According to Bain & Company, the global luxury consumer market grew by 4% in 2016, reaching an estimated retail value of 1.08 trillion euros. Recently, luxury consumption has shifted from goods to experience such as travel and gastronomy. While emerging middle classes are looking for luxury goods (Asia Pacific), more mature markets (Western Europe and North America) are looking for new ways to consume luxury. Creating an exclusive and relevant luxury experience thus becomes more and more crucial and a differentiating factor between old and new luxury standards.
The new luxury is curated
Luxury consumption is subjective. For one traveler, it can be a private cruise on a famous yacht. For another, it could be the assurance that a tailor-made wardrobe is waiting for him in his room without him having to ask for it. For others, it means bringing their favorite Chef to the middle of the Sahara. Luxury is having someone who knows you well enough to anticipate your every need and know what you really appreciate and then respond to that demand.
“Today, we think about how we consume, we demand more and carefully consider our needs. Will I really like it? Do I really need it? Is that suitable for me?” said Mercedes Erra, Executive President of Havas Worldwide at the Global Lodging Forum 2018.
The key to the next chapter lies in planning an experience that attracts travelers on a personal level, that will be in symbiosis with their lifestyle. Luxury is selling a dream. That is why brands that are truly successful focus primarily on history. The hotel’s history must be authentic, based on truth, and then built to create the aspiration on which the brands are built.
Luxury is often linked to the founders, their vision, their creations and is fundamental to who they are as a brand. Charles-Augustine Meurice, French postmaster, recognised the opportunity and need for the English tourist travelling from London to Paris to have a place to rest when they arrived, hence the location of the Meurice. But it is also a hotel designed for the English traveler, and as such it has an English bar as well as a Gentlemen’s Club.
On the Rocco Forte website, you can read: “In much more than name, Rocco Forte Hotels is the Forte family. At its head are Sir Rocco, his sister Olga and his three children. Behind it are four generations of Forte hoteliers. It is in every way a family business; a shared love evident in every Rocco Forte hotel – each exuding the Forte’s innate Anglo-Italian style, sophistication and warmth. And each welcoming you as a guest of the family.”
These hotels are unique in their destination (Hotel de Rome in Germany and Hotel de Russie in Italy) but they do not bear the company name. It is therefore even more difficult for customers to make the connection to the brand. Nevertheless, the greatest selling point of Rocco Forte remains their classic philosophy of hospitality and their keen sense of family.
The history and heritage of the group or the hotel highlight the brand and are the product of the founder, employees and clientele as well as the location, which is most often unique to the property. The Ritz-Carlton in Paris is recognizable for its swan-shaped taps, its Hemingway and Ritz Bars, its Coco Chanel suite & spa.The heritage of The Peninsula, Mandarin Oriental and Shangri-La lies in their eastern origins. In all these palaces, there is a history based on the hotel’s heritage.
The new luxury is based on fashion
The Palazzo Versace Queensland was the first fashion brand hotel to open in Australia in 2000. Subsequently, designers such as Karl Lagerfeld (Hotel Crillon in Paris), Christian Dior (Hotel Barrière Majestic in Cannes) and Diane von Furstenberg (Hotel Claridge’s in London) then created rooms for other hotel brands.
The luxury watchmaker Audemars Piguet recently joined forces with BIG- Bjarke Ingels Group to create a hotel in Switzerland, the latest in a series of high-end resorts opened by luxury brands in hopes of taking advantage of their prestige by setting up house in the hospitality sector.
Armani has a hotel in Milan, while Ferragamo’s Lungarno collection owns the Portrait Firenze in Florence and Tommy Hilfiger bought the Raleigh Hotel in Miami Beach. These properties also have the advantage of being located in strategic locations in terms of customer markets such as Shanghai, Beijing and Tokyo, gateway cities such as London or exotic locations that contribute to raising the brand’s profile.
Bvlgari and Baccarat are also examples of luxury brands with no history in hospitality that have developed in the hotel business. The LVMH luxury group is a typical example with the creation of Cheval Blanc, a collection of houses described as “exclusive havens of refinement”.
In addition, co-branding also offers the possibility of creating luxury hospitality experiences. For example, Graff Diamonds has partnered with the Ritz-Carlton Hong Kong to create a unique treasure chest offered during afternoon teas. These “Thematic Afternoon Teas” were also held at Mandarin Oriental’s MO Bar in Hong Kong with brands such as Jimmy Choo and Joe Malone.
Thanks to hospitality, these brands can offer a multi-sensory and more holistic experience than just buying. Each brand, whatever its core business, therefore recognizes the importance of hospitality in the context of luxury.
Thus, brands that strike the right chord with consumers will prosper over those that rely simply on the quality of their material offer. The new era of luxury travel is to have access to the most incredible and ephemeral experiences that money can buy, but only accessible for a select few.
The new luxury is transformational
In 2017, the economy of experience began to evolve towards the economy of transformation. This growing importance is a causal response to cacophony and lack of socio-political stability, as well as to the isolation often created by social networks. More and more consumers are re-examining their definition of value and their objectives.
Going beyond the experience to the point where it becomes meaningful is an aspiration that can grow out of the desire to be a more creative person or be a better parent. Brands can therefore support these developments in countless ways.
In this context, luxury hospitality is quite likely to be disrupted. Trust is the next currency of travel and reputation is the new score, but that is only the starting point. Consumers don’t just want to trust a brand. They want to align themselves with pillars, more consciously than before, that defend their priorities.
A traveler’s perception of luxury does not change only throughout his lifetime - it can change throughout the duration of his journey. The circumstances of the journey will change their perceptions and this new era requires brands to constantly monitor their expectations and adapt accordingly.
“Brands are more difficult to build and develop than before. There is less commitment and interest. Consumers are more attached to points of view than brands. The brand is much more disputed,” said Mercedes Erra.
The next evolution in brand loyalty aims to encourage customers to commit throughout the customer experience. Brands can achieve this through what is called “marketing orchestration” where each point of contact is integrated into a personalized message. As part of this holistic approach, hospitality brands are moving from a product-centered approach to a service-centered approach.
The new luxury is not a question of loyalty
Social networks offer brands a platform to connect with customers and shape their perceptions. But these platform also transfer power to the individual, who can tarnish long-established brands with a single post.
The user’s state of mind is much more susceptible to influence than a few years ago because of increased digitalization. Indeed, the desire of every traveler is to live everything that is stored in his personal device within real travel experiences. Today, our social networks define our value systems and priorities to the point of changing our identity. As Peter Vidani, founder of the Tumblr platform, said: “We are what we share.”
As travelers expand their digital presence, they are increasingly inspired by the new and increasingly divergent possibilities of what luxury travel can look like. From a wealthy traveler’s perspective, there is a sea of landscapes on Facebook, Instagram, Twitter and Snapchat, that explore the world in a different way.
As a result, hotels are better able to establish deeper relationships with their customers when their brand identity is more aligned with the priorities of their target clientele. But this is just the beginning of the relationship. The congruence with their lifestyles only attracts customers to the front door.
But that doesn’t necessarily mean a second date. Millennial luxury travelers are not motivated by brand loyalty. Instead, increased exposure to information through various platforms allows luxury players to benefit from a greater number of influencers, thereby increasing their chances of being connected to potential customers.
Although brand loyalty is not dead, but rather diversified, “brand love” is one of the main challenges for hospitality and travel brands. “Brand love” involves a series of actions focused on intimacy, passion and commitment between the consumer and the brand.
According to university researchers specializing in hospitality, loving a brand is not very different from human love. When a hotel wants to explore its brand identity, it must consider both internal and external factors. Internally, the hotel considers who it thinks the brand is, while externally, the reflection takes into account the customer’s point of view on what the brand is. Once the company explores “Who the brand is ?”, a logical sequence leads to “Who does the brand want to be?”
Thus, it is important to identify the types of loyalty that play a role in the creation of “brand love”:
- Behavioral loyalty, which can be quite rational and cognitive, would be linked to earning benefits or saving money through promotional offers.
- Attitudinal loyalty, on the other hand, is emotional, human and not logical. This form of loyalty is more difficult to qualify but essential to take into consideration when determining marketing strategy.
The combination of behavioral and attitudinal approaches results in overall loyalty. While we know that it can be measured by the number of times a guest has returned to stay at a property, hotels must also consider the “dark social”. This additional indicator measures how consumers talk about a brand, what they say, and whether or not they recommend it to others.
“Dark social” is a term coined by Alexis C. Madrigal, editor of The Atlantic, to describe the social sharing of content that occurs outside of what can be measured by web analytics programs. This happens mostly when a link is sent via online chat or email, rather than being shared on a social media platform, from which referrals can be measured.
The new luxury will sell much more than rooms
Hotel groups increasingly see themselves as travel players rather than hotel industry players, especially since the announcement of Marriott International’s Ritz-Carlton cruise product or Four Seasons’ private jet offering.
Hotel players are gradually providing an overview of how brands are redefining their stories in an effort to reach out to the next generation of travelers and develop higher levels of “brand love”.
Since the acquisition of Starwood, Marriott International now has 30 hotel brands, including eight in the luxury segment. One of the main objectives of this Marriott merger was to capture the Starwood SPG members. Thus, Marriott defined each luxury brand more effectively with a targeted message to engage more with each specific audience.
Instead of having the Ritz-Carlton brand compete with the St Regis brand, Marriott can now subtly target different customer profiles through two different positions, allowing a more precise approach for each type of guest.
Moreover, W Hotels will certainly have an interesting impact on the future of luxury at Marriott. The brand has always been a leader in promoting diversity, inclusion and tolerance in hospitality. The Whatever/Whenever service standard and the New/Next brand attitude have attracted a high-end clientele that is globally, culturally and socially more diverse.
In addition, Marriott’s strategic investment in PlacePass allows the operator to offer 100,000 walking, cycling and cooking tours in 800 destinations worldwide.
« The addition of PlacePass activities and tours, scheduled for later this year, reflects Marriott International’s commitment to offering our clients a complete travel experience, from planning and booking the trip itself to when they are thinking about their next trip, » said Stephanie Linnartz, World Sales Director, Marriott International. «We want our customers to count on Marriott to give them access to more destinations but also to activities they enjoy when they travel.
AccorHotels and Hilton Worldwide
AccorHotels also significantly increased its luxury portfolio with the acquisition of Fairmont Raffles Hotels International (FRHI). The priority is to ensure that these brands maintain their unique identity in an increasingly crowded segment.
This trend towards personalization to build customer loyalty is a priority for all brand leaders. Thus, AccorHotels has already customized the room experience for high-value members based on their profile, so the next wave of customization must extend beyond the physical hotel experience into the local community.
In partnership with Toronto-based Cossette and The Mill NY/ Chicago, AccorHotels has developed Seeker, an initiative to measure travelers’ biometric reactions and analyze their behavior. The goal: get to the heart of what customers really want and adapt experiences accordingly.
There has always been confusion about what differentiates Hilton Worldwide’s two luxury jewels: Conrad Hotels & Resorts and Waldorf Astoria Hotels & Resorts. But in 2015, the operator developed new brand stories for each of them, positioning Conrad on the Smart Luxury segment.
To achieve this, Hilton created the Conrad 1/3/5 platform which offers 1, 3 and 5 -hour travel itineraries in the neighborhoods around the hotel. In addition, Waldorf Astoria is now labeled as Unforgettable Experiences for hotel-centric stays in landmark properties.
In 2018, Hilton also launched a platform offering its luxury brand customers a range of exclusive experiences. Customers can have the chance to see the world’s largest private collection of Louis Vuitton suitcases in Amsterdam, discover street arts and private collections in Istanbul, or get into the shoes of a 1950s tourist in Rome.
Taj Hotels, Resorts and Palaces and Shangri-La Hotels & Resorts
Two years ago, Taj Hotels, Resorts and Palaces launched the Tajness microsite specifically to upscale its brand in luxury hospitality by promoting local experiences and personalized service.
Shangri-La Hotels & Resorts, meanwhile, has asked its customers to submit user-generated content explaining their thoughts about loyalty. The campaign called « #LoyaltyIs » first started with videos of five influencers discussing their attachment to specific cities such as Paris or Hong Kong. Next, the hotel group launched additional videos featuring profiles of long-time employees and regular guests who shared their views on the importance of loyalty. With these videos, Shangri-La then launched the #LoyaltyIs contest, asking customers to share their feelings about loyalty in general.
Hyatt and Six Senses
Aware of this change in preferences, Hyatt also launched The Unbound Collection in 2016, which offers non-hotel travel experiences, such as river cruises and other adventures to bring added value to its customers.
Similar to W Hotels, the Park Hyatt brand wants luxury to become accessible. As customers no longer seek white glove service, the experience becomes more personal and less formal, while offering high quality service. Thus, their Master of Food & Wine program allows customers to be part of the process and gives them access to the best suppliers and artisans.
In addition, Neil Jacobs, CEO of Six Senses Hotels Resorts Spas in Thailand, says it is imperative for his company to continue to innovate in the wellness space, as the entire travel industry is realizing what has always been the core mission of Six Senses, namely to promote wellness as a way of life. Six Senses launched its Integrated Wellness platform in 2015.
What kind of luxury traveler?
Mintel (2017) identifies luxury travelers according to these criteria:
- Large consumers of luxury products (from 1100 €)
- Hotel with 5 stars and more
- More than 280 euros per night for hotel guests
Percentages are based on «What kind of luxury traveler are you?» Questionnaire completed by 204 respondents to Amadeus’ Shaping the Future of Luxury Travel report.
Luxury travelers can be segmented:
Always Luxury (4%), money is not a problem for this segment of travelers. Luxury is a minimal requirement rather than an advantage, and an essential tool to make their lives discreet, refined and comfortable. They will travel first class or on private jets, stay in superior rooms and pay to outsource decision making to trusted individuals. Their travel intentions do not change.
Special occasion (20%), luxury travel is a pleasure rather than an evidence. They are looking for experiences with a « wow » factor. They may be willing to compromise on comfort at certain stages of their journey if necessary, allowing them to enjoy an incredible travel experience. They can use their loyalty points to improve their cabin class, to seek prestigious dining experiences and to indulge in well-deserved spa treatments.
Bluxury (31%), their trip will have a professional objective, but they will have the seniority and the salary to extend their trip with some luxury amenities. Generally, CEOs or business leaders, their business goal comes first, but they also want to make the most of their time once the job is done. So they may extend their stay in Milan to spend a Saturday with a personal shopper.
Rich in money, poor in time (24%), they will not necessarily have a goal to reach during their trip, but they will have responsibilities that will dictate when they can and cannot travel. Their requirements often change at the last minute, so they can travel with flexible tickets. These travelers will most likely outsource their travel planning to third parties and are willing to pay for the expertise. They will want their free time to be exceptional because it is a rare opportunity to reconnect with themselves and/or their loved ones.
Strictly opulent (18%), they want to be seen having fun, living their lives to the fullest and being able to enjoy themselves. They will want to know how to improve their travels by consulting luxury influencers.
Independent and wealthy (3%), when they want to pamper themselves or try something new, they turn to luxury travel. They are free to enjoy themselves when it comes to making travel decisions and will travel alone or with some friends.
They will want to feel that their travel provider is taking care of them and helping them make the best choices for their trip.
Thus, how can hotels meet the needs of infrequent new guests, who may not know what they want in the first place?
They must be able to listen and read between the lines throughout the journey and communicate extremely quickly within the team.
“We have engineers and servants who go to hotel rooms and are specially trained to scan the room and make observations. If they see, for example, that someone has running shoes, we will leave them extra water bottles. They then share their recommendations with the CRM through our front office team,” said Jocham Hartl of Conrad Algarve.
The process of collecting data to better understand the personal preferences of each customer who walks through the door is not necessarily the greatest challenge. What is important to hoteliers is to know how the service personnel act on these data and that they do so without being too intrusive.
Another important aspect of the luxury travel experience is how travelers feel their needs and preferences are understood by their travel suppliers. This includes striking the right balance between respecting their desire for independence, which can change throughout the travel cycle.
Thus, travelers can be broken down into two categories.
- Appreciate human interaction and like to be guided through the buying process to get the best options for their trip
- Use technology in conjunction with personal service
- Are happy to be contacted throughout their trip
- Require little or no interaction when making a purchase
- Use technology to serve themselves
- Prefer not to be contacted during or after their travel time
Yet the option of high quality service is a traditional component of luxury travel: having someone at hand 24 hours a day, 7 days a week to help and offer a warm service is, for many, a differentiating factor between standard and luxury travel. Travelers should be pampered and given the attention they deserve.
As a result, there are no typical luxury travelers in 2017. Today’s modern luxury travelers are young and old. They may be loyal to a hotel brand, but they are just as likely not to be. More and more clients are seeking transparency in order to travel smarter and transform their personal world view.
When everyone says the same thing about the value of personalized, authentic, local and immersive experiences, nothing is special. It’s time for a new conversation about a new generation of luxury consumers. Brands develop content that celebrates their customers’ lifestyle choices and personal priorities by directing them with messages that celebrate a story of the brand’s culture.
To do this, brands and consumer identity must align to retain travelers. The focus is increasingly on attitudinal loyalty as opposed to behavioral loyalty, where brands will gain the long-term loyalty of their customers if they can better understand them at a more human level throughout the customer experience.
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