Luxury hotel brands: Too small for their boots?

On 21 March 2024, Piers Schmidt gave the keynote at Global Hospitality Talk, the leading networking conference for the hospitality leadership and design community. Piers’ well received talk addressed the discrepancy in brand value between hotel brands and those in other luxury sectors and suggested what the industry needs to do to grow their stature. This article is a condensed version of the presentation.

Mind the Branding Gap

In the field of luxury branding, few sectors posses the experiential qualities of hotels and resorts and yet in the wider landscape of luxury markets, the hospitality sector finds itself at a crossroads, grappling with a paradox of prominence and invisibility.

Despite the apparent prestige of luxury hotel brands, their brand value pales in comparison to their counterparts in fashion, jewellery, and automotive industries.

This article gets to the heart of this conundrum, exploring the underlying causes and proposing a road map towards elevating the stature of luxury hospitality brands on the world stage because it’s a shame to witness a sector brimming with potential yet seemingly eclipsed by its counterparts in the wider luxury market.

The Understated Giants of Luxury

Consider the mainstays of the luxury domain — Louis Vuitton, Chanel, Hermès —
the value of their brands, though modest in comparison to behemoths like Apple and Amazon, are monumental compared to brands in travel, tourism and hospitality.

Although hotel brands are revered within the travel industry, their poor showing in terms of brand value is not merely a matter of financial metrics but suggests they lack the global gravitas of their luxury counterparts.

The question arises: Why do luxury hotels, despite their excellence, cast a smaller shadow on the global stage? Is it due to their innate focus on serving an elite few, thereby limiting their scale and reach? Or could it be that, despite their opulence, they lack the cultural sway and the ability to command a pricing premium akin to their luxury goods counterparts?

The disparity is not just puzzling but alarming, for it speaks to a deeper malaise within the sector, one that demands our immediate attention and action.

The Value Conundrum

At the heart of this issue lies the concept of brand value, a multifaceted measure encompassing scale, consumer reach, cultural sway, and the ability to command a price premium. Luxury brands from sectors outside hospitality excel in these areas, often achieving a cultural icon status that seems just out of reach for luxury hotels.

Let’s consider pricing dynamics to illustrate this conundrum. Ultra-luxury hotels in London, with their storied heritage and impeccable service, command a notable premium over their upper upscale rivals. Yet, when contrasted with the pricing premium of luxury goods — exemplified by the stark contrast between similar Coach or CELINE handbags — the gap is not just wide but staggering. This discrepancy is not merely a reflection of value but a stark indicator of the potential untapped, of the premium that could be but isn’t.

The science of brand value, salience, stature and strength is complex, yet the sustained absence of luxury hospitality brands from esteemed rankings like Interbrand’s Best Global Brands is telling. Evidently, it’s not ‘luxury’ itself that’s at fault, for the luxury sector is well-represented within these rankings. The issue, then, lies within the luxury hospitality sector itself, its strategies, its narratives, and its engagement with the very clientele with which it seeks to engage.

Identifying the Gaps

Several factors contribute to the luxury hospitality sector’s branding challenge.
The industry’s asset-light business models, the slow pace of growth due to the complexities of hotel development, and a relatively limited customer reach all play a part.

Moreover, the dilution of brand impact through the proliferation of sub-brands and the lack of unique and protectable identities exacerbate this crisis of identity.
The luxury hotel industry, in its quest for differentiation, has inadvertently cluttered the landscape with generic offerings that blur rather than define, that dilute rather than distil the essence of luxury hospitality.

This makes it harder for any single hotel brand to achieve the iconic status of a luxury goods brand, hindering its ability to imprint itself in the collective consciousness of the global elite.

A Path Forward

To bridge this gap, the luxury hospitality industry must embark on a journey of self-reflection and innovation. The first step is acknowledging the need for a unique and protectable identity, moving beyond the generic offerings and clichéd branding that currently pervade the sector. This involves a fundamental rethink of what a luxury hotel brand stands for and how it differentiates itself in a crowded market.

It’s time for introspection, for a radical reimagining of what luxury hospitality stands for. The first step, albeit bitter, is an acknowledgement of the identity crisis plaguing the sector. The proliferation of indistinguishable brands underlines an urgent need for a redefinition of brand essence, for a move towards offerings that are not just luxurious but unique, memorable, and irreplaceably distinctive.

Placing Guests at the Centre

True luxury is not just about impressive hardware and intuitive service; it’s about creating a genuine connection and placing guests at the heart of the experience.
This means going beyond transactional interactions and fostering real relationships that extend beyond the duration of a stay. From the moment of check-in to post-departure, every touchpoint should reflect a deep understanding of and care for the guest, transforming brief encounters into lasting bonds.

Placing guests at the centre of attention, treating them not as mere patrons but as cherished guests whose preferences and desires are not just noted but anticipated and catered to, is imperative. This extends beyond the confines of the hotel, into sustained engagement that keeps the flame of loyalty burning bright, long after the guests have departed.

The intimate and intense relationships that luxury hotels foster with their guests offer a unique advantage, one that is sadly underleveraged. The sporadic nature of this engagement, coupled with a lack of sustained communication post-stay, diminishes the potential for lasting emotional connections, for a brand loyalty that extends beyond the confines of a transient stay.

Investing in Brand Building

Finally, the luxury hotel industry must commit to a more substantial investment in brand building. This goes beyond short-term tactical marketing aimed at filling rooms to a strategic, long-term vision that elevates the brand in the global consciousness. Memorable campaigns, innovative partnerships, and a consistent presence in luxury media are essential components of this strategy.

The luxury hotel industry, historically sales-led, favours demand over brand but this shortsightedness has resulted in a dearth of compelling brand imagery and iconography, reducing most of our storied names to mere footnotes in the annals of luxury branding.

Call to Arms

As we stand at this juncture, the path forward is clear.

We must redefine the value proposition of luxury hospitality, evolving our brands towards identities that are not just distinct but resonant.

We must place our guests at the epicentre of our universe, engaging with them in a dialogue that extends beyond their stay.

We must invest not just in tactical marketing but in brand-building, in narratives that captivate and enchant.

The journey towards redefining luxury hospitality is not one to be undertaken in isolation. It calls for a collaborative effort, a forum perhaps where industry leaders can come together to share insights, challenges, and strategies. By learning from the broader luxury market and adapting these lessons to the unique context of hospitality, the sector can begin to claim its rightful place among the world’s most valuable and influential brands.

The luxury hospitality sector stands at a crossroads, with a choice to make.

Will it continue to walk the path of the overlooked, or will it stride confidently towards a future where it is no longer the runt in the luxury litter, where it isn’t too small for its boots and where in future editions of Interbrand’s Best Global Brands, the industry we love steps up and earns its place among the world’s very best?