Luxury Brands Are Making Over Hotels and Opening Cafes

For London Fashion Week in September, Burberry gathered the glitterati to peruse its Autumn/Winter 2023 collection in an unlikely setting: an old-fashioned greasy spoon with checkered curtains on the windows and over-easy eggs on the plates. The tie-up with Norman’s Café, situated in the U.K. capital’s Archway area, was a testament to the vision of Burberry’s new chief creative officer Daniel Lee, who is thoroughly embracing what he sees as the brand’s “iconic British DNA” in every touch point. Luxury Brands Are Recession Proof, According To Consumers “This isn’t just about luxury moving into hospitality,” explained Marta Indeka, senior foresight analyst at trends consultancy The Future Laboratory. “This is more about the boundaries of luxury melting.” Indeka recently helped pen a Future Laboratory report, Luxury Futures 2023, and in the process coined a new term for these type of experiences: haute-spitality. Luxury's new tastemakers Haute-spitality is all around. It’s Chanel’s green and pink Brooklyn diner, which recently served up fragrances instead of appetizers to mark the launch of the brand’s Chance Eau Fraîche perfume. It’s the velvet-upholstered Prada cafe in London's well-heeled department store Harrods that prizes itself on patisserie. It’s the Dolce & Gabbana beach club in Sicily or its Dior and Gucci rivals on the Côte d’Azur. It’s the Palazzo Versace hotel on Australia’s Gold Coast, and Dubai’s Armani hotel. Prada's Lorenzo Bertelli told investors in July that the year-long cafe installation in Harrods was proving "very impactful." "One of the most powerful ways luxury brands can meaningfully connect with communities is to create a physical experience where sight, sound, touch, scent and taste manifest the brand ethos in a real-world setting," said Sophia Reynoso, managing partner at creative agency ScienceMagic, on the rise of the branded eatery and hotel lobby. "Not only is it a way for brands to create a memorable connection point between the brand and the consumer, it is also a way to cultivate connections between people with shared ideals. In today’s modern society, brands understand that initiating and fostering community connections is a unique privilege they can offer." These permanent fixtures and pop-ups are firmly aimed at Gen Z and millennial consumers, designed as multisensory experiences to foster deeper relationships with the brand. Dolce & Gabbana recently decked out La Cabane Beach Club in Marbella. Consulting firm Bain and Company estimates that just 2% of consumers contribute to 40% of luxury spending globally each year. This is causing luxury clients to become more tiered in their offerings and resulting in a distinction between how they speak and sell to more incidental spenders versus very important customers (VICs). Indeka acknowledges that with luxury pricing up 7% year over year, it’s increasingly inaccessible to younger audiences, so alternative experiences they can buy into from these brands are appealing instead. “Food is a cheap comfort for this generation, but it’s also fun and it’s a status marker on social media. Both demographics use food snaps to express themselves online,” said Indeka. She observed that while a large proportion of young people might not have the disposable income to buy a Gucci bag, they will certainly have alerts set up on resale sites like Depop and Vinted for secondhand bargains. Secondhand Has the Upper Hand in Designer Fashion Zennials are still investing in luxury, and within this cohort are the future VICs for many fashion and accessories brands. Financial consultancy Cerulli Associates forecasts that the wealth transferred from baby boomers and Generation Jones to millennials and Gen Z will be worth $84 trillion by 2045, underscoring the spending power of the next generation of luxury buyers. “Luxury has always had a lot of cultural power, but it’s really escalated thanks to social media, and people really look up to these megabrands," she added. "However, there are all these consumers that can’t really be clients yet in this economy. So a more experiential approach to marketing is allowing luxury brands to become front and center of the conversation.” Hospitality and culinary experiences can be elevated while providing utility for these communities—whether it is delighting the senses, serving as cultural currency for the lucky few who could experience it, or supplying rich visual fodder for social feeds. Measuring up Prada's executive director Lorenzo Bertelli told investors in July that the yearlong cafe installation in Harrods was proving "very impactful" just months after opening its doors. But for the brands investing in food halls and hotel installations, measuring ROI is a minefield. Earlier this year, Reynoso's agency helped LVMH champagne brand Veuve Clicquot bring its Solaire Culture exhibition to London. Designed to mark the brand’s 250th anniversary and pay tribute to Veuve Clicquot’s sunshine yellow label—first printed in 1876 to distinguish dry champagne from sweet in the British market—the showcase featured a café on the top floor serving breakfast dishes and glasses of bubbly. At the time, Veuve Clicquot CMO Carole Bildé told Adweek that sales and footfall in the cafe would contribute to the overall KPIs. For Reynoso, the success of these foodie experiences can be seen in press coverage, social sharing and word of mouth. "Traditional metrics within these channels are still good directional indicators of success. What remains to be seen is whether or not these momentary experiences leave positive lasting impressions that ultimately translate to increased community and consumers," she said. She imagines a future where brands will take more interest in measuring the quality of awareness or conversions they drive through these events. She explained: "They'll ask questions like, 'Did the activation appeal to the right community for our brand? Did it generate high-value consumers? Did it drive purchase?' Perhaps this would lead to greater adoption of proof of attendance or (privacy-compliant) elegantly discreet data collection on-site." From Indeka's perspective, these events are designed to drive social media traction. Burberry's Norman's takeover was unexpected yet strategic. "The Burberry-Norman's collab was a good example of how to elevate a brand strategy through an experience. It was all about Lee's wider vision to associate Burberry with Britishness. It felt comforting, warm and fun." She predicts that automotive and spirits brands will be next to take a bite out of the space. "This is about luxury brands becoming lifestyle brands and planting deeper roots into their communities," she added. It's certainly food for thought for marketers across verticals as they look to engage with consumers in new, memorable ways.

Fashion News

Luxury Brands Are Moving From Haute Couture to 'Haute-spitality'

Fashion houses turn to food and hospitality activations to woo younger consumers

Rebecca Stewart

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