ET Insider – November 6, 2007

Elite Traveler Insider –

November 6, 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.

CONTENTS:

1. Luxury Stocks Fall as Mass Affluent Pull Back on Spending

2. Private Jet Travel Growth Continues: Wealth Bulletin

3. Personal Bankruptcy Skyrockets as Housing Crunch Intensifies

4. Elite Cover and Fashion Shoots Attract and Create Top Talent

5. See Our Latest Advertising

6. With Buyers Sidelined, Home Prices Slide

Does Elite Traveler work? Ulysse Nardin sold “at least” two $86,000 Sonnerie en Passant watches from its ad in Elite Traveler’s January/February issue

1. Luxury Stocks Fall as Mass Affluent Pull Back on Spending

How much will Mass Affluent publication Robb Report’s (Median Household Income of $183,547, compared to Elite Traveler’s $2,280,960) Luxury Stock Index dive as its Mass Affluent readers tighten their belts? We’ll see; however, a recent article by The New York Post predicts that Santa is going on the cheap this year as Mass Affluent consumers in the U.S. show new signs of skipping luxury products in their shopping plans.

It is a trend that is likely to continue (see Item 3 on the mortgage meltdown and Item 4 on the increase in personal bankruptcies).

The Post Business article noted that stocks of many high-end manufacturers and purveyors, including Polo Ralph Lauren and Tiffany, tumbled after a red-flag warning from upscale leather goods brand Coach, noting it expects fewer shoppers to visit its pricey stores this season.

Coach shares sank nearly 12 percent to $36.60, off $4.87 in a heavy sell-off. Tiffany fell 4 percent to $53.60, off $2.29; Movado lost 3 percent to $30.56, down 94 cents; Polo Ralph Lauren fell $1.26 to $67.01, off 2 nearly percent; and Saks dropped 39 cents to $18.96, down 2 percent.

Coach, of course, is considered an entry level price point brand for luxury, so softness in its traffic and sales could mean trouble higher up the food chain.

According to the story, analysts believe the weak dollar is going to scare off other customers from buying imported luxury goods, which could cost as much as 30 percent more than last season due to the steep drop in the dollar.

“An Hermes bag that’s been selling for $8,000 to $10,000 is now going to be starting at $10,000 and up,” said retail analyst Steve Buxbaum of the Buxbaum Group.

Buxbaum is advising luxury marketers to shift their focus away from the Mass Affluent, believing the tonic for luxury retailers and brands is to focus on the Super Rich. “Of course, the very rich can afford anything, but it’s the aspirational shoppers striving for status and luxury who are going to pull back,” he said. “Instead of buying a bag and the matching wallet, they’ll buy just the wallet.”

“The dollar’s drop could be helpful to Coach,” said Buxbaum. ” Shoppers are saying, ‘I can’t spend $1,200 for the Louis Vuitton bag, but I can go $378 for the Coach bag.”

Elite Traveler readers spend $117,000 per year on fashion / accessories and close to $250,000 on fine jewelry, and with private jet travel costing anywhere from $7,500 an hour and up, that $1,200 Louis Vuitton bag is in fact a bargain!

Does Elite Traveler work? Two readers of Elite Traveler just made real estate purchases with Ginn Sur Mer for over $15 million!

 

2. Private Jet Travel Growth Continues: Wealth Bulletin

Wealth Bulletin, a website designed for advisors to the Super Rich, is calling private jets the must-have among wealthy individuals.

In a recent article giving insights into how the Super Rich live, the web site noted, the number of private jets ordered globally will exceed 1,000 for the first time ever in 2007 and is expected to rise to 1,300 next year, a 30% jump!

The article points out that traveling by scheduled flights is so time consuming with airport and baggage delays that commercial airline problems serve as the ideal marketing tool for private jets.

According to Wealth Bulletin, in the US, private jet ownership is expected to double and private jet flight hours will triple over the coming decade. Private jet owners take an average of 41 trips per year, 10 of which are intercontinental.

More numbers: Today, private aircraft account for roughly 4,000 movements (take-offs and landings) each day in the New York metropolitan area, Los Angeles and Florida. And private jets are expected to account for more than 20 percent of all traffic at Las Vegas McCarran airport in just five years.

The skies are becoming ever more crowded with private aircraft despite operating costs of as much as $10,000 per hour. Perhaps because of high operating costs, fractional ownership is also increasing quickly. Netjets Europe, the largest manufacturer in Europe, reports $1.1 billion worth of orders equating to around 92 jets.

Getting a charter jet during peak periods, if you don’t own, is one of the biggest challenges, the report concludes. And if you want to buy, order now, as waiting lists are getting longer and longer!

Does Elite Traveler work? Felix S. Sabates, Chairman of Trinity Yachts recently bought six Girard-Perregaux watches that he had seen in Elite Traveler.

 

3. Personal Bankruptcy Skyrockets as Housing Crunch Intensifies

With loan defaults rising along with many mortgage payments, fast-growing numbers of homeowners are gambling on bankruptcy filings to try to stay in their homes, according to The Wall Street Journal. Last month, as the nation’s housing slump continued, consumer bankruptcy filings increased almost 23% from a year earlier — representing nearly 69,000 people — according to the American Bankruptcy Institute, a nonprofit research group whose members include bankruptcy attorneys, judges and lenders.

Overall, consumer bankruptcy filings were up 44.76% during the first nine months of this year.

In some areas where the real-estate boom was especially heated, the increase in filings has been even sharper — especially for a type of bankruptcy that allows homeowners to halt foreclosures on their homes.

In California, one of the nation’s hottest markets during the recent real-estate boom, the number of non-business Chapter 13 petitions in the second quarter of the year more than doubled from a year earlier, according to records compiled by the Administrative Office of the U.S. Courts in Washington. Over the same period, such filings increased nearly 40% in the northern district of Illinois, which includes Chicago, and 70% in Massachusetts.

“It’s a mess,” says William McLeod, a Boston bankruptcy attorney who says he is receiving twice as many calls from debtors as he did a year ago. “This is fed right now by real estate, and what’s been this mortgage frenzy in the last several years.”

BMW Chief Executive Tom Purves has already said that a large chunk of the luxury automaker’s growth over the past five years was being fed by low cost money and extra cash available consumers had after refinancing their homes.

Luxury marketers planning for 2008, however, can count on the Super Rich to keep spending. The most recent economic data shows their income and wealth is higher than ever. Research expert Russ Prince recently noted, “This is not even a blip for the Super Rich in terms of their lifestyle spending. Particularly for the Net Worth $25 million + segment, they will not be making changes in terms of luxury lifestyle purchasing.”

Prince also noted that the Super Rich will also likely become more active in the real estate market as they perceive “deals” and opportunistic purchases. To that end, another recent story in The Wall Street Journal showed Florida properties priced over $1 million still moving at a swift pace compared to the rest of the market.

Does Elite Traveler work? A reader booked the Presidential Suites at The Mandarin Oriental, Washington DC directly from the pages of Elite Traveler.

 

4. Elite Cover and Fashion Shoots Attract and Create Top Talent

Maybe it’s our oversize format? Perhaps it is the beautiful glossy paper on which we print Elite Traveler? Maybe it is the lure of being seen in the exclusivity of a private jet? Or it could be all of the above.

Ozzie (for best photography and design) award winning Elite Traveler has buzz. From our Sept/Oct 06 cover model Louise was spotted by Bruce Willis, who cast her in one of his upcoming movies.

Jessica Hart jumped from our March/April 2007 cover to become the new face of Guess Jeans. The $95,000 Harry Winston necklace she was wearing also jumped out of the case at the company’s Fifth Avenue flagship store where an Elite Traveler reader walked in an purchased it after seeing Elite Traveler on his jet.

Chanel Rouge Allure model Julie Ordon was gorgeous on the Sept/Oct 07 cover of Elite Traveler. In addition to Chanel, she has been seen in ads for Guess and Ralph Lauren as well as editorials for Vogue, Elle and Glamour among others.

According to The New York Post she recently caught the attention of Puff Daddy, where her boyfriend and the mogul apparently mixed it up in a bid for her attention.

Of course, Warwick Saint, who shot the Ozzie winning fashion shoot in our March/April issue aboard a beautiful Camper mega-yacht, is no stranger to big names. Among the celebrities he’s photographed are Adrien Brody, Alicia Keys, Brittany Murphy, Cate Blanchett, Charlize Theron, Christina Aguilera, Drew Barrymore, Eve, Gwen Stefani, Hilary Swank, Jared Leto, Julianne Moore, Julie Delpy, Liv Tyler, Maggie Gyllenhaal, Missy Elliott, Naomi Campbell, Natalie Portman, Renee Zellweger, Salma Hayek, Sharon Stone, Winona Ryder, and of course, speaking of crossroads, Puff Daddy.

Please go to the link below to see the Ozzie winning fashion shoot:

http://www.elite-travelerdigital.com/elitetraveler/200703/?pg=62&pm=2

Does Elite Traveler work? Elite Traveler delivers. Your leads are extremely qualified and we have closed a significant amount of business from your magazine. Jared Cullop – President, VPI Marketing

 

5. See Our Latest Advertising

Elite Traveler’s advertising campaign includes MIN, Media Industry Newsletter plus a number of show guides for key luxury events and conferences.

Please go to the link below and you can see our current advertising campaign:

http://pr-dbetmg-elite-traveler.pantheonsite.io/adcampaign.html

6. With Buyers Sidelined, Home Prices Slide

According to The Wall Street Journal, the housing market today can be summed up with the words, “So many houses. So few buyers.”

Inventory is the highest in over 20 years, yet a severe tightening of credit by mortgage lenders is keeping many buyers out of the market; furthermore, the huge supplies of homes for sale have persuaded others that they can wait for further price cuts.

The National Association of Realtors reported yesterday that sales of previously occupied homes in September dropped 19% from the same month a year ago to a seasonally adjusted annual rate of 5.04 million units.

Some forecasters now warn that home prices are unlikely to start rising in most of the country before 2009 or 2010. A year ago, many home builders and lenders still thought that the housing boom — which more than doubled prices in some areas during the first half of this decade — would end with a gentle landing. Now those hopes are dead. There has been a “brutal” drop in home sales, with WSJ citing a 55% decline in Orlando while sales in six Southern California counties — Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange — in September totaled 12,455, down 49% from a year ago and the lowest for at least 20 years.

Interestingly, but perhaps not surprising to readers of this newsletter, the market at the top end is still very strong. Developer Steve Ross just sold his New York City townhouse for $10 million, the asking price, according to The New York Post, while demand by the Super Rich continues unabated for homes $1 million plus in South Florida according to The Journal.

Look for our Main Feature Story in January/February Elite Traveler, Iconic Locations, as we survey some of the world’s most interesting places to have a secondary residence.