Hotel groups will increasingly collaborate with major fashion brands to differentiate themselves in a competitive market, a Deloitte report has predicted.
Following the opening of the Palazzo Versace on Australia’s Gold Coast in 2000, fellow fashion giants Armani, Missoni and Moschino have announced their intention to enter the hospitality industry.
Hotels allow luxury retailers to reinforce awareness of the brand and open up new revenue streams. However, their limited experience of the industry means the emerging model is one of collaboration between the fashion house and an established luxury hotel chain.
Missoni is working with Redizor Hotels on hotels in Edinburgh and Kuwait, expected to open later this year, and a further 28 are expected worldwide.
Marriott international has also signed a deal with Bulgari to open hotels in Milan, Bali and at least 12 globally.
The chief benefit to the hotel group is not necessarily revenue, said the report, but the chance to look beyond the traditional boundaries of the luxury sector in the face of increased competition.
Future development will concentrate on prestigious shopping locations, said the report’s author global managing partner for tourism at Deloitte Alex Kyriakidis.
“Europe, US and the Persian Gulf offer ripe opportunities, while Asia Pacific is likely to take a slice of this niche market. Fashion hotels in gateway Asian cities are likely to emerge as a means of building brand loyalty among these newly prosperous customers.”
However, the partnerships also involve risks, said Kyriakidis. “A question mark hangs over the long-term sustainability of partnership with the fashion houses. Another key risk is the threat of cannibalisation, the danger that high profile fashion brands may siphon off customers from other luxury brands in the group’s portfolio.”