Elite Traveler – ET Insider – October 18, 2011
ET Insider – October 18, 2011
Elite Traveler Insider –
October 18, 2011
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.
In this issue:
1. The $250 Million Private Jet (Interior)
Luxury shopping doesn’t get more pricey than this. Boeing Business Jets just announced their 2012 price list. You probably know Boeing from its commercial planes that carry from 125 to 500 passengers for some 100 + airlines around the world. Another side of the business is that they sell these planes as private jets – think owners of pro sports teams, royal families from the Middle East, billionaire businessmen, planes for heads of state and multi-national companies such as General Electric. Obviously these Boeing Business Jets are more likely to have private bedrooms, spacious showers, dining tables, card tables, media rooms, and gourmet kitchens than the rows of seats you find on commercial planes.
So what’s the cost? An entry level BBJ (think of a 737) is $57 million without the interior furnished. Boeing estimates it will cost another $20 to $25 million to make it nice inside.
The state-of-the art 787 Dreamliner is also available as a private jet. The entry level model is $178 million, however Boeing estimates that you put aside up to $150 million for your VIP interior, although if you want to cheap it out, you may get away for as little as $80 million.
Of course if you are looking for the ultimate, consider a new 747-800. The price tag looks like it might have been fixed by Wal-Mart. Perhaps not wanting to overdo it, Boeing lists the price tag at $299.548 million. We agree that $300 million for a private jet would have been a bit over the top! Of course, this ultra-huge jumbo will mean more dollars to outfit the interior. Boeing says as much as $250 million.
So how many are out there? Boeing has delivered 170 Boeing Business Jets and has 200 more on order.
Of course, if you are a high end watchmaker, jeweler, real estate developer or designer fashion and accessories company, it is always nice to know where you can find customers who think spending $1 million with you is the best bargain ever. And of course, Elite Traveler brings these Uber Ultra High Net Worth private jet fliers the private jet lifestyle as they hop the globe on their private jets.
============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication targeting and reaching private jet travelers to have its circulation successfully audited. View our BPA statement here. ============================================================
2. Is the Economy Bad? Not For Private Jet Buyers…
According to a new survey by Honeywell, some $230 billion in new private jets will be delivered in the next 10 years. For companies looking for UHNW consumers who can really increase sales, obviously these elite travelers are a desirable audience. Even in these tough times, over $7 billion in new private jets were delivered in the first six months of 2011. In other words, while the mass affluent struggle, there are UHNW consumers doing better than ever.
Keep in mind that a customer pays 80 to 90 percent of the new jet value upon delivery, so for luxury companies that want to find consumers who are doing well and spending big, the private jet traveler remains the ultimate market.
============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication in the world delivering 400,000+ readers with a Household Income of $1 million + ============================================================
3. Back to Reality: American Express Customers Spend… Well, Not That Much
I enjoy listening to smart people, and so it was a few months back I had the fortune of meeting Dr. Jim Taylor, guru of the Mass Affluent research company Harrison Group. Jim was speaking directly before me at New York University Stern School of Business; while I think I had better jokes, Jim is really a guru when it comes to marketing ideas.
It is one of the reasons I am always on the lookout for the research he does for American Express Publishing (think Departures and Travel + Leisure). His research does not go up to the income and spending levels of elite travelers (In a couple weeks we will be unveiling some new research with Prince & Associates with Private Jet and Private Jet Fractional Owners, plus Family Offices – think families with over $100 million in investible assets). Nevertheless, Harrison Group provides good research on consumers who might actually have money to spend after taxes and leaky roofs.
For luxury marketers, I don’t think the news was particularly bright: Cara David, Senior Vice President of Corporate Marketing & Integrated Media at American Express Publishing, noted: “Expressions of happiness are being increasingly decoupled from the desire to acquire more and more things. The search for the holiday spirit no longer centers on the search for ‘stuff’ – it resides in family and in simplicity.”
The new Survey of Affluence and Wealth in America, produced by Harrison Group and American Express Publishing, shows that the country’s affluent consumers expect to focus on relationships and experiences rather than material gifts during the holiday season. The survey sampled 769 affluent Americans with discretionary household incomes ranging from $100,000 to over $1 million. Not shabby, but not the heavy user of luxury goods and certainly not the elite traveler hard-core frequent private jet user (of whom we have over 400,000 readers).
What does it all mean? This decline is led by those with discretionary incomes of $100K to $250K, the core American Express publishing audience whose holiday spending budgets are projected to be 17% lower than in 2010. How much are they expected to spend on their holiday gifts? About $2,700. Better than nothing but certainly not good news for luxury marketers who are pinning hopes that this audience will be buying $20,000 watches, $10,000 necklaces or staying in $3,000 per night suites, let alone buying that $5,000 croc bag.
============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication targeting private jet travelers with an independent editorial and design team, original photography, award-winning editors, designers and photographers. ============================================================
4. Entourage, Prince Alwaleed Style…
I strongly encourage anyone in luxury sales and marketing to regularly read Robert Frank’s Wealth Blog at wsj.com, and even more, his book Richistan.
While various credit card publishers get excited about $2,700 in holiday spending for their readers, this is why we think elite travelers are a different and much more lucrative audience, and why our worldwide audience aboard private jets puts you front and center in their living room – that is, aboard their private jet.
From Robert Frank:
“Saudi Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud (known as Al Waleed to his pals) has issued a barrage of documents to refute media reports about him and a woman in Spain.
The alleged incident was supposed to have taken place in early August of 2008 on a rented yacht (by the way, check out Elite Traveler Superyachts, our sister magazine aboard mega-yachts). Yet in a detailed release, Al Waleed provides extensive proof that he was nowhere near Spain at the time. He was in France aboard his own yacht and shopping in St. Tropez. He provides testimony from his yacht captain, body guard, passport stamps, hotel records and restaurant receipts to show he was in France at the time.
Yet one of the more trivial but interesting documents in the release is a list of his entourage. Al Waleed provided the list to show just how many members of his posse witnessed his whereabouts at the time. According to the records, Al Waleed travels with an entourage of 26 people. In addition to his wife, the group includes:
1 – A private physician 2 – Assistant manager of his palaces 3 – Private Assistant 4 – Executive Assistant 5 – Personal Affairs Manager 6 – Two Personal Affairs Assistants 7 – Manager of Protocol Department 8 – Manager Travel and External Affairs 9 – Assistant Manager Telecommunications 10 – Private Affairs for the Princess 11 – Princess Beautician 12 – Athletic Trainer 13 – Two private security details, one French security detail and one security detail for the Princess. 14 – Assistant head of the Audio Visual Department 15 – Al Waleed’s Personal Hairdresser 16 – Two guys listed as “companions” (and their names are NOT Drama and Turtle).”
Robert always puts aspirational wealth into perspective. I am sure all the folks who use their Centurion cards for lounge access at airports and qualify from running business expenses through their charge cards will agree, elite travelers are, let’s say, Black Card Plus to the infinite!
ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication that delivers UHNW consumers on private jets from more than 100 countries with a single ad. ============================================================
5. Nielsen Research: Target a $100,000 HHI Consumer, Get $500 Maybe…
In yet another “forest through the trees” moment, more research shows luxury marketers need to aim higher – much higher – if they want customers who can spend much, if anything at all, with them. We recommend asking your ad agency how many readers have a HHI of $1 million + in the publications where you advertise, and what percent of their total audience those heavy hitters make up.
Nielsen’s Fourth Annual Holiday Shopping Survey focusing on households making $100,000 and up spotlighted online, club, dollar, toy, and consumer electronics retailers-as well as categories such as gift cards, technology, and toys that will perform well.
The survey shows that across all income levels, only 5 percent of U.S. households plan to spend more this year, with affluent households-those earning upwards of $100,000-leading the way. Among households earning $100,000 or more, consumers ranked online merchants, club stores, and dollar stores as the top three channels where they plan to spend more this shopping season. Among households making $50,000 or less, consumers plan to increase their spending at dollar stores, online merchants, and supercenters.
“Nielsen expects the vast majority of consumers to be increasingly practical and focused on value this season,” said James Russo, Nielsen’s vice president of global consumer insights, in a statement. “More affluent consumers will drive spending, particularly in entertainment, vacations, toys, and technology.”
Recent findings from Nielsen’s Consumer Confidence Index revealed consumer sentiment is near recession lows, with one out of every three respondents reporting that they’ll have no spare cash going into the holiday season. Roughly 52 percent of Nielsen Holiday Survey respondents reported plans to spend $500 or less. At the other end of the spectrum, affluent households reported plans for modest spending increases in stores as well as for out-of-home and in-home entertaining.
Of course, at Elite Traveler we always say, when you are up in a private jet or out on a superyacht, life is pretty good. And $500, I think that qualifies as a tip at club after a good night out, or maybe even a bit more!
============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication that makes sure your ad message gets your best customers and prospects no matter where they travel — on their private jets. ============================================================
6. Luxury Institute: Mass Affluent Consumers Cut Jewelry, Watch Buying
Most mass affluent publications – think Conde Nast, American Express and Hearst – have audiences that make about $150,000 Median Household Income, meaning of course that half of the readers advertisers pay to reach make less, and many not much more.
The Luxury Institute’s most recent holiday research shows that the $150,000 per year HHI crowd is dramatically curtailing spending in key luxury categories this holiday. Jewelry (39%), antiques (37%), custom apparel (34%), art (34%), handbags (33%) and watches (33%) top the list of likely areas for that those surveyed plan to cut
============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication targeting and reaching private jet travelers to have its circulation successfully audited. View our BPA statement here ============================================================
All the best,
Douglas D. Gollan Group President and Editor-in-Chief