Once considered relatively niche, the luxury segment of the hospitality industry has exploded in recent years, with rising global wealth and increasing desire for personalized and immersive experiences driving the interest. In 2023, the international luxury hospitality industry was valued at USD 140.28 billion. And it’s expected to grow to USD 154.32 billion in 2024 and USD 369.36 billion by 2032, representing a compound annual growth rate of 11.5%.
To satisfy this demand, a growing number of independent hotels and hotel chains are challenging traditional luxury brands, such as Ritz-Carlton, Aman, Four Seasons, and Mandarin Oriental. One of the biggest challenges for these new entrants is creating a luxury brand strategy that can cut through the noise and help them disrupt a market that values heritage, history, and exclusivity. To do that, aspiring brands need to create something extraordinary and seduce customers with their brand story.
What is luxury branding?
Luxury branding sets the stage for what customers can expect to feel when interacting with your business. It emphasizes quality and exclusivity to engage a specific type of consumer. Luxury branding goes beyond basic amenities to create a promise of superior service and outstanding heritage that transforms an ordinary purchase into an extraordinary one.
A big part of branding is storytelling. Luxury brands don’t focus on product features. Instead, they build a dream and tell a story that features the elements of luxury, which are “standards that reflect detailed attention to the level of sumptuous comfort, choices and convenience provided.
The purpose of a luxury brand’s story is to take you on a journey that draws you in, shows you what makes them unique, and builds that all-important desire.
Luxury can be defined rationally based on high price but also there has been a redefinition of “ultra-luxury” as “back to basics” with a focus on authenticity, establishing real one-on-one relationships, the importance of service and personalization, as well as the value and uniqueness offered through artistic design and craftsmanship, use of celebrated artists; and quality in all things.
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Differentiating luxury from mainstream hospitality brands
In today’s vast and varied hospitality industry, you cannot be all things to all people. A brand must distill its identity to create a clear message for a particular demographic that differentiates its offering from the competition and shows the unique value it provides. Mainstream hospitality brands emphasize their practicality and functional values, while luxury brands focus on the following elements to distinguish themselves.
Exclusivity and rarity
Exclusivity is at the heart of the luxury hospitality industry, with high-end guests wanting luxury experiences that not everyone can enjoy. Limited guest numbers, a high price point, and an exceptional standard of services and experiences can add a sense of exclusivity and increase the status associated with your brand.
For example: A luxury boutique hotel that only has a few suites available, each offering unique and personalized experiences. A hotel that has private jacuzzi and sauna rooms that guests can reserve for an intimate, private wellness experience. And finally, hotels that foster special relationships with luxury fashion brands.
Heritage and legacy
Heritage counts in the luxury hotel industry. It helps you deliver unique and authentic guest experiences and showcases the history and culture of the area. Beyond the exceptional facilities and dining experiences you offer, the architectural heritage of your buildings can be a hallmark of luxury. Combining features that celebrate a building’s storied past, such as majestic staircases and soaring ceilings, with high-tech amenities, can be a powerful way to differentiate a luxury brand.
An interesting example of the luxury branding exercise is the classification of palace hotels. While hotels around the world may be referred to as palaces, the concept is quintessentially French and in 2010 the French Tourism Office bestowed the title on establishments that met certain specific criteria.
Superior quality and attention to detail
Featuring the quality of your rooms, restaurant, wellness center, and other facilities in your storytelling can be a powerful luxury branding tool. Quality is a vital component in the luxury hotel segment, but it’s how you sell it that can set you apart. Quality comes in many forms, from the standard of your fixtures and fittings to the uncompromising attention to detail and the service levels you offer.
Some items that merit consideration for a luxury guest experience are the ones that translate to exceptional comfort and wellbeing. The beds, pillows and sheets are a good place to start, based on the examples of the hotels that offer the best night’s sleep. Another important element for today’s guests is the food. Many people today have special dietary needs and preferences, and people can get hungry at any time of the day, so it’s important to have a high-quality selection of meals and snacks, available 24/7.
Aspiration and emotional connection
Luxury brands create aspirational stories that resonate with their guests emotionally. Luxury has nothing to do with practicality. Instead, brands trigger an emotional response in their guests by emphasizing the brand’s story and showing that the company’s values align with their own. That makes them feel like an important member of an exclusive club.
For example, a luxury hotel can create aspirational stories around its brand by showcasing its commitment to sustainability and social responsibility. It might highlight its support for local communities and environmental conservation efforts, allowing guests to emotionally connect with the brand's values and mission.
Additionally, the sense of belonging to an exclusive society is related to the ego. François Delahaye, Chief Operating Office, Dorchester Collection and General Manager of Plaza Athénée in Paris explains that luxury hospitality in this media-dominated world is all about ego and living up to the image you wish to project. For an article about the qualities of luxury hotels, he explains:
We are in the ego business. Whether the employee joining us is proud to list us on his CV, or the owner and guests are selective about high profile properties to invest in or stay at. Those three pillars - employees, owner and guests - are sensitive to where they work, what they acquire, or where they stay.
Timeless design and aesthetics
We’ve talked about the architectural heritage of luxury brands, but the look and feel of the brand itself are also important. The brand’s heritage should be reflected in every customer touchpoint, from the website and brochure to the logo and in-room details. A creative director and designer can help you create a cohesive brand identity, with defined fonts, colors, and other design aspects to differentiate the brand and make it immediately recognizable.
Price
Price can be a luxury brand differentiator in itself, but it must be supported by some of the other elements we’ve discussed. A high price can add to a perception of prestige and even boost demand. If you choose a premium price point for your hotel, be wary of a dynamic pricing strategy - lowering or raising the price according to demand - as charging a lower price can devalue your brand.
Building and differentiating a luxury hospitality brand
Here are five steps to building a strong and differentiated brand that can give you a competitive advantage.
Find your differentiator
Being a luxury hospitality brand is not enough of a differentiation point in itself. Luxury hospitality is a vast market, and to stand out, you need to identify and communicate what makes you different.
Your brand differentiator isn’t something you find - it’s something you work hard to create. In this market, it could be your state-of-the-art wellness facilities, high-tech amenities, the rich heritage of your buildings, or the world-class gastronomic experiences you offer. When you know what makes your brand truly outstanding - your differentiator - you can think about how to communicate it in a brand-aligning way.
Understand audience perceptions
The ultimate goal of luxury branding is to shape your audience’s perceptions. Before you start that process, it helps to understand what customers think of you now. You can then refine your strategy and target the areas to improve.
Customer surveys, social listening, and monitoring reviews, complaints, and preferences can help you understand what guests like and don’t like, and how you compare to the competition. Once you know what your audience expects from your brand, you can work to change or improve it.
Craft the narrative
Now you know your differentiator and how your customers perceive you, you can start to shape the discussion and tell your story. For a luxury brand, you must build a complete and convincing narrative across every customer touchpoint based on your unique niche and differentiator. Branding elements to think about include:
- Visual consistency
- The imagery that pulls your brand together
- Font and color
- Tone
- Logo
Build a sense of exclusivity
When people stay in your hotel, they want to feel exclusive and special, like they’re experiencing something not everyone can enjoy. You can create that sense of exclusivity through the voice and tone of your communications, the price point, and your heritage and quality. Personalization is another major quality of the luxury market today.
Amplify your message
It takes time to build a luxury brand. Once you have harnessed the notion of storytelling to craft a cohesive brand story across every touchpoint, keep it consistent and make it the core of your business. Everything should embody that narrative, from the booking process and the service offered by your team to the standard of the rooms and the amenities you offer.
Understand your target audience
Keep in mind that luxury consumers have different preferences that are related to their generational values and experiences. The expectations and behaviors of luxury consumers vary and evolve with societal trends and different generations are looking for different things in luxury products and services. So, it’s a good idea to read up about the most common luxury consumer profiles based on their generation, whether they be Baby Boomers, Millennials or Generation Z, so that you can adapt your marketing strategies to attract and retain customers from each group.
Standing out from the crowd
When you operate in a competitive market, the only way to succeed is to offer something different. By making differentiation a key part of your luxury brand identity, you can create a compelling narrative that builds an emotional connection, creates desires, and transforms your luxury niche into a successful business model.
