Monday, May 27, 2019

Opinion: Why brands like LVMH, Taco Bell and West Elm are opening hotels | Advertising Age

On a recent trip to Tokyo, I came across something curious: Muji, a Japanese stationery brand, had opened its first hotel there in 2016. Upon further investigation, I discovered this wasn’t a one-off but a growing trend among brands. In 2018, both Shinola and West Elm launched hotels of their own. So far this year, several luxury brands, including LVMH, have followed suit. And, just a couple of weeks ago, Taco Bell announced the opening of a “luxury” pop-up property in Palm Springs, California.

So, why would primarily consumer goods companies be pursuing such complex endeavors?

The obvious business driver of hospitality partnerships applies, of course: namely, that product trials drive sales. The hotel creates an environment that puts the product into the hands of the customer, encouraging them to try it, often for an extended period of time, before, ultimately, committing to a purchase.

All-inclusive deal
But there’s more to it than that. Each of these brands sees itself as a lifestyle brand. Meaning, each is attempting to live what its customers are living. A hotel represents the ideal setting for a brand to spend some quality time with its customers, if only for a few days.

All brands collect data on customer behaviors, habits and preferences across an array of life experiences. But a hotel environment takes these opportunities to new levels and enables brands to measure customer activity in a multitude of settings, such as the booking of activities, meals, entertainment selection, even wake-up times. Meanwhile, each human interaction yields valuable qualitative data. For brands, a hotel affords the ultimate ethnographic study of its customers.

In today’s world, you’re unlikely to compete successfully against Amazon on price. But you might win on brand experience. The hospitality industry is the ultimate training ground for that. Every detail must be designed to allow the customers’ lifestyle to unfold for the length of their stay. Even the staff are well-trained to interact with guests on behalf of the brand. They are, in essence, brand ambassadors with a unique opportunity to get to know customers on a deep and meaningful level. It’s a chance to create a level of personalization that far exceeds the expectations of the digital experience.

Room service
By exploring lifestyle questions that are typically off limits, brands are able to reveal an entire spectrum of customer behaviors. For example: What’s your customer’s ideal welcoming experience? What aspects of the human touch do they especially value? Or, maybe they prefer to avoid human interaction altogether? If so, how can technology help to bypass, augment or streamline these human-facing experiences?

Exploring how a customer travels also helps us understand what they value. What type of traveler are they? Are they efficient or thorough? Do they need room for luggage or do they travel light (and therefore value the toiletries and a bathrobe)? And what sort of room environment do they value? Is it a desk and lighting for work, a space for entertaining or a bathtub because the kids are in tow? Remember, it’s often the small details that are the most important to helping customers feel settled and provided for.

The concept of the emerging brand hotel is really the latest evolution of Marshall McLuhan’s famous 1964 maxim: “The medium is the message.” If your brand is a lifestyle brand, or is aspiring to become one, it’s worth taking a moment to explore what your own brand hotel might look like and feel like.

While most media placements or experiences require a brand to focus on maybe one or two customer insights, a hotel is a true end-to-end experience. Every detail must be well thought out, both online and offline. These are areas that you rarely explore within the context of most marketing efforts but are worth pursuing if you’re truly a brand that wants to better understand the way your customers live their lives.


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