white paper Understanding Luxury in the Hospitality Business
SUMMARY
• 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
ex-
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
Page 3
perienced as such, as the following dem-
stimuli) must be individually examined
onstrates:
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
Europe
groups:
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
event
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?
time
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.
1.
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
Page 5
“... for a variety of reasons people believe that
certain
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-
Page 7
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-
text.
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
Page 8
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
sense:
expectations.
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
Page 9
vice) higher than extrinsic luxury stimuli
the new traveller into the realm of lux-
(food items, etc.).
ury.
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
club.”
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