In vacation hotspots, it’s becoming more common to see people carrying brown handbags from the Four Seasons Astir Palace in Athens, wearing tank dresses from the Eden Roc Cap Cana resort, and even London commuters with bags from the five-star One&Only hotel.
According to a report from Bloomberg, luxury hotels around the world are investing more in their own merchandise. The Beverly Hills Hotel has developed $218 pink and green nylon handbags, Le Bristol Paris sells $88 baseball caps, and even The Peninsula London is offering silk pajamas for $770.
For years, luxury hotels have been selling merchandise in their physical stores. However, due to the impact of the pandemic, consumers are increasingly turning to online shopping, prompting hotels to join the e-commerce trend.
With the easing of the pandemic, guests are returning to hotels to enjoy the vacation experience, turning hotel merchandise from mere souvenirs into a symbol of status.
The Aman hotel is one of the most luxurious hotels in the world, selling a $2,700 handbag with the letter “A” on it in its online store; Aman’s e-commerce business has doubled in size over the past year. The Mandarin Oriental offers high-quality cotton and leather bags with its classic fan pattern for $166. The Hotel Eden in Rome also launched a handmade yellow canvas bag paying tribute to the city of Rome which costs 450 euros (about $500).
Leora Lanz, an associate professor at the Boston University School of Hospitality, said, “Merchandise is a symbol of status, and for millennials and Generation Z, luxury hotel products exude an aura of ‘those in the know.'” This is an enticing additional source of income for luxury hotels, a savvy marketing strategy as explained by Barbara Czarnecka, associate professor at London South Bank University. “Consumers feel that by purchasing products from luxury hotel brands, they will be closer to the upper class,” she said.
This partnership also presents a rare opportunity for luxury brands. Luxury loungewear brand Olivia von Halle recently collaborated with The Peninsula Hotel to launch a product line including a silk pajama set valued at £620 (priced at $770 in the US), inspired by the view of Hyde Park from the hotel. The American fashion brand Frame also partnered with Le Bristol Paris.
Stephanie Phair, former Chair of the British Fashion Council, pointed out that more and more luxury brands are starting to collaborate with luxury hotels. “After the pandemic, people are willing to spend money on travel and experiences, so fashion brands and hotels are considering how to seize this business opportunity.”
In recent months, the European luxury goods market has suffered a significant blow, with an overall market value decrease of nearly $250 billion. The downturn in the luxury goods market is primarily attributed to the economic slowdown in China, with Chinese consumers notably reducing their demand for high-end products.
British luxury brand Burberry has seen a 70% decrease in market value over the past year and has been removed from the London FTSE 100 index. The companies owning Gucci (Kering SA) and Hugo Boss AG have also been severely affected, with market values almost halving in the past year. LVMH Group, once the largest company in Europe by market value, has now dropped to the second spot.
While brands like Hermès, which cater to top-tier clients, have remained stable, the luxury goods industry as a whole is facing a crisis, with many brands seeking to transform.