Why is the luxury industry stuck in predictability? – Hospitality
In part 2, as a follow up to the previous analysis on fashion and accessories, we are looking at predictability – opportunities, challenges and trends in the luxury hospitality industry.
The past decade has seen a flurry of new luxury hospitality brands, few independent and most, belonging to a larger hotelier, however, in most cases, they are now facing an identity crisis, clearly indicating the lack of a solid foundation of the DNA of the brand but also the fact that the company did not anticipate neither competition, nor changes in consumer needs and preferences.
One such example is the Marriott Group which boasts the highest number of luxury hotel brands: JW Marriott, Ritz Carlton, EDITION, Bulgari and Autograph. While in the case of Bulgari and Ritz Carlton, the two brands would have a very solid foundation, the other brands would generate numerous question marks as to what makes each brand different – what are the differences between Marriott and JW Marriott or the differences between JW Marriott and Ritz Carlton – the latter example arising especially because of mixed use developments like in Los Angeles (L.A. Live) or Beijing, among many other examples globally, the two hotel brands would co-exist under the same roof.
One such striking similarity which could give way to confusion is The Ritz Carlton in Vienna (Austria) which opened less than a year ago, and which boasts an interior design and facilities which made me think, during my stay, that the property could perfectly be a JW Marriott. Ironically, when the development works started more than 6 years ago, the owners have signed a long term management agreement with Shangri-La, and Vienna would have thus been the first property of the Asian chain in Europe.
It is obvious that the need for diversification came as an anticipation of needs and a finer targeting of consumers. However, the interaction and the experience of guests with each of the brands could not have developed more predictable – from placing a reservation, checking-in, to the actual stay – both ‘hardware’ (interior design, facilities etc) and ‘software’ (service) being almost identical. Therefore, the only clear benefit would be the group’s leveraging in terms of rates, especially corporate. Many such similarities exist between Autograph and Ritz Carlton properties, especially from the point of view of interior design, type of building and location.
However, despite the somewhat confusing path of several brands, Marriott has taken a most sensible approach, to not only limit itself at managing / operating properties under third party management agreements but also own them. This is the case with the EDITION brand launched almost five years ago in partnership with Ian Schrager, as a distinctive luxury lifestyle hotel brand. It is the newly opened EDITION Hotel in London, which is the first property to follow this new approach and the results are evident – a solid concept with a very well defined brand DNA with clear differentiating factors from its direct competitors Andaz (Hyatt Intl) and W (Starwood Hotels).
With the The London EDITION Hotel, it is for the first time in almost a decade, I could truly grasp a strong sense of innovation at all levels, the company enjoying the ‘luxury’ of implementing various ideas without having to consult with owners/developers. What was most impressive to me, during my stay at The London EDITION last week, was the exceptional standard of service, both consistent and most genuine and warm, in less than a week from opening. Rarely, have I seen, at any luxury hotel in the past years, such a well bonded and motivated team, with an incredible passion to serve, and at the same time, displaying a sophisticated attitude – warm, yet slightly formal, adapted to each and every guest.
Spanish based international hotel group Melia, added the ME Melia brand, as a retort to Starwood’s W Hotels, however, copy pasting many detail of the concept and the brand identity – from the cutting edge, colorful and flamboyant design to the entertainment and F&B, several of the Me Melia hotels strikingly resemble W Hotels.
Within giant Starwood Hotels, W Hotels have been experiencing a gradual decline brand awareness, the core concept of the W aging much faster than probably initially expected, especially in major metropolis around the world, where they have been facing stiff competition from chain and independent luxury design hotels. The essence of the W Hotels concept, the WOW factor in music, retail, food and Spa has been looking more and more lackluster at many properties around the world. However, visiting several W Hotel properties, I could grasp that the company has been striving to re-invent and re-fresh the brand.
Another example of a predictability recipe is Hilton Worldwide, the company having taken their New York flagship globally as a distinct, upper level brand, the Waldorf Astoria. Again, I have repeatedly asked myself the question what are the real differences between the Hilton and the Waldorf Astoria, especially keeping in mind several unfortunate projects such as Syon Park outside London which opened as a Waldorf to recently be re-branded as Hilton or the Waldorf Astoria in London. In the case of re-branding existing properties, especially upgrade from Hilton to Waldorf, I would agree, in part, that this generates additional challenges which take time to implement. But what about the Waldorf Astoria in Berlin, a huge opportunity for the chain, especially considering this is a brand new property and Berlin has a shortage of luxury hotels.
The antidote to predictability is undoubtedly innovation, which, in the case of the hospitality industry, should enhance the stay of hotel guests and gain their long term loyalty. Beyond in-room technology which relates to entertainment (Tv, sound, internet etc) and comfort (air-conditioning, remote control of facilities), luxury hoteliers should foremost focus on innovating in services – whether that relates to front of the house or house-keeping. It is mainly through innovation in services that hotels are able to kindle a long lasting WOW factor.
Whether fashion, cars or hotels, luxury relates to lifestyle the the most complex and sophisticated manner, in such a way that each luxury sector is more and more interconnected. And not only from the point of view of converging towards the latest lifestyle trends, but also to identify common lifestyle DNA traces which can forge long term relationships. Successful luxury hoteliers nowadays, embrace and connect with other luxury sectors, directly or indirectly – for instance, they may create a dialogue with a fashion designer of fashion collection through an art installation or in a more overt manner, for instance, a certain designer (fashion, accessories, jewelry, cars or watches) to create an entire suite or design specific elements in the hotel.
Starwood’s St Regis Hotel brand is undoubtedly the chain which has grasped, early on, on the potential of collaborating with fashion brands i.e. Bottega Veneta, Dior, Bentley suites can be found at several St Regis properties around the world. Then, there is also the more recent trend of creating ephemeral suites, such as the Baccarat Suite at Hotel Raphael in Paris or the ’Night & Day’ Suite by Regis Dho at Hotel Lutetia Paris.