Understanding Luxury in the Hotel Business

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white paper Understanding Luxury in the Hospitality Business


• What is luxury, and how it is experienced

Marketers of high end and upscale hotel brands are gradually coming to grips with the fact that there is a difference between “traditional luxury” and “modern luxury.” This difference is can be understood and leveraged by understanding the nature of the luxury experience.

• Why traditional approaches to delivering luxury are becoming irrelevant to younger travelers

A quick look at hotel brand advertise-

More importantly, they find themselves

ments in any business publication cer-

unable to differentiate their brands in

tainly gives the impression that hotel

relevant and sustainable ways.

• The difference between “modern luxury” and “traditional luxury” • Advertising luxury

brand managers have a pathological need to see themselves and their brand

Asking the Question

in the “luxury” category. The exceptions

In developing the brand essence for a

to the rule are a few mass brand compa-

well known chain of deluxe boutique ho-

nies that understand, like Motel 6, that

tel properties, we realised we needed to

it’s not a bad thing to be the Wal-Mart of

understand the underpinnings of luxury:

the hospitality industry. Of course, Holi-

what it is, how it is perceived and what

day Inns first understood the importance

are the attributes or triggers that make

of customer focused positioning, and led

luxury work. We also wanted to under-

the way in developing a hierarchy of

stand whether the experience of luxury

clearly positioned brands.

is changing, and whether we should be

Luxury brands, however, are still mired in their own worlds of “what we do” rather than “what you experience,” and as a result, many of these companies,

416.967.3337 www.proteanstrategies.com

looking at a different kind of luxury for travellers entering the marketplace now, as opposed to the more traditional luxury buyers.

find themselves playing a game of

To answer these questions, we devised a

“brand catch-up,” demonstrated by the

qualitative study that would explore the

business need to moderate rate struc-

underpinnings of luxury at an emotional

tures, develop two or even three tier

and experiential level. Interactive con-

pricing systems and suppress margins.

sumer response workshops were held in

major North American travel destina-

factor is not the bath or activity, but the

tions, focusing on high-end business

mind-set that informs the activity.

travellers in various age groups.

In it’s most fundamental form, luxury can be defined as “waste.”

The working conclusion, therefore, is

Using a variety of projective techniques,

that luxury has different meanings and

respondents were asked to declare the

connotations under different circum-

relationship between their experience of

stances for different people. It is strictly

luxury, their expectation of luxury and

experiential, and requires the subject to

their valuation of luxury. In this context

be in a “luxury state of mind.”.

luxury was viewed in abstract and not restricted to travel or hotels. The understanding stemming from this phase of the discussions was then used to understand the specifics of luxury delivery in the hotel context. Defining Luxury

In it’s most fundamental form, luxury can be defined as “waste.” We think of luxury as “that which is simply not necessary at any level.” In other words, luxury transcends functionality and adds a dimension of superfluousness to its object. However, in working with this definition, it is important to understand the relative nature of functionality.

This insight is the key to developing and executing luxury programs which will appeal to guests in the sense that they will be willing to pay a premium and still evaluate the experience as having delivered good value. The Benefit of Luxury

Marketing and advertising advisors focus their thinking almost entirely on the concept of “benefits”. Our learning and experience tells us that there is not necessarily a meaningful benefit to everything people do — specifically as it applies to the experience of luxury. However, for the sake of clarity, we have suggested a universal benefit of luxury — a benefit

The easiest example of this theory is

that is definitively ethereal and experi-

that of the hot bath. To many people, a

enced exclusively at an emotional level.

hot bath is a functional activity – it is

This benefit is a heightened sense of en-

part of personal hygiene, it is routine, it

joying life. Therefore, in discussing the

is automatic, it is, in many ways, not

benefits of the luxury the hotel offers,

even noticed. On the other hand, many

from either an operational or a market-

of these same people will describe a hot

ing point of view, the most pertinent

bath as a luxurious escape – a moment

question is not only how does this con-

of peace at the end of a tiring day. Thus,

tribute to a heightened sense of life en-

to the same person, a hot bath can be

joyment, but also, and perhaps more im-

both a functional routine and a luxurious

portantly, can we ensure that the guest

treat -- even on the same day, and often

is in the mind-set to experience this?

at the same place. The differentiating Page 2

“...luxury is strictly experiential, and requires the subject to be in a “luxury state of mind”

To understand this duality, it is interest-

for the room themselves. In the case of

ing to talk to mid-level business execu-

a senior executive staying in a hotel on a

tives who have attended a convention.

business trip, the night in the five star

Very often the convention will have been

hotel when the company is paying may

held, or they will have been housed, in

be experienced as functionally excellent;

what we would consider luxury hotels.

but the same room in the same hotel

When asked about their accommoda-

may well be experienced as lavish luxury

tions, they will generally report in func-

when he or she pays for it themselves on

tional terms: it was very nice, close to

the weekend.

the convention centre, the wake up call was on time, check-out was quick, the service was good, there were two phone lines in the room etc. The same people, however, when returning from a vacation where they may have stayed at a reasonably good hotel (but by no means five star) will report that the hotel was fabulous and comfortable, the room was huge, the food was wonderful, etc. In fact, an objective comparison of the two experiences will demonstrate a clear difference in the level of “luxury” (as hotel operators define it) between the two

The implication here is that the experience of luxury is active and conscious. The person must be aware that what they are experiencing is luxurious and must be consciously prepared to experience it as such. They must be in a luxury state of mind. Luxury cannot happen unless both these factors are operating. No matter how definitively luxurious an item is, it will not be appreciated as luxury unless the recipient is prepared to experience it in those terms.

properties. Why is one experienced as

In other words, there are instances when

luxury and the other not? Again, the dif-

“luxury” is luxury and instances where

ferentiating factor lies not in the prod-

“luxury” is not luxury because it is not

uct, but in the mind-set of the experiencer. The Nature of Luxury


In effect, luxury is a state of mind that is evoked by various stimuli, and these stimuli change under different circumstances – in the case of the bath, the stimulant may be the tiredness of the day’s work; in the case of the vacation, it may have been the need for a great vacation, or even having to pay

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perienced as such, as the following dem-

stimuli) must be individually examined


and integrated.

Luxury is luxury when:

“... hotels do

ing it as such and consciously

not “provide”

recognises it as such

or “deliver” luxury; guests “experience” luxury. ”

The person is open to experienc-

Given the overriding premise that luxury is always functionally unnecessary (i.e. waste), the stimuli that can evoke a

e.g. time away from the kids,

sense of luxury in the predisposed mind

flying first class on a vacation to

of a person, can be categorised into four



Luxury is not luxury when:

Categories of Luxury

not know it is a luxury item/

It is costly, and therefore can be enjoyed infrequently In it’s simplest terms, this suggests


that in many cases an item or ex-

e.g. pâté foie gras served at a

perience is a luxury because it is ex-

convention lunch buffet,

pensive. Anecdotally we know this to

The person is not in the mind-set

be true, but it raises the question of

to experience it as luxury at that

how does luxury relate to quality?


Again, the answer lies in the under-

e.g. driving the kids to little

standing of functionality. A higher

league in the Rolls because the

price paid because an item is func-

mini-van is in the shop

tionally superior (lasts longer, runs

The person experiencing it does

Luxury therefore is not a one-way street. Hotels do not “provide” or “deliver” luxury; guests “experience” luxury. The hotel offers the stimuli, the guest brings the mind-set. Using this model as a basis, it is easy to see how a luxury brand builder can manage the components to successfully provide the added value for which customers are anxious to pay more.


more accurately, requires less maintenance, offers greater personal safety etc.) is not luxury. It is simply functional quality that some people can afford and others may not be able to. On the other hand, when a higher price is paid for a quality dimension that does not improve functionality, then it enters the realm of luxury: paying more for a quality shirt may be a functional issue if the

It is this understanding that forms the

shirt fits better and lasts longer.

core of success in the luxury brand busi-

However, paying more for a custom

ness (be it hotels, jewellery or adventure

made shirt made by an Italian de-

safaris). The process of luxury can, in

signer is clearly luxury.

fact must, be managed, and each of the two intrinsic components (mind-set and Page 4

Frequency here is important, too.

airport so the guest can relax over

The more often a luxury event can

breakfast, etc.

be experienced, the less it is experi-

“...must be aware that what they are experiencing is luxurious and must be consciously prepared to experience it as such.”

enced as luxury. The person buying an Italian hand-made shirt for the first time is more likely to experience ”luxury” than a person who regularly order 12 shirts each season. In both cases the stimulant (the shirt) is luxury, but because of the frequency, the mind-set is different. 2. It requires time and therefore can be enjoyed only infrequently (intrinsic luxury) The 90’s cliché that time is our most precious resource, comes to life in this application. When talking to people in abstract about luxury, small, inexpensive (or free) personal activities are mentioned almost universally. “The luxury of being alone with my family;” ”The luxury of being able to take a break in-between meetings;” “The luxury of taking a hot bath and relaxing,” etc.

3. It has an externally defined status or prestige (extrinsic luxury Luxury brands to a degree rely on this human reality: for a variety of reasons people believe that certain objects or experience are worth more for no other reason than others tell them so. This is extrinsic luxury, and is dependant entirely on what the person believes other people believe about the product or event. This experience of luxury happens when one believes that telling somebody that they stayed at the Four Seasons Hotel will make the listener think differently about them. This will only happen when the brand is strong enough to support the dynamic. It is also important to note, that not all status or prestige experiences are always luxury: sometimes they are functionally necessary. If a

This kind of luxury, “intrinsic luxury,”

business traveller needs to establish

can generally not be provided by an

credibility and believes staying at the

external source -- it comes from

Four Seasons Hotel will support this

within. However, the ability to enjoy

need, then this is not luxury. It’s an

intrinsic luxury can come from out-

expensive (and possibly enjoyable)

side: a hotel, through attention to

functional activity, but it is unlikely

detail and assisting in the efficient

the guest will focus on the luxury ex-

execution of functional activities,

perience of the hotel when recalling

may provide the time for the guest

the trip.

to enjoy an “intrinsic luxury experience,” such as fifteen minutes to read the paper in the morning, information on the fastest route to the

4. It is the aggregation of a number of small “extras,” any one of which may not be significant alone

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“... for a variety of reasons people believe that


objects or experiences are worth more for no other reason than others tell them so”

This is the “wow” factor of which the

Bathrobes, too are not luxury items. Ei-

late Ron Plummer spoke, and the ac-

ther the guest needs one and uses it (in

tivities that seem to receive the

which case it’s functional) or he doesn’t

most attention at many luxury hotel

use it, in which case it’s irrelevant. It is

properties. It is the attempt to pro-

important to realise that being a luxury

vide something that will cause the

hotel is not as simple as ensuring that

guest to say: ”they even had...a lit-

every functional necessity is available –

tle bottle of French Cognac next to

that would simply define an effective

my bed at bedtime!” This is the area

functional hotel. Luxury requires a

in which hotels tend to battle:

greater understanding of the guest. That

amenities, amenities and amenities.

said, a silk bathrobe would be “luxury”

Luxury and Amenities

A guest paying $600 for a night in a ho-

because of the intrinsic waste in the fineness of the fabric (a terrycloth bathrobe functions just as well as a silk bathrobe).

tel is unlikely to treasure a free bottle of shampoo, no matter how great the brand on the label is. Nor is there much chance that it is his or her favourite brand. The guest may need the shampoo (because they did not bring their own, but this is definitively not luxury). At best, the items provided in the bathrooms of luxury hotels are functional

A coffee maker in the room is never a luxury. Having efficient room service that can deliver coffee in five minutes, while not luxury in the true sense, is likely to support the brand premise of a luxury hotel more than offering the guest the opportunity to make his or her own coffee.

items. Even in properties where room-

This is not to say that many of the extras

service personnel bring an array of items

offered in guestrooms cannot be luxury.

to choose from, soap is soap and is not a

Chocolates on the pillow, a bottle of wine

luxury. The hotel bathroom would be

on arrival, fresh fruit, and so on. But

truly “luxury” if an entire range of per-

only an understanding of the duality of

sonal products were offered so that the

the luxury experience will ensure com-

traveller would not need to bring any

petitive differentiation – there is no

“shower bag” items; but the guest would

chocolate that a competitor couldn’t pro-

have to know this in advance. In this

vide more of or better than. But the way

case, the luxury would not be the

in which the chocolate is presented, the

amenities, but would be the intrinsic ex-

manner in which the hotel manages the

perience: “I don’t have to be concerned

guests mind-set, is what will build mean-

with these functional issues, allowing me

ingful differentiation at a luxury level.

the luxury of time to say goodbye to the kids.”

However, it is important to realise that in order to be a luxury hotel it is likely, Page 6

“... guests paying $600 for a night in a hotel are unlikely to treasure a free bottle of shampoo, no matter how great the brand on the label is”

from a competitive point of view, that all

this category, as might Rolex

of the amenities (functional though they

Watches, Chanel, Cadillac, etc.

may be) will have to be provided. The

these brands are in the fortunate

trick is to determine a context in which

position of being able to deliver

as many of these will be experienced as

luxury stimuli without necessarily

luxury as possible.

building a context around them.

The Luxury Mind-set

There appear to be three distinct routes into the luxury mind set: 1. A priori luxury: certain experi-

3. Anticipatory Luxury: the “luxury receptor cells” can be triggered by a convincing announcement that that which is about to be experienced is lux-

ences are known and understood

ury. Traditionally, grand hotels

to be luxury, and are therefore

orchestrate the arrival of each

experienced as such regardless,

guest as they might a military

ultimately of the effectiveness of

tattoo – doorman, porter, bell-

the execution. Eating caviar is an

hops, receptionists, assistant

a priori luxury, and assuming the

manager, etc. While this activity

person knows it is caviar, he or

clearly meets the fundamental

she will enjoy it as a luxury.

“waste” criterion of luxury, it is

2. Predisposed Luxury: on many

not presented for this purpose.

occasions, people enter into an

These grand arrival circuses ac-

experience with the predisposi-

tually perform a more practical

tion that it will be a luxury ex-

purpose: they drive home to the

perience. This accounts for the

arriving guest the idea that what

high “luxury rating” vacations

they are about to experience is

receive relative to business trips.

luxury. After this welcome,

When one is on vacation, one is

guests are in the mind-set to re-

predisposed to view it as luxury

ceive luxury. Similarly, atrium

for several reasons (the cost and

lobbies, gilded ceilings, etc., can

the time).

be used to trigger the luxury re-

This predisposition can also come from the brand itself. True “luxury brands” automatically

ceptor cells. In a larger than life sense, this is how luxury has traditionally been merchandised.

predispose guests to experience

More commonly, however, it is necessary

them as luxury because of what

to trigger the “luxury receptor cells”

the brand clearly stands for.

closer to the delivery of the stimulus. For

Four Seasons Hotels falls into

instance, a letter from the Hotel man-

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ager welcoming the guest and mention-

ened enjoyment of time. The hotel would

ing the “fresh fruit” or “linen sheets” will

then do well to present the stimuli it de-

predispose the guest to enjoy those

livers (such as room service or business

items as luxury. This merchandising of

facility) in the context of saving the

luxury, however, must be done with re-

guest time.

straint, and must be presented in conFigure 2 below demonstrates how a ho-


tel can map the luxury experience from Mapping the Delivery of Luxury

the guests’ perceptive point of view, us-

In order to ensure that the guest

ing the business traveller as an example.

“receives” the luxury the hotel delivers,

Bear in mind that this model will change

it is important to first understand the

for different individuals under different

context in which the target group would

circumstances as well as for different

receive the benefit (heightened enjoy-

target segments.

ment of life). For instance, in the case of business travellers, the provision of additional time would allow them a heightFigure 2

Luxury Stimuli

Mind Set

In order experience luxury they need to be.. Figure 2 ...prepared to accept and enjoy luxury at that time and...

...aware that the stimulus is luxury

He or she must...

...get “work” done and be free of guilt to be in a frame of mind to...

...actively enjoy the experience

So the hotel must...

...provide a full set of convenience amenities and merchandise them in terms of their ability to help the guest save time

...provide and merchandise luxury items, explaining each in the context of the end benefit

Which will...

...inspire a sense of confidence and give the gift of guilt-free time

...increase the perception of value and gives context

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Modern Luxury and Business travelers We asked business travellers to rate the

luxury category. This suggests that older

importance of 55 hotel services and

travellers, at least in the business travel

amenities covering a full range of prod-

context, because of their background

ucts delivered by typical five star hotels,

and greater experience, have a more

and categorise them into luxury or con-

sanguine approach to luxury – they are

venience groupings. We learned, how-

more used to it, understand it in context

ever, that we would have to add a third

(business travel does not really need to

dimension for business travellers: some

be luxury -- it needs to be convenient)

items were seen in a strictly “value”

and are therefore more practical in their



To demonstrate how customers group

Younger respondents, on the other hand,

the various services and amenities, a

ranked the luxury category significantly

few examples of each category are pre-

higher than the convenience category.

sented in the box below (Figure 3)

And, within the luxury category, they

Older guests ranked the convenience category, in general, higher than the

seemed to rank intrinsic amenities (windows that open and turndown ser-

Figure 3

Convenience Factors

Value Items

High speed internet

Voice mail

Free local phone calls

Phone on desk

Hair dryer

Complementary foodservices such as continental breakfast

Business centre

Coffee maker

Cordless phone in the room

Free water

Free internet

Luxury Items

Executive lounge

Turndown service

24 hour concierge

Deluxe massage shower

Windows that open

TV in the bathroom

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vice) higher than extrinsic luxury stimuli

the new traveller into the realm of lux-

(food items, etc.).


The suggestion here is that younger

Consumers today no-longer discriminate

travellers are more responsive to luxury

based on individual attributes, but

stimuli when they understand them. The

choose products and services based on

resulting opportunity is to merchandise

the holistic experience. This idea of mov-

luxury at the point of delivery, and help

ing beyond product benefits (“what I get

make these guests more knowledgeable

from using your product) into the realm

and hence more appreciative. The hy-

of experiences (how I feel after interact-

pothesis is that a younger traveller will

ing with your brand), has massive impli-

be more willing to appreciate a luxury

cations for defining and delivering luxury

amenity or feature, but they must be

in hotels and resorts in the future.

told that it is “luxury.”

The chart below scratches the surface of

This presents the opportunity to redefine

the difference between traditional ap-

the way luxury is defined and delivered,

proaches to luxury and the way in which

in order to be the brand that introduces

successful brands will delight post millennial travellers:

Today's business traveller defines luxury as:

Tomorrow's business traveller defines luxury as:

A state of mind that is brought about by various stimuli, but that is very rarely expected or experienced in conjunction with a business trip. It is described in bland terms, lacking imagination or passion.

A state of mind that is brought about by various stimuli and that can be a surprising part of any activity. It is described in colourful, personal terms, invoking imaginative imagery and expressing a sense of excitement. Design cues are a significant luxury trigger.

Today's luxury hotels deliver product that is seen to be...

Tomorrow's luxury hotel must deliver a product that is seen to be...

undifferentiated, if not irrelevant, to the business traveller even when it is recognised as luxury

...because they provide a specific menu of facilities, amenities, services… …that meet specific and identified needs generally defined by the hotel’s capabilities

delivering a variety of well merchandised value added benefits that go beyond the expected full range of convenience. The degree and make-up of positional factors (such as prestige or badge value) depend on the nature of the occasion, NOT the brand. ...because they provide a specific menu of facilities, amenities, services and attitudes… …that meet specific and identifiable needs defined by the individual guest’s experiential needs (intrinsic and extrinsic) Page 10

Advertising Luxury Given that luxury is abstract and dealt

the same reasons: more for what it

with exclusively in emotional terms, it is

doesn’t do than what it does. There is

easy to see why communicating the de-

no functionality to the ad – the copy is

gree, or even the existence, of luxury is

not written to tell the reader something

so difficult. The rational mind will not

about what the hotels do. Rather, the ad

process the information, because the

is clearly designed for design sake, and

cognition of luxury is not rational.

expressing the luxury of the brand in

Therefore, advertising for luxury prod-

terms of pure design adds another di-

ucts or brands must bypass the rational,

mension of emotional conviction to the

logical mind and enter the emotional or

campaign. Pure design is pure luxury

existential area of cognisance. Simply

(the design of the Jensen cutlery adds

put, to communicate luxury, the adver-

nothing to their functionality). And it is

tising itself must be luxurious.

this context that the brand is presented.

It is no accident that the masters of the art of hotel luxury, Four Seasons Hotels, also wrote the book on luxury advertis-

After seeing this ad, the reader is predisposed to experience luxury when visiting one of these hotels.

ing. The ads for which Four Seasons be-

Laurence Bernstein is the founder and managing

came famous were those that featured

partner of Protean Strate-

small, elegant pictures of details from

gies/The Bay Charles

the hotel in a vertical strip surrounded

Consulting Group Limited. He has been a leading

by white space and very little copy.

proponent of the “new

Much of the ads was waste, in that it

order of differentiation”

served no functional purpose. Even the

and has written and lectured on the subject of

photograph communicated only a non-

experiential branding and intrinsic/extrinsic

relevant, yet aesthetically pleasing,

research methodologies in Canada, the US and

item. Readers understood immediately, at the pre-linguistic level, that this com-

China. In addition to a highly successful 20 year career in advertising and marketing he held senior posi-

pany understood luxury. The ads did not

tions at Westin Hotels and The Canadian Restau-

attempt to describe or elaborate on this.

rant Association. Laurence attended the Univer-

A more recent campaign achieves the

Cornell University in Ithaca , New York

same effect. The accompanying print ad

This white-paper is based on the original paper

for Park Hyatt Hotels communicates lux-

on the subject written by Laurence Bernstein

ury immediately and convincingly, for

sity of the Witwatersrand in Johannesburg and

and published in the Cornell Quarterly in April, 1999.

Page 11

Applying these Principles Our clients successfully apply these prin-

added value program, wherein guests

ciples in defining and delivering luxury to

customise their luxury stay by selecting

guests, with the clear result of turning

a personalised combination of luxury (in

guests into ambassadors, and loyalty

the sense of surprising and unnecessary)

into zealotry.

amenities or services – such as compli-

Operationally, these plans have included mandatory “conversation” training programs: guest contact, reception and concierge employees are taught the art of meaningful conversation in order to learn from guests what is important to

mentary valet parking, complimentary in -room movies, etc. This has allowed the hotel to maintain room rates, provide added value and ensure the guests experience luxury in a subjective way that they will appreciate.

them, what the priorities of their trip are

The design (not “décor” anymore) of ho-

and how the hotel can alleviate some of

tels’ public spaces need to be interesting

the stress. This opens the door to pre-

and surprising, with clear “luxury” cues

senting hotel facilities in a context that is

to drive home to guests the idea that

be meaningful to the individual guest:

they are experiencing luxury. To further

e.g. “Mr. Smith, our business centre is

make the point, we have advised our

equipped to handle the printing of your

clients to provide well written, artistically

presentation, which will allow you to

meaningful description of these items in

spend a bit more time in the health

the hotel service guide. After reading this


information, guests view the public areas

This approach to understanding the

in a different, more luxurious, light.

guests needs on a one-on-one basis has

Finally, we have helped clients develop

the potential to increase cross selling

advertising based on significant insights

and up-selling of hotel facilities, while at

into the way the guests view their own

the same time managing the guests’ ex-

personal relationship to luxury; and how

perience of luxury within the property.

the brand can meet these needs at a

Rather than promoting summer leisure business with discount packages, we advised one of our clients to develop an

personal level. We stress creating advertising that messages “the luxury you, the guest, experience,” as opposed to “the luxury we, the hotel, deliver.” Page 12

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Protean Strategies 80 Cumberland Street, Suite 1503 Toronto M5R 3V1 Canada 416.967.3337 Bernstein@proteanstrategies.com www.proteanstrategies.com