Elite Traveler – ET Insider – November 7, 2006
ET Insider – November 7, 2006
Elite Traveler Insider –
November 7, 2006
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, that 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.
Super Rich will Spend Even More This Holiday…
While you and I may be packing the family car to go to the mall for some holiday gift shopping, nearly one in four Super Rich families will take the private jet specifically to go shopping this holiday season.
In this issue of the Elite Traveler Insider, we provide you an outlook on spending by both the Super Rich (Net Worth $10 million +) and the Middle Class Millionaires (Net Worth $1 million – $10 million) for the holiday season.
The research was conducted by Prince & Associates during the last week of October and included 1,027 pre-arranged telephone interviews split between consumers who fall into these two Net Worth categories.
Researcher Russ Prince is considered a leading authority on High Net Worth households, having authored over 35 books on the subject and as a consultant to Merrill Lynch, Neuberger Berman, Morgan Stanley and many other financial services companies who cater to a well-heeled clientele.
I read this latest research with great interest, as in recent weeks I had also seen research from Unity Marketing and The American Affluence Research Center which predicted softer spending for the Middle Class Millionaire segment. So while those surveys didn’t deal with the ultra-high end that Prince does, I thought it would be interesting to see if there were any similarities.
Among the aspects of the new Prince Research I found most interesting is that the Super Rich plan to continue significantly higher spending across the 13 luxury categories that were tracked in 2005. Percent increases ranged from an 11.8% projected increase in spending on yacht charters to a 57% jump in spending on spirits for entertaining.
For the Super Rich, Elite Affluent, High-Net Worth or whatever you want to call the $10 million + group, the super spending ranged from $25,700 per household on gifts of electronics to $410,000 spent on yacht charters.
Of course, only 8% of even the Super Rich will be chartering a yacht (others may already own yachts, Prince points out); however, the top categories for spending based on percentage who will spend during the upcoming jolly season are: Holiday Entertaining (91% spending an average of $34,600); Spirits for Entertaining (87% spending $22,300), Jewelry (86% spending $91,100), Fashion (84% spending $36,400) and Corporate Gifts (82% spending $38,400).
In terms of spending by the Super Rich, watches will again be popular gift purchases (38% spending $52,000 which may be spread over five to 10 gift timepieces) while relaxation is also a big spending point: 41% will stay at a hotel or resort, spending an average of $61,200 (about what a Conde Nast Traveler reader earns after taxes for an entire year) while 51% will visit spas and spend slightly over $27,000. About a third (31%) will rent a villa or ski chalet, spending an average of $69,900.
To me, all of the above appears to be good news for companies that derive a large part of their business from the Super Rich, particularly luxury goods and travel companies. The growing gap between the Super Rich and the Mass Affluent was noted in several areas of the survey. One was in the percentage that spend in specific categories and then of course, the amount spent.
For example, while 8% of the Super Rich plan to charter a yacht, none of the Mass Affluent did – I think that is natural. With villa rentals, 31% of the Super Rich planned this for the upcoming holidays vs. 3% of the Mass Affluent. With pricing at luxury hotels and resorts climbing higher than ever, 41% of the Super Rich planned to vacation at a five-star property for the holidays vs. 10% of the Mass Affluent, while with the purchase of watches, the percent was in favor of the Super Rich by a 38% to 14% margin.
This reminded me of a quote from the CEO of watchmaker Hublot at June’s FT Conference on the Business of Luxury, who said that the person who buys a $20,000 watch buys five more watches that year while the person who buys the $2,000 timepiece waits another five years to buy.
For categories such as jewelry (86% to 79%), Fashion (84% to 80%) and Electronics (61% to 50%) where the percent of Super Rich and Mass Affluent engaging in the activity were similar, the big difference was in amount being spent.
For example, the Super Rich will spend $91,000 per household buying jewelry as gifts this holiday vs. $4,100 for the Mass Affluent, while in Fashion the difference is $36,400 vs. $1,700 and for Electronics $25,700 vs. $2,800.
For marketers looking to hook in more business from the Super Rich, charities again will be a big theme with High Net Worth families donating an average of $94,200, a jump from $62,100 last year where many gave earlier as part of Hurricane Katrina relief efforts.
Of course, when the Super Rich get ready to shop, they don’t only pull their Jags and Maybachs out of their long gated driveways. According to the Prince Research, 22.8% of the Super Rich will take their private jet specifically to go holiday shopping. Hopefully they will give Santa a lift to your chimney on the way!
The full report will be available in the Research section of www.elitetraveler.com in the next few days or feel free to email me at email@example.com for a copy!
Reminder: You can win 5 hours of private jet travel free for you and 5 friends. Help celebrate Elite Traveler’s 5th anniversary at www.elitetraveler.com/contest.. It is all online and will take about 10 minutes!
Elite Traveler is the only magazine distributed worldwide aboard private jets reaching luxury’s best customers in over 90 countries. Each issue delivers over 400,000 readers with an average household income of $5.3 million!