Ledbury Research on behalf of Airbus Corporate Jets (ACJ) recently published a Billionaires Study in which they dredged through any information they could find on 250 of these 10 digit wonders from China, Middle East and Russia in an effort to better understand their lifestyles. They then conducted 25 in-depth interviews with service providers and experts across 10 sectors, including jets, fashion, hotels, high-end stores and yachts. While I didn’t know I was part of such a select group, I can say I was flattered to be one of the interviewees so was looking forward to seeing the study which I received yesterday. I did not know the research was for Airbus until the end of the interview.
As background, most of us know Airbus as the commercial airplane manufacturer whose signature jet is the Airbus A380 which can hold up to 900 passengers. Single aisle models such as the A318, 319, 320 and 321 typically ply intra-Europe routes and routes across North America. In these plane types you will find 150 to 200 passengers.
Another side of the manufacturer is that it sells “Corporate” versions of these planes, from large to small. Commercial list prices are from $70 million to $415 million depending on plane type, and then of course you have to furnish it. Airbus offers various design options for private customers, but often buyers bring their own designers and use third parties. One can easily spend $25 million or more fitting out the cabin to their preferences, be it private offices, media rooms, card tables, showers, master bedrooms and so forth. Therefore, it makes sense ACJ would be interested in knowing more about billionaires, although these jets also have a Head of State, Charter and CEO market segment.
In fact, it was former General Electric Chairman Jack Welch who got the segment started when over dinner he complained to then Boeing Chairman Phil Condit that his Gulfstream was a bit cramped for the ultra-long haul trips he was making from Connecticut to China. Condit suggested a conversion of the Boeing 737 (equivalent to the A320) in an executive configuration powered by, of course, General Electric engines.
While Airbus and Boeing sell new private jet versions of commercial airliners, it’s also possible to buy commercial planes airlines are retiring and convert them for private use. Google operates a former Qantas 767 that now has three bedrooms among its amenities. Casino billionaire Sheldon Adelson has two 747SPs that in a former life flew for Pan Am and TWA.
Below are some highlights from the research:
- There are now more billionaires in China, the Middle East and Russia combined than in the USA, but at the end of the day that’s somewhat irrelevant as they tend to have a global lifestyle.
- Billionaires are discreet. What we see is really only glimpses of how they live.
- While they own or invest in many businesses “billionaires have learnt to enjoy themselves, and set aside time for family compared to five years ago.”
- They are highly determined. They have confidence in their own ideas and decision-making ability, and the money to execute them. This can make them easier to deal with that your run of the mill UHNW.
- Wealth was generally created via a unique idea or being associated with somebody who had a unique idea. They tend to be detail focused, are quick to pick up on mistakes and assimilate information quickly.
- They are attracted to unique, tailored services.
- Younger billionaires tend to be more free spending, whereas older billionaires tend to be more focused on wealth preservation, legacy and inheritance, according to Ledbury. That said, we have had experience with billionaires purchasing watches and jewelry directly from Elite Traveler, and I have first hand knowledge of billionaire purchasing. An 80-year old billionaire purchasing $300,000 pieces of jewelry doesn’t come across as a spendthrift in my book, but again I think one has to take these reports as more directional guidance than gospel. Regardless of age, most luxury providers I know would like to have a few more billionaire clients.
- In certain areas of the World, family hierarchy is part of buying large items. In the Middle East, a son will have a smaller yacht than his father.
- Wealth Stage is a critical factor. I’ve said this forever. Most UHNWs are first-generation wealth. The rich folks didn’t get rich studying luxury products. For marketers who can build awareness of what they are selling, Billionaires and UHNWs have the money. They just need to be given the motivation and desire. More than anything, they need to know what you are selling. I always say, advertising is a good answer. It works, plain and simple.
- Many UHNWs have different lifestyles outside their home country or hometown. It’s just different in St. Tropez than Doha, Beijing or Kansas City.
- Their mind-set is global and not restricted to a single market.
- They want hand holding available when they need or want it.
- For younger billionaires, being educated in the U.S. or U.K. has influenced their outlook and lifestyle, and the trend of having their children educated abroad means this will continue and deepen.
- Billionaires today tend to be less formal, preferring seating arrangements around a coffee table rather than boardroom style. As a plug, I think Elite Traveler has been way ahead in our approach to covering luxury in a reader friendly and informal way. I guess that’s why 99 percent of private jet owners we surveyed last year said Elite Traveler is a good showcase for luxury products and services, and 95 percent said Elite Traveler was higher quality than other magazines. I still find many luxury lifestyle magazines suffer from the “Pretty Woman” syndrome in the way they talk to readers.
- Travel plans, including dates and destinations, change frequently.
- Private villas as part of hotels are popular as they provide privacy and high service standards.
- Many travel with key household staff in addition to butlers and nannies. A London General Manager recently told me about how he was sent out to greet a billionaire arriving by private jet. They had sent several cars and a van for luggage but were amazed to see the party had already secured their “regular, security approved” drivers as they got off the plane and whizzed right by.
- Billionaires want to be surprised and delighted, but they want it adapted to their personalities and lifestyles.
- They lead a global lifestyle. In the summer Russians, Middle East and even Chinese can be found in the Med, while in the Winter, they will be likely vacationing in the Caribbean. While the report states Chinese billionaires tend to be more regional, I will debate that. Just look at the real estate market in London and Canada. The $3.5 billion Baha Mar resort in The Bahamas is funded by Chinese money and the Chinese have over $15 billion in Caribbean investments.
- For yachts, the Chinese have more of an indoor focus and are more likely to have rooms built for business meetings or Mah Jong whereas Russians and Middle East see yachts as “vehicles of leisure.”
- Billionaires believe their service providers should go above and beyond for them, because they are billionaires.
While the study did speak about the important role of intermediaries, I do think it missed out not mentioning the fact that billionaires can be influenced to buy from traditional print advertising just like you and me. In the 13 years since we started Elite Traveler we have had Presidents of countries, Sultans and Kings, CEOs and Billionaires buy products and services straight from ads. A recent Boston Consulting Group/Altagamma study of 10,000 luxury consumers in 10 countries showed that magazines are number one in influencing luxury purchases. From my experience, I would add that traditional advertising in media that reaches Billionaires and UHNWs should be a key part of whatever your UHNW marketing strategy is.