in the country rose by 15 percent to £412.8 billion, the paper’s annual Rich List reveals.

For the fourth consecutive year, Lakshmi Mittal topped the list with a personal fortune of £27.7 billion, mostly accrued through his interests in the steel industry.

In second place was Ukranian oligarch and owner of Chelsea FC Roman Abramovich, with £11.7 billion, while the Duke of Westminster, who owns a substantial slice of some of London’s most desirable areas, in third with £7 billion.

The list also revealed the emergence of what the paper called an “international superclass” which has superseded Britain’s indigenous entrepreneurs.

This was born out by the fact that just six of the top twenty places were made up of people who were born in Britain.

List compiler Philip Beresford said: “Much of the rise in this year’s wealth can be attributed to one factor: the number of foreign rich who have made London or its environs the main home and base of operation.”

The report supports a recent Prince/Elite Traveler survey of the Super Rich (Net Worth $30 million +) which showed that as Mass Affluent donors cut back, charities are asking more of the Super Rich, and they are giving more.

The good news for luxury marketers is the Super Rich feel entitled to spend more on themselves and family as a just reward for doing more to help. In fact, 80 percent of the Prince survey sampled said they would increase their spending on luxury in 2008.

More good news for marketers: The United Kingdom is Elite Traveler’s second largest market with nearly 20,000 copies distributed every issue as part of our BPA audited circulation to more than 100 countries.

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.

5. Not For the Rich? Travel + Leisure Trades Down

With a Median Household Income of less than $150,000, I never really considered Travel + Leisure a magazine that targeted the wealthy. If one wants to delve into any research, it is clear the American Express publication has a readership targeted more toward Holiday Inn than toward five-star hotels.

Recently, to re-enforce that point, the magazine crowed in a promotion email, “In times of economic recession, Travel + Leisure editors and correspondents over the past year have scoured the globe to unearth what they say are the best undiscovered tips and tools for traveling smarter, faster, safer and more affordable.”

Clearly they have a different mission than the editorial team of Elite Traveler. In 2008 we continue to look for suites, jewelry, timepieces, private jets and experiences our readers will want, regardless of price. But then again, if one is spending $10,000 per hour to fly somewhere on their jet, that $5,000 per night suite or $8,000 bracelet looks like a positive bargain.

Luxus Networks can bring your brand front and center with the world’s wealthiest consumers in over 100 private jet terminals throughout North America. Programs start from $1,000 per month. Contact Kimaada LeGendre at klegendre@elitetraveler.com for more information!

6. Consumer Confidence Hits 26-Year Low

U.S. consumer confidence in April fell to its lowest level since March 1982, according to the latest Reuters/University of Michigan consumer-sentiment survey which declined to 62.6 in April from 69.5 in March. Nine out of 10 respondents said they believed the economy is now in recession, and many said they expect to use government rebate checks to pay down debt or increase savings. That could keep consumer spending, a main engine of economic growth, sluggish, reports predicted.

“Sentiment is mired at levels that historically have been associated with recessions,” said Steven Wood, chief economist at Insight Economics. “This largely reflects the job losses, the housing market meltdown, turmoil and volatility in the financial markets, and higher food and energy prices. These are all squeezing consumer spending.”

Companies that didn’t go down or are aggressively ensuring they are targeting the Super Rich will do the best, according to an analyst at Credit Suisse.

“The higher the prices for the products, the more insulated the company will be. The more accessible brands will suffer more,” said Rogerio Fujimori, analyst at Credit Suisse.

J.P. Morgan analyst Kian Abouhossein told investors that the outlook is bleak, saying, “it was too early to call an end to current market turmoil.”

Credit Suisse CEO Brady Dougan summed it up well, in my opinion: “A number of times, people have seen the light at the end of the tunnel [and] it turned out to be a train coming down the tracks,” he said.