More than ever private jet travelers, or elite travelers as we like to call them, are the most lucrative market for luxury brands and service providers. With readers spending $10,000 per hour to fly privately, the over 600,000 readers Elite Traveler reaches each issue provide you a great way to make sure your message is in front of consumers who have the money to be good customers. With our Asia Edition, Elite Traveler Superyachts, our over 60 Elite Traveler Destination Guides at Elitetraveler.com, our global database of private jet owners and our award-winning custom marketing team, we would welcome the opportunity to be of help to you in making sure you get a bigger share of our reader spending.

With a Net Worth of more than $40 trillion, I hope you will agree elite travelers should be a key target for your marketing! Follow Doug Gollan on Twitter: https://twitter.com/EliteTravelerDG

In this edition:

1. How Much Do CEOs Spend on Private Jets for Leisure? 2. Do The Super Rich Know What You Are Selling ? 3. Private Jets Are Flying High 4. The Super Rich Spent $214 Billion on Luxury and Lifestyle Last Year

1. How Much Do CEOs Spend on Private Jets for Leisure?

According to a study by Equilar and reported by Bloomberg, the average Fortune 500 CEO spends about $276,391 for personal travel by private jet. Typically private jet travel is billed to executives at a rate lower than if one charters or is using their own jet since the asset is already there and would just be sitting unused. A typical recharge rate is probably around $2,000 per hour, meaning CEOs use their private jets for around 138 hours a year for personal use, or about 11 hours per month.

Among some of the executives mentioned in the article, General Electric’s Jeff Immelt clocked in at $343,121 last year while Halliburton’s David Lesar spent $463,329. AT&T boss Randall Stephenson spent $276,391 to reach out and touch someone while on his own time. And while Facebook keeps us connected online, founder Mark Zuckerberg spent $650,164 to be there in person.

How much did you spend on personal travel last year? As we say, private jets are a good place to reach consumers with deep pockets.

The Average Household Income to be in the Top 1% is $1,264,065—and one needs a minimum Household Income of $400,000; since 2008 the 1% have captured 95% of all income gains, according to The New York Times… Is your media plan reaching consumers who are heavy users of luxury?

2. Do The Super Rich Know What You Are Selling?

“The Super Rich already know us.” It’s one I hear quite a bit when I speak with purveyors of luxury goods and services. There is an urgency to get the word out to a broader audience of aspirational consumers with the belief that Ultra High Net Worth prospects already have some type of intimate knowledge of what they are selling. It’s as if billionaires and centimillionaires wake up in the morning wondering what new luxury products have been launched lately.

Truth or Myth?

I’m going to say Myth.

First of all, around 90 percent of Ultra High Net Worths (UHNWs) are self-made, first-generation wealth. In The Sky’s The Limit, only 2.9 percent of private jet owners we surveyed became rich via inheriting their money. Many came from middle class households. (See five Super Rich Americans who started out super poor.) Dad might have been a bus driver or factory worker, Mom a teacher or nurse. Wealth was created via business success or innovation. There were no father and son trips to Hermes to buy new saddles before heading to the club. More likely mom was taking the future UHNW to soccer games in a minivan while dad was painting the house.

Today’s UHNW was never the aspirational consumer flipping through fashion magazines in their cubicle. As they built their business, every extra dollar was plowed into the business. During school breaks, vacations meant the kids came to work in the warehouse. The spouse helped in the business, and her shopping was probably buying new computer equipment online, not shoes. There are many stories about today’s very rich having to borrow money from friends and family to make it through the early years.

Somewhere between age 30 and 50 these folks crossed the chasm that separates UHNW from aspirational wealth. Today’s UHNW didn’t grow up shopping to impress other people. There was no need to wear Gucci loafers at the factory. Now they are the ones with the money. In fact, since 2009 the Top 1 Percent — the rich — have gotten richer, having gained 95 percent of income increases, according to UC Berkeley researcher Emanuel Saez. Their newfound lifestyle means they are active in luxury, having time and taking time to vacation, often working it in with business and investment opportunities, flying on their private jet, pursuing hobbies and passions, going to places where a nicer wardrobe and some upgrades are needed. Research by Harrison Group suggests this socialization into luxury trappings and preferences is a five to 15 year process, providing a nice window of opportunity for marketers. In some cases it never stops. Carl Icahn was in his 60s when he bought his first superyacht, although he could have afforded to buy one for many years before.

My take:

The Super Rich know less about your product or service than you think. While they weren’t thinking about you as they were making their money, you have been busy the last decade or so churning out innovative products and experiences, line extensions and so forth. After all, it wasn’t that long ago Montblanc, as an example, just made pens. Now a large part of their business is mechanical watches, they have a jewelry line and accessories such as briefcases and luggage. It’s only in recent years Louis Vuitton launched high jewelry, high-end mechanical timepieces and menswear. The Super Rich don’t wake up in the morning and think about what new product launches you just had. So while UHNWs may know the brand, they might not know everything you do.

At the same time they are the segment with the most money. They already spend a lot of money with you or your competitors, but they have the depth of wallet to spend more. To me, that’s an opportunity. This goes for every segment. How many people who have the money have chartered a yacht? How many Super Rich people know the full range of spa experiences? It seems like there is a new concept every month. For that matter, destinations are constantly evolving their offerings. Fine dining in Australia? How many rich people have never had a custom-made, Italian hand-stitched suit? Why doesn’t Bill Gates appreciate the complex mathematical concepts behind mechanical watches? After all, Microsoft and minute repeaters are both the works of genius.

I think it’s important to state luxury industry and brands have done a phenomenal job developing a lot of infrequent buyers: aspirational consumers who spend money they really don’t have to create an image of status not matched by their bank accounts. According to Boston Consulting Group there are 350 million aspirational luxury consumers worldwide that account for $620 billion in global sales, or about $1,700 in total luxury purchases annually per household.

In terms of growth opportunities, my point is that there are untapped opportunities with UHNWs.

How much do your top 50,100 or 500 customers spend annually?

How would you like to get 25, 50 or 100 new customers who have the same spending power?

While every brand has its fans and advocates, there are lots of Super Rich folks out there who could spend a lot more. The opportunity is to make them aware of all the great products and services you have.

“Elite Traveler is a key media source for us with well over $200,000 in sales we can track directly back to our ads in your magazine over the past year.”- Charles Krypell, Owner, Charles Krypell

3. Private Jets Are Flying High

General Aviation, the umbrella industry that covers private jet use, contributes $150 billion a year and 1.2 million jobs for the U.S. economy and is one of the few industries that contributes to the economies of all 50 states. The ignition point for use of private jets is generally business, and then the adjunct is leisure, with many times missions getting combined. National Business Aviation Association research pegs private jet users as making some 41 trips per year, or over 100 flights. In other words, the private jet is both board room and family gathering place.

You can ask, “How does one mix business and leisure?”

Let’s say you’re visiting factory locations in provincial France, Germany and Italy over the course of two weeks. A private jet enables you fly into one of 3,900 airports in Europe near to the location in time for a tour of the location and a full day’s business meetings, then jet off to the next regional airport without a connection. Perhaps you have meetings Monday and Tuesday, but nothing scheduled for Wednesday. You take the jet to London or Paris to check out a top restaurant you read about, or maybe to do a bit of shopping.

What to do on the weekend? Maybe the spouses fly to London for the weekend to meet for some theatre and shopping.

While some might criticize this as an unneeded folly by those that have too much money, let’s remember we live in a service driven economy. If one considers that the Top 0.1 Percent of U.S. taxpayers, a mere 117,000 households, contributed some $214 billion to the economy last year via luxury lifestyle purchases (in addition to the $150 billion figure for private aircraft use), I say, keep spending. Others will disagree, but that’s not the point of this piece. This piece is for luxury marketers who are looking for where they can efficiently reach more high spending prospects.

Recently Bloomberg published an article about an increase in private jet use for leisure by the CEOs of publicly traded companies. I was not surprised.

Honeywell forecasts in the next 10 years 9,250 new private jets worth over $250 billion will be delivered. Bombardier puts its forecast at 24,000 new private jets delivered in the next 20 years valued at $650 billion.

Last year was the second best year in the history of private aircraft deliveries. According to the General Aviation Manufacturers Association the keys to $22.8 billion dollars in shiny new airplanes were handed over in 2013. To put that in perspective, it was just behind the 2008 record of $23.8 billion. More interestingly, the 2010 post-recession low of $18.6 billion in new deliveries was the industry’s seventh best year since they started keeping records in 1964. As recently as 2003, annual deliveries were less than $10 billion.

As luxury marketers look for ways to target the upper echelons of the 1 Percent, private jets are a good place to find them. About 750 private jets were in Louisville this past weekend for The Kentucky Derby, and as one person told me, “There was plenty of money.”

After all, if you could afford a car, would you take the bus? Simply put, private jets are the “chariot of choice” for the Ultra High Net Worth, Super Rich or top luxury customers. I think the saying is, “Fish where the fish are.”

“From the Summer Edition of Elite Traveler Superyachts, as well as the Asia Edition including the May/June issue we are happy to report sales ($437,000) of the timekeepers we advertised” – Patrik Hoffmann, CEO Ulysse Nardin

4. The Super Rich Spent $214 Billion on Luxury and Lifestyle Last Year

Looking at research on luxury and lifestyle spending by Ultra High Net Worth families and layering it against recently released research on how much the Top 0.1 percent make, I estimate these 117,000 households contributed $214 billion to the economy last year.

Analysis by Sadoff Investment Research of University of California, Berkley’s Emmanuel Saez study of U.S. income tax returns reveals the Top 0.1 percent have an Average Household Income of $6,373,782.

So where does it go?

According to a study by The Washington Post of households with a $250,000 income, after taxes, mortgages, child care, electricity, water, phone service and other necessities they probably have about $15,000 a year to spend on leisure and luxuries, including clothing.

The Top 0.1% of American earners represents some 117,000 households (117 million x 1/10th of 1 percent). We also know from Saez that since 2009, the Top 1 percent have gained 95 percent of all income gains, and luxury autos, fashion, watches and hotel revenue has continued to grow. In fact, 2013 marked the second highest year in history for the sale of new private jets at $23.4 billion.

With that in mind I thought it would be interesting to look at lifestyle spending research published in The Sky’s The Limit based on 661 private jet owners with a Median Net Worth of $41 million.

Not all of the Super Rich spend in all categories measured, but weighting the numbers and making the assumption since the lot of the very rich has only improved they are spending at least the same as they did in 2007, I worked out how much the Top 0.1 of American households percent contribute for various industries (chart below).

Based on my analysis, the Top 0.1 percent spent nearly $50 billion on making their homes nice, some $25 billion on fine jewelry, $19 billion having events and parties and $5.5 billion on watches among other things. Moreover, they contributed over $12 billion to those who make their living getting us dressed. All together, my estimates show the 117,000 top earning households in the U.S. put about $214 billion into the economy.

Category / Amount Spent Art $61,897,446,000 Home $47,370,258,000 Yachting $4,868,604,000 Jewelry $25,824,240,000 Cars $4,151,394,000 Events $19,236,672,000 Villas $5,444,712,000 Leisure Hotels $12,013,326,000 Watches $5,572,476,000 Cruises $3,326,076,000 Fashion $12,265,344,000 Spas/Spa Resorts $7,411,248,000 Adventure $1,891,890,000 Wine/Spirits $2,890,836,000 Annual Spend $214,164,522,000

All the best,

Douglas D. Gollan Group President and Editor-in-Chief Elite Traveler, the private jet lifestyle magazine Elite Traveler Superyachts, the superyacht lifestyle magazine Elite Traveler Asia, Asia’s private jet lifestyle magazine Elitetraveler.com, the private jet lifestyle online Elite Traveler Update, our weekly e-Newsletter to private jet owners worldwide

Elite Traveler (audited by BPA Worldwide) is the only audited publication delivered to global locations for private jet travelers. We have global distribution in over 100 countries aboard private jets and in private jet terminals. Each issue is read by over 630,000 Ultra Affluent consumers with an Average Household Income of $5.3 million (Source: Prince & Associates, 2011)

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Doug.Gollan@elitetraveler.com Elite Traveler Magazine 708 Third Avenue, 10th Floor New York, NY 10017 USA