Hotel chains that collaborate with fashion designers are establishing a lucrative sense of exclusivity, an industry analyst says.
In a report examining the fashion hotel industry, Deloitte global managing partner Alex Kyriakidis says mainstream consumer access to luxury goods through premiumisation and counterfeiting allows the luxury fashion hotel sector to reassert a sense of exclusivity.
“As the luxury goods market grows increasingly competitive, the major fashion labels seek new ways to innovate and reinforce their brand strength,” he says.
“In today’s ‘experience economy’ luxury goods are promoted as part of a broader aspirational lifestyle, encompassing all aspects of work and leisure.”
Kyriakidis says development of fashion hotels can open up additional revenue streams for both the label and the hotel operator through cross-selling.
According to Verdict Research, global expenditure on luxury branded goods has grown by 31 percent over the past five years to reach US$263bn in 2007.
Verdict expects the growth rate to accelerate over the next few years to reach US$450bn by 2012, boosted by increasing demand from emerging economies.
Despite the money-making potential, the long-term future of such collaborations is uncertain, Kyriakidis says.
“A question mark hangs over the long-term sustainability of partnership with the fashion house.
“Is the longevity of the hotel brand assured or are the fortunes of the brand wholly dependant on the current generation of individuals who control many of these family-run businesses?”
Kyriakidis says future developments in the industry will be concentrated in prestigious shopping destinations such as London, Paris and New York, while the Asia-Pacific region is expected to offer growing opportunities.
By Elizabeth Clifford-Marsh