THE FUTURE OF LUXURY HOTELS

  
The luxury hotel space is competitive but players are stepping up to the plate to keep up with rapidly evolving consumer demands. Here we investigate some on the cutting edge and what’s ahead.

Last month, in conversation with Robert Cheng, Group VP Marketing of the prestigious Peninsula Hotels Group, despite the plethora of exciting initiatives in the pipeline for the company, we found ourselves continuously drawn back to a particularly prevalent discussion on technology, innovation and their place in the luxury hotel space.

Keeping the balance between innovation, customisation and still maintaining that personal touch – which so often sets high-end hotels apart from the rest – is always top of mind, according to Cheng, and the risk of taking technology too far is always present.

Nevertheless, the increasing use of technology across the board in the luxury hotel space is a trend which is impossible to ignore – and the appetite for futuristic additions to the luxury hotel experience is palpable, particularly from the lucrative millennial set.

As Jérôme Destors, Director of Hotel IT at technology firm Amadeus, stated in its report ‘Hotels 2020 – Beyond Segmentation’: “Unique, connected, informed are just three watchwords that define the hotel guest, both today and in the future.”

Hence, understanding a customer is a strategic imperative for hotels in today’s world. We are operating in an era of unprecedented change. Brands that don’t recognise and respond to this run the risk of falling behind the competition permanently.”

So the question today is two-fold – how are luxury hotel providers currently innovating and what can be learnt from their pioneering advances and; what does the future hold for the hospitality space?

“Brands that don’t recognise and respond run the risk of falling behind the competition permanently.”

Two Heads Are Better Than One

First and foremost, when we hear ‘future’, often we think digital, smartphones, space travel. But innovation can also be more than just technology on its own.
Cutting-edge concepts that challenge the norm and offer new, exciting and exclusive options for the luxury consumer are often borne from forging inventive partnerships with like-minded entities and breaking new ground.
The Peninsula Hotels Group, for its part, has “never been afraid of technology” says Cheng, and has employed a dedicated research & development team for 30 over years to constantly scan innovations occurring across the globe and trial and adapt viable technology and concepts to suit the group’s properties.
But a perfect example of the aforementioned balance between technology and a personal touch materialised when the group established an innovative and exclusive partnership with online luxury fashion retailer and publisher NET-A-PORTER.com earlier this year.

  
 
The tie-up saw the two collaborate to create a series of stylish mini guides to the world’s most dynamic gateway cities.

The exclusive style savvy bite-sized guides were published on the respective hotel’s section of The Peninsula website (peninsula.com), and featured in the travel section of NET-A-PORTER.com’s fashionable The Edit magazine (net-a-porter.com/peninsula) during the week of launch.

According to Cheng, the duo will reunite again shortly to publish the next five in the series during New York Fashion Week in the Fall. But, as he hinted last month: “There’s more to come there, so stay tuned!”

“These meetings of innovative minds have since resulted in a range of out-of-the-box tie-ups.”

The Marriott Group is also pushing ahead, with research emanating from its 10,000-square-foot Innovation Lab and an Innovation Team, which is continuously brainstorming about what the hotel of the future will entail.

These meetings of innovative minds have since resulted in a range of out-of-the-box tie-ups such as a recent expansion of its partnership with TripAdvisor to add Marriott’s global hotel portfolio to the TripAdvisor Instant Booking platform from this summer, capitalising on the increasing shift in consumer behavior to trust recommendations from fellow guests over straight advertising.

Marriott and Netflix also officially announced a deal last month, which will allow guests to log in or subscribe to the streaming service via Internet-connected guest room TVs across several Marriott properties.

“Our collaboration with Netflix responds to changing consumer preferences in the way our guests access and watch content, while recognizing the leading role Netflix is playing in driving this transformation,” Matthew Carroll, Marriott’s VP of brand management, said in a statement.

Back To The Future

Starwood Hotels & Resorts Worldwide has, similarly, joined the ranks with the launch of its own high-tech design lab – Starlab – at its headquarters in Stamford, CT earlier this year.

The company has gone on to become the first to offer keyless hotel room entry, allowing guests to check in via their iPhones (or Apple Watch), and the group began trialing a robotic bellhop , dubbed Botlr, across its Aloft hotels in Cupertino and Silicon Valley in August last year.

Botlr, a three-foot high robot in the vein of R2-D2, allows guests to send request items – ranging from toothbrushes, smartphone chargers, magazines, newspapers and even snacks – from their smartphones, which can then be delivered by Botlr within two to three minutes.

When the robot reaches the guest’s door, the system calls the room, alerting the guest to the delivery.

  
Starwood’s robot butler, Botlr

Starwood is also in the midst of a roll-out for its smart-mirror concept, which offers guests immediate access to the weather, news and sports scores with a touch of the mirror’s surface.

A Bluetooth connection can also be accessed to link the guest’s phone so they can see their Twitter feed and other alerts directly on the mirror, which is powered by Panasonic technology.

No doubt the Starlab innovation team has also had plenty to do with Starwood’s recent interest in the Oculus Rift virtual-reality headset – bought last year by Facebook for $2bn – which Starwood reportedly aims to roll out to its Element gyms progressively in the near future.

“Gesture interfaces and 3D mobile phone displays could be common by 2020.”

The Amadeus report confirms that while technologies such as augmented reality and mind control headsets are already with us and are set to spread, “developments such as gesture interfaces and 3D mobile phone displays could also be common by 2020”.

Gesture interfaces for one, have the potential to drastically change how we view and interact with information and although the technology does exist – gestural interfaces have been developed by firms including Microsoft’s Kinect and Oblong Industries – this is still largely undiscovered territory for the hospitality industry.

Facial recognition though, is in the early stages of roll-out across the hospitality industry, with Universal Studios Japan one of the first hotels to make use of the technology in partnership with NEC via its NeoFace® Watch solution.
  
NEC NeoFace® Watch

NeoFace Watch uses cameras installed in and around the hotel to recognize the faces of guests, check registered guest information, identify VIPs and undesirable guests, and alert the hotel staff.

Alerting staff to the arrival of a VIP (via mobile or otherwise), before they check in allows the hotel staff to implement smoother and more appropriate check-in procedures, according to the firm.

The recognition takes less than a second and it can be integrated with the hotel’s loyalty and customer relationship management system so that customers can begin to be catered to in a tailored fashion as soon as they step through the door.

However, it is essentially an opt-in program and guests decide whether if they want to be part of the hotel’s database.

“Some 500,000 guests have been enrolled in the Universal program since June 2014.”

“Ultimately, we’re not selling facial recognition, we’re selling enhanced customer experience that’s enable by face recognition,” explained Allen Ganz, senior account development for the biometric division at NEC North America when queried.

Indeed, according to reports, the customer response has been positive to date and some 500,000 guests have been enrolled in the Universal program since June 2014 with the numbers growing steadily.

Mobile Aspirations

While there are many opportunities available for further evolution, mobile is one area where luxury hotels have excelled of late.

Marriott International introduced a new feature to their mobile app this month with Mobile Request, which operates by offering guests a chat function to make real-time requests at individual hotels and to have immediate responses and interaction.

Additionally, a drop-down menu also allows guests to request services and amenities, such as extra towels and pillows.

Inititally available to 46 hotels worldwide, the new feature will eventually be rolled out to all Marriott hotels this summer and will be available to the 50 million members of Marriott Rewards, the company’s loyalty program.

Dubai Marriott Harbour Hotel & Suites in the UAE, Amman Marriott Hotel in Jordan and Cairo Marriott Hotel & Omar Khayyam Casino in Egypt were some of the first hotels to get the app.

Following in the footsteps of Ritz-Carlton, Starwood, and Marriott, The Four Seasons also just released a new mobile app, a multi-functional global app which acts as a ‘do-everything concierge’, catering to guests’ every whim – from checking in and out, to ordering room service, housekeeping and laundry, to requesting a car from the valet.

Guests can also book luggage pickup and airport transfers or use the content-rich application to peruse local recommendations on individual destinations, curated to their ‘moods’.

Unlike other hotels, The Four Seasons has also set itself apart by not only offering the app across its 94 properties across 39 countries, but also making it available to all users, not just those in the loyalty program.

The luxury chain also plans to release a Simplified Chinese version of the application next month (August 2015), and a special version tailored to the preferences of Chinese travellers will reportedly be issued by the end of the year.

Four Seasons also has plans to provide the app in additional languages down the road, starting with Arabic.
However, it’s interesting to note that Cheng reveals that the Peninsula Hotels Group opted out of the app race – on purpose – to cater to its niche customers’ preferences.

“On purpose – we did not do a native app,” he says. “Because we felt that we wanted to make sure that we were at the guests’ disposal in terms of them being able to get access from their mobile device, but our guests didn’t want extra real estate on their phones dedicated to a Peninsula App, so we did the next best thing and gave them a mobile-optimised site.”

“On purpose – we did not do a native app.”

Switching Off
On this note, it’s clear that while looking to the future is essential – listening to the customer is paramount. Not all customers check into a luxury hotel to be catered to by technology and stimulated by curated content and box-breaking collaborations. Some of them may just want to switch off.

As Jonathan Ford, Founding Creative Partner at Pearlfisher recently pointed out – a survey by BCG claims that 51 per cent of US luxury consumers are now looking for ‘these enriched experiences’ over product, and a new and growing experiential luxury movement is tapping into this.

“Consumers are seeking new ways to take time out, slow down, contemplate and appreciate,” he says.

So, while some hotels are speeding ahead into the future, other luxury operators are experimenting with the opposite and leaning towards a more traditional, yet inspired, offering by allowing guests to truly power off and enjoy the serenity.
  
Villa Stéphanie (Above & Main Image)

German luxury resort Villa Stephanie is one such operator which offers its guests the option to activate an an Internet kill switch in each guest room – marking one of the first times a hotel has offered such a ‘digital detox’.
Check into the Villa and the flick of a switch activates a Wi-Fi grid blocker, which will actively block approximately 96 percent of Wi-Fi signals, and limit texts and tweets.

Eco-hotel, The Adrère Amellal, near Siwa in Egypt has gone a step further and actually banned mobiles from public areas of its premises to ensure that its up-market hotel guests – which have included Prince Charles and the Duchess of Cornwall – are not bothered by ringers, texts or loud phone conversations while on vacation.

The resort – which also has no electricity – only allows mobiles inside the bedrooms, and is made entirely from traditional materials such as salt-rock and palm leaves, relying entirely on torches, beeswax candles and stars to illuminate its 40-rooms, which reportedly start at £460-a-night.
  
  The Adrère Amellal in Egypt

While these customisations may not be the initial images that spring to mind at the sound of the word ‘future’ – it’s far from a long shot to imagine that in years to come, luxury hotels may choose to go down one of two paths – one, leveraging innovative partnerships and technology to trail-blaze modernity, or the other – to offer their guests an opulent and organic respite from a world which is increasingly connected and buzzing around the clock.

One thing, however, is for certain. Wherever luxury hotels choose to innovate next – it will be exciting, because a segmentation is in process – and, as the Amadeus report suggests – it’s all based on personalisation, where the guest is given choice over almost every aspect of their hotel experience.

(C) Luxury Society, by Daniela Aroche, 08 July 2015.

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HOW THE LUXURY INDUSTRY IS LEAVING $1.7 TRILLION ON THE TABLE

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Douglas Gollan, co-founder of Elite Traveler magazine, explains why the luxury industry’s continued robust performance is coming, despite largely missed opportunities.

My mother used to always tell me I succeeded “in spite of myself.” It was her way of telling me while my intentions and instincts and many of my actions may have been right, I was making whatever the task was more difficult than it had to be.

One could argue that the luxury industry’s continued robust performance is coming despite missing some large opportunities.

A recent report by wealth researcher Wealth-X found some 185,000 households worldwide with a Net Worth of at least $30 million. These families – commonly referred to as UHNW – or Ultra High Net Worth – cumulatively are worth between $25 Trillion and $40 Trillion depending on which report one reads.

They are without doubt the “heavy users” of luxury goods and services simply because they can afford to be. After all, who else is spending $5,000 a night on suites at luxury hotels and buying $50,000 watches or $80,000 necklaces. A 2011 Washington Post research project found that U.S. households in six major markets couldn’t make ends meet despite having a Household Income of $250,000, a level considered fairly robust by media buyers.


“ Ultra High Net Worth’s are without doubt the “heavy users” of luxury goods and services simply because they can afford to be.”


The kicker was that these families didn’t even have luxury cars, didn’t buy designer fashion and had an annual vacation budget of just $3,000. In New York this Mass Affluent family was running a deficit of nearly $30,000. In other words, there was very little upside marketing to these consumers. Hundreds of brands were competing for one or two luxury purchases per year, generally for no more than a couple thousand dollars.

Greg Furman, the Founder and CEO of The Luxury Marketing Council recently told me, “luxury companies need to be more focused on selling more watches to the person who already buys a half dozen watches a year than the first watch to a person who can’t pay his rent.” He added, that as luxury companies extend their product ranges they need to invest more in educating UHNW consumers, including advertising. He uses the term “share of wallet.”

As part of a white paper I am currently working on, we are trying to understand how much these UHNW households currently spend cumulatively across a variety of luxury product and service categories – and how deep their pocket books truly are. In other words, how much more could they spend if properly educated and motivated.


“ Hundreds of brands were competing for one or two luxury purchases per year, generally for no more than a couple thousand dollars ”


The categories we are looking at include automotive, jewelry, watches, fashion and accessories, hotels, resorts, spas, villas, adventure travel, yacht rentals (not purchases), renovating and refurnishing residences and collectibles.

Obviously there is a lot of guesswork with the formulas but using research we did with Prince & Associates that included personal interviews with over 600 private jet and fractional jet owners, the current figure comes out at around $300 billion annually. That would equate to about $1.6 million in spending for each of these 185,000 UHNW households. It would also register at only around one percent or less of Net Worth.

Interestingly, as we look at numerous other surveys of luxury lifestyle spending from Ipsos, American Affluence Research Center and Unity Marketing with Mass Affluent consumers to create a range of scenarios, we believe that the potential spending of these UHNW families could be over $2 trillion!

For the Global CEO of any major luxury brand or conglomerate, I feel pretty sure they all have well developed strategies for China and E-marketing. These are considered key areas all luxury companies need to be focused on. However, I am not sure if I would find any of these same, successful companies having a Global UHNW Marketing Officer responsible for a Global UHNW strategy with a single focus to get more spend from these UHNWs and centralized authority.


“ Luxury brands have well developed strategies for China & e-Marketing, but how many have a global UHNW strategy?”


Yes, I know there are the polo sponsorships and at the country level lots of wining and dining and event invites for key customers. What I think has slipped through the cracks is these best prospects are now not in town or even in the country most of the time. I always like to say “private jets set the rich people free.” And in fact, one Richemont executive I met with referred to this group as “Homeless with 20 Homes.” Burberry has dubbed them the TLCs, short for Traveling Luxury Consumers. Global Nomads is another moniker.

Mykolas D. Rambus, CEO of Wealth-X, was right to the point: “The growing trend of the ultra wealthy choosing to establish residences in the most cosmopolitan cities around the world has implications for all professionals operating in the financial services and luxury sectors. Professionals need to understand these ultra wealthy clients, who defy being categorized by geographical location, should they wish to create consistent strategies of approach.”

Luxury houses today are still structured on a country basis with lots of country management and lots of local focus. It is not uncommon to be questioned, ‘what if your readers buy when they are in another country?’ I do understand everyone has their own revenue targets to hit. Being a global magazine, it means that some readers who are ‘based’ in the U.S. may in fact buy when they go to London or Hong Kong but at the same time readers from South America, the Middle East or Europe probably do a good deal of their buying in the U.S.


“ It’s easier to sell lots of stuff to rich people than poor people – Milton Pedraza, CEO, The Luxury Institute.”


It underscores the point that the luxury companies are enjoying success ‘despite themselves.’ Clearly, as Rambus notes, these UHNW families live a global lifestyle. A recent Financial Times piece profiled a couple who hop from London to Venice for lunch if it looks like a rainy day, and reported that today’s Super Rich follow the good weather, good schools, good tax regimes and good entertainment as they fly around on their private jets.

Milton Pedraza, the CEO of Luxury Institute once told me, “It’s easier to sell lots of stuff to rich people than poor people.” Even if the numbers I am looking at are wrong by double, luxury brands are leaving about $850 billion in sales in the pockets of UHNW customers who just need to be motivated to spend. Either way, it’s a bigger opportunity than China, bigger than the Internet, and right out there every day around the world at the nearest FBO. That’s the acronym for private jet terminal.


To further investigate Wealth & Affluence on Luxury Society, we invite your to explore the related materials as follows:

The Dangers of Homogenising the Wealthy: Ledbury Research
Key Insights from The Wealth Report 2012
Luxury’s Mixed Messages in a Yo-Yo Economy


Douglas Gollan is Group President and Co-Founder of Elite Traveler Media Group, launched in 2001, based in New York. The company publishes Elite Traveler, the private jet lifestyle magazine, with BPA audited distribution in over 100 countries worldwide by private jet.

It also publishes an Asia Edition of Elite Traveler, Elite Traveler Superyachts, Elite Traveler Hotels/Resorts/Spas Annual, Elite Traveler Annual Watch Guide and hosts over 60 Destination Guides for UHNW consumers at Elitetraveler.


© Luxury Society, How The Luxury Industry Is Leaving $1.7 Trillion On The Table, 28 June 2012, by Douglas Gollan.


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THE LATEST HOTELS: KYIV, ABU DHABI & WESTERN AUSTRALIA

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The Berkeley River eco-resort, accessible only by seaplane or boat in Western Australia

InterContinental Hotel Group launches a brand dedicated to Chinese consumers, whilst Sofitel opens its second property in the UAE and Hilton’s Conrad launches in New York

Luxury hotel brands were some of the quickest to acknowledge the potential of Mainland China, developing properties far beyond Beijing and Shanghai well beyond luxury goods brands came knocking. But what they are now also beginning to gauge, is the growing significance of the affluent Chinese traveller, an increasingly global and mobile consumer who interacts with brands in Shanghai, Wuhan, San Francisco and Paris.

Thinking along these lines, the InterContinental Hotel Group has developed a new hotel brand based on four priorities it feels are important to Chinese travellers: tradition, rejuvenation, status and familiar spaces. HUALUXE – a hybrid of ‘Hua’ meaning majestic China and luxe – has been launched with the understanding that the Chinese traveller wants the status of a world-class luxury hotel group combined with a feeling of pride in China and respect for Chinese tradition.

The hotel giant expects the number of domestic travellers in China to reach 3.3bn in 2015 and forecasts the China hotel market will grow by 5-8% annually by 2030. The group has reportedly signed over 20 letters of intent and expects the first hotel to be open in late 2013 or early 2014, with plans to roll the brand out in 100 Chinese cities in the next 15-20 years.

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Sofitel, Abu Dhabi

As part of the new Capital Plaza Complex, Sofitel Luxury Hotels has opened its second property in the UAE at the eastern tip of Abu Dhabi’s Corniche. The hotel’s 282 rooms and suites elegantly blend modern design with authentic French “art de recevoir” combined with Arabic hospitality, featuring Jean Cocteau lithographs and sculptures inspired by Brancusi.

Website: sofitel.com
Source: Gulf News

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Swissôtel, Chicago

Swissôtel has unveiled renovations at its Chicago location, inspired by the work of the building’s original architect, Harry Weese. The lobby now features backlit glass panels etched with Chicago’s skyline, where check-in pods replace the traditional bulky hotel front desk. Concierges are equipped with tablets for quick access to all necessary information.

Website & Source: swissotel.com

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Fairmont Grand Hotel, Kyiv

Fairmont Hotels & Resorts is proud to announce the opening of Fairmont Grand Hotel Kyiv, the luxury brand’s first hotel in Eastern Europe. The 258-room, 54-suite property offers spectacular views of Podil Square and the Dnipro River, as well as a fully equipped business centre with 24-hour access as well as secretarial services.

Website: fairmont.com
Source: Elite Traveler

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Radisson Blu Istanbul Asia, Istanbul

Offering Super chic and contemporary Istanbul accommodation, the Radisson Blu Hotel, Istanbul Asia has 195 stylish, well-appointed guest rooms and suites, featuring a mix of designer furnishings and every conceivable modern convenience, including free high-speed Internet access, Anne Sémonin bath amenities and a 37-inch LCD television.

Website: radissonblu.com
Source: Hospitality.net

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The Westin Lake, Las Vegas

Starwood Hotels & Resorts Worldwide has launched The Westin Lake Resort and Spa, its second location in Las Vegas. 493 rooms and suites, feature the world-renowned Westin Heavenly® Bed, exclusive SuperFoodsRX® menus, White Tea Aloe bath amenities and in-room, high-speed Internet access alongside ergonomic workspaces.

Website: westin.com
Source: 4-Traders

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Viceroy, Maldives

Located in Shaviyani Atoll, Viceroy Maldives is an ultra luxury resort comprising of 61 Villas with 32 over the water and 29 on the beach, designed for maximum privacy. The resort features five distinct dining venues, specialised massage techniques, yoga practices and dietary guidance as well as a series of Ayurvedic, regional and traditional spa treatments.

Website: viceroyhotelsandresorts.com
Source: CPP Luxury

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Conrad, New York

Rising 16 stories along the Hudson River waterfront, Conrad New York is the first NYC address from Conrad Hotels & Resorts, the global luxury brand of Hilton Worldwide. The 463 all-suite luxury hotel features panel televisions, one-touch technologies, wireless Internet access and iPod sound docks. Contemporary design by interior designer Jill Greaves has incorporated custom furnishings through separate areas for work and sleep as well as spacious bathrooms.

Website: conradhotels3.hilton.com
Source: Market Watch

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Capofaro, Salina

The Capofaro Malvasia & Resort has reopened following extensive renovations, on the Eolian Island of Salina in Southern Italy. One of the first Mediterranean wine resorts and retreats, the property is surrounded by the lush of Malvasia vineyards on soft slopes degrading towards the blue sea. Just twenty rooms are laid out across seven acres of vineyards, all of which have a terrace overlooking the sea.

Website: capofaro.it
Source: Grassi + Partners

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Berkeley River, Western Australia

Berkeley River luxury resort has opened in Far North Western Australia, on a 4600 hectare site accessible only by seaplane and boat. Located near a stunning river, with waterfalls and fresh water holes, 20 luxury “eco friendly” villas feature open air bathrooms with a shower and full bath. The resort can also arrange private boat and helicopter expeditions for guests.

Website: berkeleyriver.com.au
Source: The West

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Westin, Xian

Starwood Hotels & Resorts Worldwide has launched The Westin Xian, its first entry into the Shaanxi province of China and the first hotel in Xian to have its own museum, paying tribute to the ancient history of China with a collection of over 2,000 artefacts. 329 rooms and 32 apartments feature LCD televisions, rainforest showers, extra-large closets, personal refreshment centres, and Westin’s signature Heavenly beds.

Website & Source: westin.com

For more in the series of The Latest Hotels, please see our most recent editions as follows:

The Latest Hotels, Istanbul, Panama & Berlin
The Latest Hotels, Mumbai, Moscow & Riviera Maya
The Latest Hotels, Kitzbühel, Tuscany & Hanoi


© Luxury Society, The Latest Hotels: Kyiv, Abu Dhabi & Western Australia, 24 April 2012, by Sophie Duran.


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