Notes on:The luxury hospitality market

Change Nation London & Singapore

March 2014

Notes on: the Luxury Hospitality Market

The luxury market is in a state of flux—and it may never be the same again. As travel and hospitality are two of the most discretionary items in anyone’s spending pattern, they are probably under more pressure than any other sector. Yet hotel brands seem to be making mistakes that could have long-term repercussions. How can hotel brands adjust to the new paradigm of luxury that’s driven by value, rather than conspicuous consumption?

Mistake 1: Treating luxury as though it were an ornament, not substance.Consumers are demanding the freedom to determine what luxury means. In response, yourproduct must go beyond the standard checklist of high-thread-count sheets and a locallyacclaimed restaurant. PlumpJack, which has niche properties for snowsports (Squaw ValleyInn) and wine appreciation (Carneros Inn), provides direct access to unique experiences inthose categories, bypassing the need to “know the right people.” Luxury isn’t the fireplaceanymore. It has to be a real fire.

Mistake 2: Adapting your current luxury consumer model without changing youroperational setup. Ensuring that customers achieve the experience of privilege with everyencounter requires a very different operational style. Staff members need to be trained to bestewards of the brand. Look to organizations that blend entertainment and hospitalitysuccessfully for examples of how service can be choreographed but not scripted. Forinstance, W Hotels has adapted the same “cast member” strategy as Disney—their humanresources representatives are even called casting directors—to create the right behaviors incustomer interactions.

Mistake 3: Ignoring the competitive landscape beyond the boundaries of yourcategory. Luxury is about indulgence. In the mind of the client, a week in your hotel mightbe measured against plastic surgery or a new sports car; which gives the most satisfaction?Your competition doesn’t end with other properties in the same area with the similaramenities. Consider how well your marketing messages measure up in servicing other needsbeyond your core competence.

Mistake 4: Believing a single, spectacular brand experience is possible withoutfully integrating communication channels. Consistent, seamless, positive relationshipswith your brand are at the base of what every “purchaser of experiences” wants. Talk tocustomers online about what is going on at your property, and then follow up with additionalconversations through special events and direct mail. TheLobby.com, for example, offersinsider-quality information written for visitors to both inspire them to travel to Starwoodproperties and to make their trips in progress more enjoyable. Too often, differentcommunication channels are parceled out to separate agencies and partners with littleregard to how messages will fit together for the customer. Marketing executives must alignthem to achieve a common goal. Think orchestra rather than solo performance.

Mistake 5: Not striving to make brands more human. Don’t focus on the brand’stagline. People who are buying luxury experiences don’t want to buy the same experienceagain and again. They will gravitate toward brands that continuously evolve anddemonstrate different tastes and moods like real, live humans do. They desireanthropomorphic brands that do different things and introduce them to different people.Blueblood brands such as The Ritz-Carlton Co. and Four Seasons Hotels & Resorts mustbegin to portray different aspects of their brand personalities from location to location. Theycould also flow more organically from one context to the next. For example, a Ritz in the cityshould have a different flavor than a Ritz at the beach. And everyone needs to lighten up, orelse risk becoming a target for the current backlash against traditional demonstrations ofostentatious wealth

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