Calling all hotels and concept innovators: I am waiting to be swept off my feet by a hotel. We consumers have moved on from seeking on products; and the current obsession with experiences is yesterday’s news. But creating products that deliver unique personalised experiences that resonate with consumers is a tough gig and many hospitality companies are still trying to crack it. But we’re getting there and the concept creation process is stepping up a gear, using a blend of tangible and intangible tools to create next-generation offerings. It’s time we for a more nuanced way to underwrite these deals.
I have a confession to make: I am waiting to be swept off my feet, charmed, amused, intrigued, even challenged … by a hotel. I want an experience that changes me a little, leaves a tattoo on my memory bank. I have quite a few notched up actually, but the list involves very few luxury hotels and resorts, which is surprising, given my track record in hospitality advisory so far.
The quest for experiences is officially a craze, an obsession and a little bit yesterday’s news. But who is creating these extraordinary luxury hotel experiences, why and how?
The “why” relates to money. 1970s futurists Alvin and Heidi Toffler observed that under wealthy circumstances, consumers feel that material satisfaction is not sufficient, so the economy should evolve to provide psychological gratification and evoke emotions – i.e. experiences (The Future Shock, Alvin & Heidi Toffler, 1970). Fast forward three decades and the Experience Economy theory was developed (Pine and Gilmore, 1999), which concludes that as soon as a specific level of prosperity is reached, interest and demand shift from products and services to experiences – which are as different from services, as services are from products. This is where we are now. Makes sense so far.
This economic progress has ignited technological innovation and spread greater affluence across developed countries and emerging economies (such as China). This in turn, has driven tourism infrastructure improvements. More people are travelling than ever before, fuelling annual growth in international tourist arrivals of circa 4% per annum over the past two decades. Travel & tourism is the second fastest growing sector in the world after healthcare, according to the WTTC .
In addition, technology removed barriers between different areas of our lives, enabling us to blend, blur and share multiple activities – think bleisure, workspitality (thank you Wojo ) and social media. It seems we are programmed to seek things that give us purpose, stimulate new thinking and anchor our memories (how often have you been dismayed to realise you can’t remember how you spent your weekends last fall?).
So, we know lots of us are travelling, but who is actually on a mission to notch up more life experiences? In the US, for example, the four principal generational groups range from 9 years old to 75 years old. McKinsey identifies the consumption patterns of each group: Baby Boomers (mid 1940-1959) consume ideology; Gen X (1960 to 1979) status and luxury; Gen Y or Millennials (1980-1994) want experiences; and Gen Z (1995-2010) is seeking the unique and ethical.
It is a complex task delivering the requisite customer experience to these different customer segments, who are all very vocal on- and off-line. That said, definitions are rarely so rigid. Whilst the research points to a diverse group of aspirations across the generations, there is inevitably some overlap (not least because we all want to have a great holiday). Moreover, whilst baby boomers may have been consuming ideology, they have also been acquiring air miles and experiences, as avid and affluent travellers, particularly for the luxury hotel segment.
And on that note, what of the accommodation? Whilst there are plenty of detractors of the current brand proliferation in the hotel market, I am a complete fan of the innovation occurring in products and experiences. Beyond the typical luxury hotel/resort, you can now stay in anything from superyachts to submarines, aerial tents to troglodyte caves. Space hotels will be an option in due time; in fact, NASA has recently opened up the International Space Station to private missions. Limited to two space tourists per annum, reported costs are $35,000 per day, with total spend anticipated to be over US$10m per trip – not an option for the annual family holiday just yet. The choice goes well beyond the offerings of the 115 luxury hotel brands listed globally by STR globally.
But it’s not this vast array of bricks and mortar brands that provide a clue of where the industry is breaking new ground. Who is? It’s the hospitality companies that really are offering an experience with a twist.
Duty & Quality Manager at the Conservatorium Hotel Amsterdam, Michelle Bullens, observes “What it comes down to are the emotions. We often do not remember an exact experience, but we always remember how we felt during that experience.” The Tofflers’ theory has become reality.
The Safari Collection’s Giraffe Manor in Kenya charges over US$600 per person per night. Set in 12 acres of private land, the boutique hotel is visited by wild giraffes, who poke their heads through the hotel windows during the day hoping for a treat. If you didn’t grow up in Africa, this is the stuff that memories are made of. The guests do not come for the hotel, they come for the giraffe encounter. Anticipation is a huge part of the customer experience.
Tell me how you feel when you have watched bespoke travel company Black Tomato’s video introductions of BLINK and GET LOST. The most affluent, well-heeled, well-travelled people I know shake their heads in disbelief, mutter softly under their breath and go silent. Even more fascinating to me is that according to Tom Marchant, co-founder of Black Tomato, some 50% of people who contact them don’t know where they want to go, they just know “how” they want to feel.
As such, the ethos of their business is about “building a connection between a place or an experience and the consumer; and that connection is one that produces an amazing emotional response. ” This is more than experiential travel, this is transformational travel in the extreme. You come come home changed.
This alchemy of product and experience is creating next generation luxury hospitality offerings. And my bell-weather private equity investors are firmly on the bandwagon. In December 2018, KSL took two “substantial” positions in alternative lodging concepts – Baillie Lodges in Australia and Under Canvas in the US. Under Canvas, established in 2009 and the owner and operator of eight glamping (luxury camping) resorts in the US, “has done an amazing job of creating truly memorable experiences – connecting guests with nature while they enjoy high quality, exceptional accommodations in beautiful locations,” according to John Ege, a Partner at KSL. He goes on to talk about working with the founders and their team “to define a new category of hospitality.”
The hospitality industry is in the process of immense transformation as new generations come of age and make their purchasing power, values and aspirations felt. But does Gen Y want to stay in the same type of luxury hotel that their parents stayed in? Ian Schrager made a typical bold statement at a recent conference about “traditional luxury”, saying: “… some of those customers are getting old. I think there’s an opportunity for luxury lifestyle, something that has the great service and refinement and all the things the luxury hotels have, but the bars aren’t pre-function rooms for a funeral.”
How are the long-established luxury hotel brands intending to attract the next generation of luxury experience hunter? Hats off to Rosewood with its recently opened properties and to those investors/operators regenerating concepts in luxury hospitality.
Dr. Suzanne Godfrey, a lecturer and consultant in luxury branding, marketing & hospitality alludes to the complexity of creating successful new luxury experiences today: “It’s about a uniquely branded and memorable experience that can only be attributed to you.” There aren’t many hospitality companies with the infrastructure to deliver that. At IHIF 2019 in Berlin, I hosted a panel on this topic. LVMH, Lungarno collection, Rosewood Hotels and Auberge Resorts all had plenty to say – and all agreed that it’s a tough gig.
The concept creation process needs to step up a gear, if we are to create successful next generation offerings. The established metrics and tools have worked on traditional accommodation concepts, but don’t provide sufficient insight into experience-led investments; underwriting emotions is a challenge for most funders. Models that measure beyond the rational aspects of product and service quality are limited and insufficient to fully inform the concept creation process. That’s why we developed the HoCoSo framework model. It incorporates multiple metrics assessing the diverse aspects of a hotel guest’s experience – a necessity for the concept creation process of an early market disruptor.
Hence, I look forward in anticipation, to fulfilling my personal quest for hotels that offer indelible experiences. I continue in the knowledge that “luxury is directly connected to exclusivity and uniqueness” (Brun and Castelli, 2013), so I should not expect to find too many that knock my socks off … and if I am a true steward of this planet, I should also plan carefully where I leave my footprints.
But I am desperately seeking a luxury hotel that makes me laugh out loud during my stay (I believe there’s at least one out there). Answers on a postcard, please.
About Katharine Le Quesne
Katharine Le Quesne started her career in China and continues to do business there. She has spent two decades as a professional advisor to the travel, hospitality and leisure industries. She works all over the world in emerging and mature markets, helping clients to assess opportunities for value creation. She loves what she does and has a particular specialism in: development strategy; destination resorts; luxury and lifestyle brands; and theme parks.
HoCoSo are advisors with a difference. We create tailor-made and innovative solutions for clients’ hospitality-led projects by bringing together the optimum team of sector specialists. Jonathan Humphries, Chairman and Owner of HoCoSo, and his direct team specialize in the extended-stay hospitality market, luxury and boutique hotels, and resort developments in Europe, the Middle East and Africa (EMEA). Our strengths lie in the following core services:
- Product & Concept Creation, for portfolio & individual asset developments
- Strategic Projects with a focus on business planning, partner selection, market & financial feasibility studies
- Transformative Asset Management for brand repositioning, asset re-evaluation and concept re-structuring.
- Hospitality Education for companies and academic institutions, with a focus on bespoke course development, training and teaching
- Workshops, Keynotes and Conference Moderating for boards, leading international conferences and incubators