Industry Update
Opinion Article26 June 2018

“Deep Luxury” is the Key to Winning Share in the Luxury Hospitality Market

By Allen Adamson, Co-Founder and Managing Partner at Metaforce

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Like many of you, I take more than my fair share of business trips, often staying in business class or, as Marriott refers to them, "premium" class hotels. When on vacation, I'm fortunate enough to be able to stay in what the industry refers to as "luxury" hotels. What I have observed over these past few years is that the gap between "premium" and "luxury" hotels is shrinking, especially when it comes to the physical product. Guest rooms are all equipped with the latest technological amenities. The towels and robes are as plush from one venue to the next. The décor in the lobbies is as fashionable as it is interchangeable from one place to another. The restaurants all cater to the farm-to-table crowd, the spas to those in search of the newest in wellness treatments. This is creating a significant marketing challenge for those in the hospitality industry. Only adding to this challenge is the fact that the luxury segment continues to get more crowded and competitive. As the difference between premium and luxury becomes less and less distinguishable, so, too, does the difference between one luxury hotel brand and another. All offer a high level of service commensurate with their level of pricing.

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While exemplary service is still vital to any luxury hotel experience, given the commoditization of luxury hotel brands, it is now necessary to go beyond the traditional definition of service in order to win over the most demanding guests and, specifically, millennials, who have actually changed the very meaning of luxury. To succeed in the increasingly competitive high-end market, to widen the gap between premium and luxury status and, more so, to genuinely differentiate one luxury hotel from another, brands today have to dig deeper to really understand what's driving customers in this category. And that's just what my partner , Chip Walker did. After an extensive amount of research as to what is changing in the luxury hospitality industry and what is required to gain market share, Chip's takeaway was that the key to success is understanding and responding to the emergence of what he calls "deep luxury."

As Chip explained, deep luxury is driven by three factors:

  1. The Desire for "Inner" Rather than "Outer" Badges: Call it "affluence anxiety." People are less concerned about being seen as having too little, and more concerned about being seen as having too much. Unlike their parents, younger consumers are not as intent about flaunting the outward trappings of their wealth.
  2. Emergence of a New Status: People are proud of a purchase, not because it shows how much money they have, but because it shows they care about something that matters on a different level. For example, buying organic produce at a farmer's market might well have more status value today than carrying the latest designer handbag.
  3. Desire for Peak Experiences: Consumers are more interested in experiences that make them better in some way than they are in "stuff," travel being a good example.

For today's consumers, deep luxury doesn't mean bragging rights for having stayed at one hotel or another, just a superficial status symbol. Rather, as Chip put it, "It's experiences that enable people to become a better version of themselves." It's promoting self-enrichment over pampering, personal growth over self-indulgence. To succeed in this market, it's necessary to flip the luxury paradigm. It's not about adding more gold trim and top spin, the coolest infinity pool, or the newest facial ingredients. Deep luxury is representative of experiences that connect on an inner level, that leave people feeling better off in some way than when they left home, be it physically, mentally or emotionally. It's giving them the bragging rights for having had a transformative experience. Giving them memories they can't wait to share with family and friends, part of their life's narrative.

As has always been the case, brands that understand the consumer best win the game. Brands that can see and tap into a consumer behavior before others do have always had the leading edge. Most luxury hospitality brands are playing by yesterday's insights, not today's. To take - and keep - the lead in the luxury hospitality category brands must understand that first class service is no longer a differentiating factor. It's table stakes. What is a differentiating factor is the ability to align your luxury brand with experiences that are relevant to consumers and that reflects your deep understanding of what matters to them - and to the meaning of deep luxury.

Allen Adamson

Allen Adamson is a noted industry expert in all disciplines of branding. He has worked with a broad spectrum of consumer and corporate businesses in industries ranging from packaged goods and technology, to health care and financial services, to hospitality and entertainment. With his perspective and depth of experience, Allen has helped his clients understand and activate strategies that enable them to shift ahead of the market and the competition, generating long-term value and increased brand equity.

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