ET Insider – May 9, 2006

Elite Traveler Insider – Versace Jets, The $390,000 gift, Mass Affluent Housing Hits a Skid, and Good Customers…

 

May 9, 2006 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 elite luxury market. This information is provided to offer a better understanding of how to target the Elite Affluent market, its impact on your business and other trends that affect you. Remember, that private jet travelers are paying up to $10,000 per hour to fly by private jet, so these uber wealthy 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.

• Europeans Go Private, Lufthansa Private Jet Goes Russian…
• Versace Debuts Couture for the Private Jet…
• A $390,000 Gift? No Worries for the Private Jet Set….
• Mass Affluent Luxury House Spending Hits a Wall…
• Eclipse Says It Has Sold Over $3.4 Billion in New Very Light Jets…
• People You Want to Have on Your Customer List…

Famous elite travelers recently spotted reading Elite Traveler in private jet airports: Gwyneth Paltrow, Jessica Simpson, Katie Holmes, Paris Hilton, Dave Matthews, Jennifer Lopez, Heather Locklear, Kid Rock, Jewel, Nicole Richie, Beyonce Knowles, Shakira, Salma Hayek, Arnold Schwarzenegger, Goldie Hawn, Jay Leno, Bill Clinton, Jerry Seinfeld, and Elton John.

“I love to see our client’s reaction, they go crazy for the magazine. It inspires us here to make it rich some day.”

– Jennifer Masse – Sun Western Flyers Bullhead City , AZ

1. Europeans Go Private, Lufthansa Private Jet Goes Russian…

European travelers are increasingly taking private planes, according to Eurocontrol, the Brussels-based air traffic management agency. The agency said trips by business aircraft were growing by 14% annually and within a decade would account for 1,100 extra flights a day. Last year, 6.5% of Europe’s 9.2 million flights – or over 600,000 flights – were business aviation. The growth will mean private jets will account for approximately 10% of all flights within Europe. For luxury marketers who know that about 10% of their customers generate upwards of 50% of sales, targeting these top spenders will be easy via advertising in Elite Traveler, which is distributed across Europe on private jets!

Separately, Lufthansa has matched the benefits of premium first class long haul flights by adding private First Class terminals and transfers to and from flights by sedan. Its alliance with Netjets means long-haul passengers can transfer for their connections onto private jets, and the popular service has now been extended to destinations within Russia. Lufthansa assigns a personal assistant to accompany private jet passengers during their transits in Frankfurt and Munich. Examples of how the service works: Fly Lufthansa in First Class from Los Angeles to Munich then get driven across the tarmac to your private jet and delivered to the private jet airport in Cannes.

In our opinion, this is a template all private jet companies and long-haul premium airlines should be exploring. By providing seamless transfers between long-haul First Class services and convenient connections by private jets, commercial airlines protect their high-yield traffic and private jet companies generate extra flight hours.

“Our facility exclusively distributes only Elite Traveler because it’s the best high-end publication. We have lots of clients who request it.”

-Jim Allbaugh– Career Lab, Parker, CO

2. Versace Debuts Couture for the Private Jet…

Versace is taking is taking high fashion from the runway to the runway. The company announced that it is collaborating with Tag Group SA, a Swiss aviation company, on the interior design for private jets. A photo of the prototype shows a black-and-white cabin, with white leather chairs, a long white sofa and black carpeting and shag accent pillows. Customers can work with Versace designers on personalizing their aircraft interiors. The first interiors will be presented at a British air show this summer. It will be the private jet equivalent of a “runway” show!

“All our people, including Shaquille O’Neal, Bo Derek, Maria Shriver and Reba McIntire love the book. We put them on all of the private aircrafts. Great books!”

-Tommye Johnson—FBO AvCenter, Louisville, KY

3. A $390,000 Gift? No Worries for the Private Jet Set….

Maybach has a gift idea for those who know giving or receiving gift cards from the GAP or Target don’t make the cut. Riding in the back of a Maybach 62, one is swaddled in comfort with footrests — ventilated leather seats, chilled wine from the built-in refrigerator and sunlight filtered through the electroluminescent roof. Cost is around $400,000 and estimates are 20% of the 150 or so Maybachs sold in the U.S. last year were not for the purchaser but gifts!

As an example of private jet lifestyle spending, the typical Ferrari customer orders $20,000 to $30,000 of options. Ferrari customers happily wait a year or two for their cars. Certain custom woods on your Maybach can add as much as $12,000 to the cost of the car.

Many customers, however, impatient to get a car, will buy floor models. Both Maybach and Rolls-Royce say their American customers are often averse to waiting for custom-built cars. One buyer recently negotiated the purchase of a Maybach demonstrator — and handed over a check — within 10 minutes of entering the dealership.

In this world, repeat business is extremely important since only a relative few can afford these products. Fortunately, they have the means to keep coming back. “A handful of customers are just constantly buying cars from us,” said Ehren Bragg, chief operating officer of O’Gara Coach Company of Beverly Hills, Calif., a dealership that sells Aston-Martin, Bentley, Bugatti, Lamborghini, Rolls-Royce and the Dutch-built Spyker exotic sports car. “A larger number of customers buy one car a year,” said Bragg, “We probably have 30 or 40 of those people.”

Fortunately for Bragg, his dealership is right where all the money is. Even in an economic downturn, Beverly Hills never runs out of ready cash. “It’s not that the wealth goes away or comes back,” he said. “The names on the mailboxes change.”

And while these super rich folks are flying in their private jets, they are of course with their copies of Elite Traveler.

“Women have complimented the jewelry. The following companies keep Elite Traveler in their aircrafts: Net Jets, Charter Communications, Lockheed Martin, US Department of Treasury.”

-Anah Joffroy—Signature Flight Support, Englewood, CO

4. Mass Affluent Luxury House Spending Hits a Wall…

Toll Brothers, the builder of luxury homes for the Mass Affluent (typical customers have a Household Income under $300,000) said last week that signed contracts for homes dropped 29 percent in the second quarters. It cited higher mortgage rates. “It’s pretty much what we had thought,” said William Mack, a home building analyst for Standard & Poor’s. “Things are slowing and at a pretty rapid rate.” Cancellation rate also jumped to 8.5 percent, a historic high showing that Mass Affluent customers are getting skittish. Toll is not alone: Two other upscale builders catering to the Mass Affluent – Centex and Beazer reported double digit drops in orders.

In Denver, the number of unsold homes hit a record 29,045 in April and the rate of foreclosure skyrocketed by 19.2%. One agent said 50% of his listings under $300,000 are in foreclosure or facing foreclosure.

“I always make sure the magazines are in my view. What an amazing magazine. I look forward to each new issue, the covers alone are something to look at.”

-Camela Hollin – Galaxy Aviation, Palm Beach, FL

5.  Eclipse Says It Has Sold Over $3.4 Billion in New Very Light Jets…

While Mass Affluent consumers may be tightening their purse strings – a recent survey said if they had an extra $500, most would save it – the super rich are in no need of cutting back. Eclipse, which this year will start delivering jets for under $1.5 million (of course you have to pay for pilots, fuel, maintenance, landing fees, etc.) expects it will deliver more than 750 of these jets per year. Range of the jets is about 1,500 miles, so chances are they will attract the last wave of wealthy commercial airline flyers frustrated with bad service, delays and the hassles of airport security. A recent story in USA Today said lost luggage by US airlines is at record highs and expected to get worse over the summer as more passengers travel but their reduced workforces are unable to cope. Timing probably couldn’t be better to target any Super Rich flying by commercial airlines in the US. A lack of trained screeners is expected to make airport waits this summer even longer. On a recent Sunday at LAX, flights were delayed for over an hour because there weren’t enough screeners to clear passengers who are already being warned to check in at least two hours prior to their flights. What’s more, you may not want to take off your expensive watch to go through the screening process. Nearly 100 TSA agents have been arrested for theft this year!

“I’ve had to increase my copies because the magazine goes so fast. I try to keep one for myself when I can. The pictures inside are so breath-taking.”

-Donna Reed – YYJ-FBO Services, Canada

6. People You Want to Have on Your Customer List….

David Koch bought Jacqueline Kennedy Onassis’s apartment at 1040 Fifth Avenue, the entire 15th floor of the building, for $9.5 million. He and his wife, Julia, renovated it at an estimated cost of $5-10 million. Now reports say as the Koch household is expecting their third child Ms. Onassis’ former apartment will be too small for their expanded family. ‘There’s just no way we could fit another child in that apartment,” Koch said.

The Fifth Avenue apartment has four bedrooms, two dressing rooms, a staff room, a library, living room, dining room, conservatory, two terraces, three fireplaces, five and a half bathrooms and a wine room. Thus the apartment is on the market for $32 million and the Koches have bought a new apartment at 740 Park Avenue for a mere $18 million. “It’s time to move to a bigger space to accommodate the larger family,” Koch said. The new apartment, a duplex, “has about double the space”.

And if that is not enough of a demonstration of where the money is, a recent article in the South Florida press noted a trend among mega-yacht owners: Shadow boats – or mini-mega yachts typically between 75 and 150 feet.

But what are these boats used for? Well, toys for yacht owners are getting bigger. It is hard and unsightly to have to keep your private submarine on the back of your mega-yacht, but it is still too large to put on the back of an ordinary boat. Also, the shadow yachts are a nice place to send crew you don’t need after their shifts are done.

Shadow mega-yachts first started as a popular feature for Middle East owners, such as the Sultan of Oman, but the popularity is spreading with Americans and Russians.

Of course, Elite Traveler is there for luxury marketers by supplying copies of Elite Traveler to mega-yachts and private jets worldwide via our BPA audited circulation thus ensuring wherever in the world these rich customers are, your message is there!

“Fascinating, they always want to buy something they see. The products offered and destinations are just what my customers are looking for!”

-Mary Bullock Bagosy – Galaxy Aviation, Orlando, FL