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Why These 4 Brands are Diving into the Hotel Space

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The boutique hotel industry has grown 6.1% since 2009 and is expected to experience even more accelerated growth over the next few years. A few outside brands are trying to hop on board.

With the goal of expanding their brands without overextending their core presence in one area, West Elm, Shinola, Equinox Fitness Club, and Karl Lagerfeld plan on unveiling their new stakes in the hospitality industry within the next two years. By opening hotels, these companies will attempt to create deeper connections to their consumers while building trust and brand loyalty with their stakeholders.

Here is our list of four brands dipping (and diving) into the hospitality industry. We’ll give you the lowdown on who’s helping to make each venture a success and just why we think they will work.

West Elm

West Elm, a furniture and home decor boutique store and subsidiary of Williams Sonoma, announced on September 26, 2016 that they will enter the boutique hotel industry. Why?  To proactively try to increase their market share, influence, and uniqueness to maximize the quality and care of service and products for their customers.

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  • Help: West Elm Hotels will partner with DDK, a leading hospitality management and development company, to run the hotels. DDK will operate the hotels, while West Elm will stick with what its really good at: the hotel’s design, furnishings, and marketing.
  • Markets: The brand plans to roll out 5 hotels, located in Detroit, Minneapolis, Savannah, Charlotte, and Indianapolis, beginning in 2018. All five locations have growing creative communities with a strong demand but low supply of hotel space. However, the company has little to no retail space in these five locations.
  • Layout: Each hotel will sport from 100 to 250 rooms, with prices ranging from $175 dollars for basic single rooms to prices over $400 dollars for luxury suites and specialty rooms.
  • Why it Works: West Elm is an experience and status symbol. This isn’t the first extension of the brand, either. The company has West Elm Workplace and handcrafted as well as local initiatives. Could the brand plan on partnering up with local artists on these hospitality projects? It would only bring more guests in. After all, everyone wants to live like a local.

Shinola

A luxury lifestyle brand focusing on watches, bicycles, leather goods, and other accessories. CEO Tom Lewand said to Travel & Leisure:

“Our brand has become increasingly elastic, which allows us to explore different categories and channels. This is an opportunity for us to open Shinola Hotel in a city and location that’s important to us.”

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  • Help: Bedrock, a commercial real estate company based out of Detroit. Opening in Detroit fall 2018, The Shinola Hotel will combine Shinola’s high quality craftsmanship with Bedrock’s real estate and development expertise to try and capture the boutique hotel niche that has not been fully explored in the area (and perhaps compete with West Elm for control of the city).
  • Market: Haven’t you heard? Detroit is the new place for young crafty professionals. The city’s downtown has undergone a revitalization pick-up over the last few years.
  • Layout: The hotel will feature 130+ rooms and be designed and furnished by Gachot Studios and Kraemer Design, with food and beverage amenities provided by NoHo Hospitality Group.
  • Why it Works: Leave it to Shinola to break more barriers. The brand is the digital nomad of the bunch, starting online and pushing into brick-and-mortar. “They’re doing it backwards,” some may say. No, they’re just doing it right. Who knows the rustic city better than the most recent brand to thrive there?

Equinox

Who: Traditional retail stores are not the only ones getting involved in the boutique hotel industry, and taking advantage of the desire for boutique hotels, Equinox Fitness Club will hop into the mix by opening Equinox Hotels. After polling its member base, the luxury fitness company that spans 85 locations in the United States, Canada, and the U.K. reported that 95% of active members claimed they would stay at an Equinox hotel.

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  • Help: Last summer, Equinox hired Josh Wyatt as President of its hospitality brand. Wyatt is a well-seasoned investor and entrepreneur. He served as Partner and Senior Advisor of Patron Capital, where he crafted the company’s Hospitality and Leisure practice. Aside from that, Wyatt was Co-Owner and Chief Strategic Officer at Generator Hostels, where he gained a wealth of experience in managing real estate, design and brand voice for the concept which he expanded over 10 countries. If anyone can take a lifestyle brand and transform it into a hospitality brand, it’s Wyatt.
  • Market: The company acted quickly, planning to open 50 hotels worldwide. The first opening will be in Hudson Yards, NY in 2019.
  • Layout: The hotel will have 233 rooms and feature a 60,000 square-foot fitness club open for all guests.
  • Why it Works: This may come as a surprise to some. However, health and wellness is huge in the hospitality industry right now. So, why not capitalize on  it? Also, if 95% of loyalty Equinox members say they’ll stay at an Equinox Hotel, well, they’ll stay at an Equinox Hotel.

Karl Lagerfeld

The beauty industry is never far behind on all things trending. German fashion designer Karl Lagerfeld recently announced his plan to launch a branded hotel chain – Karl Lagerfeld Hotels & Resorts.  Perhaps his love for the hotel industry occurred during his interior design work on the 270-room Hotel Macau.

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  • Help: Karl Lagerfeld’s partner in this venture is Brandmark Collective BV. Founded in 2015 in Amsterdam, Brandmark Collective has developed over 25 hotels across the globe. Brandmark CEO Tony Kurz said the endevour will provide developers and owners a unique concept which “celebrates the designer’s unique approach and talent to lifestyle and fashion.”
  • Market: The first Karl Lagerfeld hotel will open in 2018 in the gambling center of Macau, along the south coast of China. The market is a hub for everything luxury. Plus, it’s the only place in China where gambling is legal.
  • Why it Works: Lagerfeld isn’t the first designer dipping his toes into the hotel space. Fellow luxury brands like Versace, Baccarat, Giorgio Armani, and Bulgari has done the same. Lagerfeld will surely have his dedicated fashion followers and stars looking to stay at his hotel. It’s the place to stay just because you can say you did.

As more and more companies begin to explore unconventional options in the hotel world, it will be interesting to track their individual progress and successes, as well as their overall effect on hotel giants like Marriott and the entire hotel industry.

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