If the hotels featured in most luxury magazines seem a little down market, you might consider getting ARareWorld, an exclusive travel title published in Westwood. But, in this case, exclusive means you’ll need $20 million in the bank.
That’s the minimum net worth for subscribers, who are vetted by wealth managers privy to their finances.
Given this limited market, it’s noteworthy that the magazine has grown among wealthy travelers. Its pages are filled with reviews of pricey international vacation hot spots and ads for jewels and other luxury items.
You won’t find it on airport newsstands – and that’s exactly the point, said Matt Wollman, owner, chief executive and writer at ARareWorld. His money came from the sale of a Long Beach massage chair company in 2003.
“We only visit the very best properties in the destinations where we think our friends are going,” Wollman said. “It’s coming from your peer who has the same lifestyle as you.”
The magazine’s circulation has grown to 11,000 copies today from 600 at its 2009 launch.
Wollman is hoping to preserve the title’s cachet so he can give targeted reach to luxury advertisers, who pay about $20,000 for a full-page ad. Based on the limited circulation, he said his advertisers pay more to reach each reader than for any other publication.
The strategy appears to be working. ARareWorld began selling advertising last year and already has scored brands such as NetJets and Assael pearls. The ads have helped the magazine turn profitable.
ARareWorld is published 10 times a year. It has 48 pages with a maximum of 20 ad pages. The company has six employees.
Now, Wollman sees an opportunity to grow the subscription side of the business – not by opening the title up to less wealthy readers, but by doubling the magazine’s cover price to $400 a year.
The other part of that effort is converting freebie readers into paying subscribers. About 90 percent of the magazine’s 11,000 copies are given as gifts as a perk by wealth managers or other financial professionals to their wealthiest clients.
On top of that, Wollman is planning the launch of a new title through his publishing company, Strategic Media Intel in Westwood, next year. Two more are also planned. The three will focus on business, geopolitics and philanthropy.
But that might be too much too fast, said Samir Husni, director of the Magazine Innovation Center at the University of Mississippi, due to the costs of launching products.
“This is the downfall of most publishers,” Husni said. “They sniff success and before they establish themselves, they expand.”
Wollman said he’ll pay for the expansion with cash generated by ARareWorld.
ARareWorld is Wollman’s first foray into publishing and it was decidedly low cost.
He sold the massage chair company that he founded, Interactive Health of Long Beach, to private equity firm J.H. Whitney & Co. of New Canaan, Conn., in 2003 for $94 million, which he split with partners. He invested a tiny amount of his proceeds, $50,000, to launch the magazine in 2009. A year-and-a-half later, he bought out his partner’s equity for an undisclosed sum.
Wollman said the sale of Interactive Health put his net worth well beyond his magazine’s $20 million threshold and closer to the average net worth for a subscriber, which is around $100 million. Still, he noted, many readers are worth far more.
“Our sweet spot is in the $300 million range,” he said.
He had no prior publishing experience, but after talking with friends and acquaintances, he identified a void in the market for people looking to book vacations that cost hundreds of thousands of dollars. Existing luxury titles such as Departures – distributed to American Express platinum and black card holders – and Robb Report don’t cater exclusively to the highest end of the travel market, he said.
Wollman said the magazine only reviews properties of interest to ultrawealthy readers. In the July-August edition, the magazine’s cover story reviewed a number of secluded waterfront properties in Vietnam, one of them so remote as to be accessible only by boat although it is on the mainland. The magazine praised the chicken pho at the Six Senses Con Dao resort while lamenting the limited availability of Wi-Fi at the Six Senses Ninh Van Bay. The article didn’t say how much it costs to stay there, but standard room rates are between $600 and $2,500 or so, according to the resorts’ websites.
To build a readership of only the wealthiest consumers, Wollman approached financial institutions, which agreed to give the magazine to its high-net-worth clients as a perk to show them what they can do with their wealth.
“They’ve completed their financial planning so they have more time to travel the world and go on beautiful vacations with their family and have great experiences,” said Michele Havens, president of personal financial services for Northern Trust in Los Angeles. “It’s a very natural point of connectivity.”
Twenty-seven financial services firms pay wholesale for the magazines and distribute them to clients, whose names are kept confidential.
But Wollman is trying to convert those readers into customers who will pay the cover price themselves – and also provide their addresses and other information that can be used for marketing purposes. It’s not an easy proposition, but Havens said she has seen some of her clients switch to paying subscribers.
One incentive: ARareWorld offers perks to subscribers that are not available to those who read the magazine as a freebie. For example, subscribers are eligible for a night’s free stay at super-deluxe suites around the world, such as the Peninsula in Beverly Hills. The perks are given by luxury brands for the chance of winning business in the future.
In one such perk, James Friedman, managing partner at West L.A.’s Intrepid Investment Bankers, said he and his wife took a private charter flight with nine other couples in March to stay at a 13,000-square-foot Talisker Mountain Inc. property at Deer Valley in Utah. Friedman met Wollman when he was hired to provide investment banking services for Interactive Health and was among the early readers of the magazine.
Other perks include extravagant events, such as a Chairman’s Ball earlier this month, when 60 people met at Wollman’s house in Brentwood, where Champagne Krug was poured and Rolls-Royce Motor Cars showed off its newest model.
“You get to experience some interesting products when you go to these events,” Friedman said.
Husni acknowledged providing such clublike benefits is a good strategy to add paying subscribers.
As Wollman broadens his publishing business, he’s keeping his core readership in mind.
“The goal was to keep it close to the vest and not share it with the general public … to define the readership as our peers from a wealth standpoint. Folks who were living really, really well,” he said. “One of the biggest challenges for people with a lot of money is spending the money.”