Institutional Investor's Alpha Magazine - April 2008 - (Page 52)

SPECIAL REPORT: LUXURY MARKETS Above: A $22,500 platinum, bezel-set diamond bracelet from the Betteridge Collection. Below: The interior of the Bombardier Learjet 45XR its marina development business to address the global shortage of berths as demand grows from owners of newly built yachts. “We have seen a heavy inﬂux of Russians as owners and charterers,” says Monteﬁore. ”And now we are seeing a trend from India.” SeaNet of Newport Beach, California, a leader in fractional yacht ownership, has expanded its ﬂeet to 12 yachts since the company was launched four years ago with one yacht. SeaNet is also expanding its ports of call this year, adding Miami and the Mediterranean to its California and Mexico destinations. As the demand for multimillion-dollar yachts continues to swell, SeaNet recently added a new 60-foot vessel, named Manhattan. The company has also found that value-added services with fractional ownership are important in a market that has a growing list of competitors. For example, SeaNet provides a concierge service that gives fractional owners a feeling of being at home when they set sail, with family photos placed around the yacht along with their favorite music and wines. Manufacturers of long-range corporate aircraft, including Boeing Business Jets, Gulfstream 550, Global Express/XRS and Falcon 7X, have orders going to 2012 and beyond, with price increases of around 20 percent since early 2007. The private jet industry has seen few signs of a slowdown, thanks to a changing market in which some 70 percent to 80 percent of all corporate aircraft purchases come from buyers outside the US. Embraer has won almost 700 orders for its Phenom executive aircraft in the past two years. Cessna plans to add 1,500 employees as it expands its Citation jet line. Leasing options for private jets have helped boost the market for corporate aircraft, even among companies and individuals trying to trim costs. “Once you’ve become used to ﬂying on private jets, you don’t want to go back to commercial airlines,” says Michael Shane, president of Civilian One, a charter service that started up this January. Civilian One sells ﬂight hours through a card rather than fractional memberships, so passengers pay only when they are actually ﬂying. The company also oﬀers a number of value plans, such as a Fly Home Free program, in which a customer who takes a round trip and stays at the destination for less than two hours receives a free return trip. “When you have a superior product and great value, it turns out that a recession is a good time to start a new business,” says Shane. From Jets to Jewelry Bombardier Flexjet has begun to oﬀer new leasing and fractional programs in keeping with a customer base that, according to Natalie Bloomﬁeld, Flexjet’s director of marketing, has a growing number of entrepreneurs with a diverse range of needs. One expecially popular option, says Bloomﬁeld, is the Flexjet 25 Jet Card program, which allows customers to purchase ﬂying hours in 25, 30 and 35-hour increments. “Customers have their choice of ﬂying in the best of the Flexjet ﬂeet, including Bombardier Learjet 40XR, Learjet 45XR, Learjet 60XR, Challenger 300 or Challenger 605 aircraft,” she says. The company recently launched a new program called Flexjet One, in which a customer can purchase a whole aircraft and put it under Flexjet management, so that the company hires the crew and takes care of hangaring and maintenance. “Other beneﬁts,” says Bloomﬁeld, “include access to the entire Flexjet fractional ﬂeet and the ability to use more than one aircraft in a single day.” With its growing range of options, Flexjet has seen a growth rate of more than 20 percent since early 2007 in both revenue and ﬂight hours, and even more signiﬁcant growth in orders in that period. In Shanghai, Aston Martin is opening its ﬁrst showroom in China, as global marketers of luxury goods pursue the $6 billion – and still nascent – luxury market there. Manufacturers of luxury automobiles, such as Jaguar, Porsche and Ferrari, expect global sales to double within ﬁve years. The classic car market is also taking oﬀ, especially rare racing cars, such as the Ferrari 250 GTO, which can command as much as $25 million. Luxury watch designers are gaining support from new strategic alliances in the industry, such as the partnership between Swatch and Tiﬀany’s, which competes with Cartier and Bulgari. Twenty-sixyear-old Ivanka Trump has just launched a jewelry boutique that bears her name on New York’s Madison Avenue that focuses on modern reinterpretations of glamorous Hollywood designs. Trump has announced 2 • Alpha Sponsored Report • April 2008

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - April 2008

Institutional Investor's Alpha Magazine - April 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Here to Eternity The Good Guys: Voice of Hope Cover Story: The Kings of Cash Where the Money Is Into the Light Interview: Proceeding with Caution Strategies: A Convenient Truth Alpha Bytes: Village Voice Unhedged: Commentary: No Time for Complacency

Institutional Investor's Alpha Magazine - April 2008

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