Why luxury retail brands are turning to hospitality for business growth

  1. Insight

The convergence of luxury retailers and hospitality brands is reflective of the modern consumer’s increasing demand for augmented experiences, and synergistic business partnerships provide enhanced commercial benefits to both the retailer and hotelier.

  • For retailers, brands need space to engage with consumers and hospitality experiences provide an opportunity to create deeper connections. The brand stays front-of-mind without diluting the value of the products by forcefully trying to sell more. 

  • For hoteliers, it’s an opportunity to elevate brand awareness, heighten loyalty and reach new potential guests – especially when the retail partner shares brand values and is aligned with target audiences.

The importance of brand

Today’s consumers seek connections with brands, often using logos and products to articulate their own personality to their peers and networks. Younger generations are driven by a hunger for experience and heavily influenced by social media: owning objects is no longer seen as their quest, experiences - the more luxurious and unique, the better - are today’s trophies.

In the luxury sector, brands are increasingly aligning themselves to ‘experiences’: one study found the market for luxury hospitality is growing faster than personal luxury items. Driven by the rise of millennials as luxury consumers, the researchers found “emotion and experience have emerged as luxury consumers’ important motivations to purchase.” They don’t want to just buy the status symbol; they want to live it.

Analysing consumer behaviour in the luxury sector, it’s believed: 

“twenty-first century consumers want to interact with brands on a deeper level than just a financial transaction. These consumers aim to form emotional, contextual, and sensory connections with brands... As a result, luxury brands have become synonymous with going above and beyond to provide consumers with a personalised and unforgettable experience.”

Yet, brand loyalty remains a key factor in 90% of luxury purchasing decisions, with a consistent brand presentation across all platforms – including experiential partnerships – boosting revenue by as much as 23%. Forging a meaningful partnership with a hospitality provider allows retailers to keep their brand relevant to consumers’ mindset and lifestyle, without having to roll-out increasingly frequent product lines and risk devaluing their brand.

The concept of lifestyle is without doubt influential in hospitality: by 2025 lifestyle hotels are expected to constitute 23% of the hotel development pipeline worldwide. And it’s a category that delivers for owners and operators, achieving an additional $33.60 ADR over non-lifestyle hotels according to STR.

The benefits of collaboration

Deloitte cites the challenge for luxury retailers as finding the balance of driving “future sales, while remaining unobtrusive, discrete and scarce.” At the core of luxury brands has always been a physical experience – marquee stores in exclusive locations – and partnering with hospitality brands provides an opportunity for them to extend a physical and emotional relationship with their customers.

Collaborations between luxury lifestyle brands and hotels (and the wider property market) grab attention, both in the media and with consumers. Examples include: 

  • The Dior Spa on the Royal Scotsman

  • Frame’s hoodies for the Ritz Paris - shoppable on social channels!

  • Christian Louboutin’s 13-room Hotel Vermelho in Portugal

  • Fashion behemoth LVMH acquired the high-end Belmond Hotels, while Milan (and other cities) are home to Armani, Bulgari and Moschino hotels

  • Mercedes Benz Residence in Dubai

  • Aston Martin Residences in Miami

  • Nobu Hotels - not only well-known for its celebrity owner Robert de Niro and evolution from Nobu Restaurants, but the Atlanta hotel is a car-lover’s dream with the exclusive Porsche Icon Suite and Porsche Classic Room available

  • Elie Saab Residences for those seeking a base in London

  • Swiss watchmaker Audemars Piguet’s Hôtel des Horlogers, the ‘Watchmakers’ Hotel’

  • Fashion bible Elle has a Maison Elle collection, including, of course, a property in Paris

Experiential activities allow luxury retailers to bring more aspects of their brand to life and strengthen their brand equity: “Producers of luxury products have realised this and are switching elegantly between selling products and offering experiences to promote their brands and values best.”

Credits: Armani, Bagatelle

Credits: Chanel - Courchevel

Credits: Aston Martin Residences - Miami

Credits: Dolce&Gabbana - San Domenico Palace

Partnering with established fashion brands boost the credibility of hotels, while trendier brands add street credibility and appeal to a younger demographic. It’s not just take-home items, designed to extend the brand relationship beyond a hotel stay; fashion brands are also partnering with hotels to offer guests glamorous wardrobe rentals, such as Rosewood and My Wardrobe UK, or Four Seasons and a range of luxury handbags. 

Experiences are also a good way for brands to appeal to aspirational luxury consumers – a market segment that McKinsey found may account for only 18 percent of the total fashion market value, but is 50 percent of the luxury market.

Why luxury partnerships are a good idea

Partnerships between luxury retail and hotel brands is an opportunity for both parties to strengthen their brand – but only if done right.

Luxury brands, eager to keep their reputations for exclusivity whilst building deeper and more frequent relationships with consumers – have been forced to find novel ways to connect. Hospitality offers the perfect partnership – sharing a desire for faultless service alongside a wish to help customers enjoy memorable experiences.

Partnerships also offer hotels a revenue stream - whether taking a commission from wardrobe rentals, driving increased room rates for a themed suite, or boosting incremental revenue through a Dior spa treatment. While luxury brands may be moving into the hospitality world, hotels are also transitioning the other way, moving into ecommerce spaces and becoming retailers, leveraging brand relationships to sell more at high rates and grow profitability.

Learn more about Journey’s ecommerce platform that enables luxury hotels to retail their whole on-property experience online.

Simon Bullingham

Founder and CEO

Our founder and CEO, Simon, has been growing our business since 2012. He’s a key player in increasing ROI for international hotels, but when he finds a spare minute, he’ll be playing pool or looking for new places to eat.

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