Author: Dr. Florent Girardin, Assistant Professor in Luxury Marketing of EHL Hospitality Business School
With global diversification and a need for emotional engagement, the lines between the traditional hospitality sector and the luxury sector have rapidly been blurred. Luxury goods brands are reinventing themselves to be a part of their clientele’s lives and lifestyle. A growing number are joining the hospitality industry through brand extension strategies. Italian luxury brands such as Armani and Bulgari have opened 5-star hotels in Milan, Dubai and other large cities; while Louis Vuitton opened its very first café in 2021 in Japan. Other examples of luxury brands joining the hospitality industry include Chanel’s Beige restaurant in collaboration with Alain Ducasse; Tiffany & Co The Blue Box Café on the ground floor of Harrods; Cartier’s pop up chocolate boutique in Zurich; Ralph’s Coffee & Bar which has become Ralph Lauren’s hot dining destination in Mayfair, etc.. Swiss luxury watch brands are also entering the hospitality market, for instance, Audemars Piguet has recently built a watchmaker hotel in Vallée de Joux, Switzerland.
The importance of sensorial experience
The strategy of luxury brands to stretch towards other product categories is not new. For decades, successful luxury brands have been leveraging their strong reputation to enter into new product categories like accessories, perfumes, ready-to-wear, jewelry and the like. However, the extension into hospitality businesses is a more recent phenomenon. The main strategic reason behind this move is the ever-increasing demand of luxury consumers to live exclusive brand experiences that go beyond the mere possession of the luxury items. People buy luxury goods for emotional reasons – resonating more than ever with the “experience economy”. The quest for meaningful experiences seems to be particularly important for the new generations of luxury consumers. The so-called generations Y and Z are redefining the notions of luxury and status. When older generations (baby-boomers and generation X) are still using luxury goods as status signaling symbols to show their success, younger consumers prefer to show their status through the exclusive and meaningful luxury experiences they can live. Possessing a luxury car or watch is not so important for them, as long as they can live luxury experiences which give them a sense of self-achievement. Luxury brands are therefore transforming their marketing tactics from “storytelling” to “story living”, as they have realized the interesting potential in integrating hospitality into their core business for a more holistic and multi-sensorial experience. Indeed, hotels and restaurants experiences allow guests to be fully immersed in their favorite luxury brand’s universe. The very ethos of luxury lies in the culture of service excellence, attention to detail and personalization. In the elective course on Hospitality Luxury Brand Management that I teach, I analyze with my students how iconic luxury brands now develop strategies to engage with their customers and the trend for immersive experiences that encourages luxury brands to learn from the hospitality sector.
The importance of understanding the customer and spending time with them
One of the key challenges for a luxury goods company to succeed in the luxury hospitality industry is to acquire the necessary skills and knowledge to manage 5-star hotels and gastronomic restaurants to satisfy the very high expectations of their clients. Bulgari decided to partner with Ritz-Carlton owned by Marriott Bonvoy to operate its hotels, while other luxury brands are building their own hospitality teams by recruiting staff from 5-star hotels, palaces and from the best hospitality management schools such as EHL. Understanding VIP clients, anticipating their needs and providing them with an impeccable service consistently 24 hours a day are amongst the soft skills needed to succeed in such an industry. Those skills cannot be acquired only by reading books and by following theoretical courses. Hospitality management students wishing to work in the luxury industry should learn from practice and do internships in luxury hotels and restaurants where they can be in direct contact with luxury clients from different cultures. In a hotel or a restaurant, employees spend much more time with clients than in a luxury boutique. The knowledge acquired by serving and talking to the elite clientele coming from all over the world is critical and highly valuable when applying for a job at a renowned luxury brand.
“Presentation” is a large part of creating the “experience” a luxury company is seeking. This doesn’t just include being highly mannered with an exemplary appearance, practicing your “savoir-faire” and “savoir-être”, but also presenting the brand and its products or services with emotions and authenticity. Hospitality management professionals understand that the commercial value of the brand is not just one factor; and that there is a need for bespoke attention to detail, creating unique moments for clients to experience the brand beyond the product or service. In essence, a multi-sensorial journey for each customer. With an ever-increasing demand in this new cross-industry sector, it is an exciting time to see how various hospitality management degree holders can get drawn into the luxury goods industry.