Fashion, retail brands slip into a new business: hotels

Back in 2014, Zappos, the online shoe purveyor, hosted a Twitter chat carrying the hashtag #insidezappos. During it, users asked questions about the company that, in turn, were responded to by Zappos' CEO Tony Hsieh. After a few questions and answers (one involving a baby goat on a leash—part of an answer to the question: "What's your craziest Zappos memory?"), came this: "It's June 2019. What does Zappos look like?" Hsieh's response had nothing to do with footwear. Instead:

It was a remark later expanded on in a December 2015 Washington Post story and reiterated during another Washington Post article, from January 2016. "His intention...is to make Zappos' customer service the brand hallmark that helps him grow into other industries, much like Virgin's "hip and cool" brand led it beyond music and into other fields. Among the ideas that have been brainstormed: a Zappos hotel, an airline...."

Now, Zappos is stepping up the claim. At this month's Global Wellness Summit, in Tyrol, Austria, Zappos announced it was pondering a foray into hospitality, but stopped short of making a formal announcement. They'd be a shoo-in, right?

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Zappos contemplating checking into the hotel business is just one story among a crowd of others; other brands have already made the jump.

Brand extension

West Elm and Restoration Hardware are known for their storefronts, selling furniture and other home goods. Naturally, extending into the hotel space would make sense. 

In August this year, Springhill Suites by Marriott announced an exclusive partnership with West Elm for an original design package. The company also began adapting designs for Starwood’s FourPoints by Sheraton chain from its existing collection.

Then, the following month, West Elm announced plans to open at least five U.S. hotels by late 2018. West Elm will design, furnish and market the hotels, the first of which will open in Detroit and Savannah in late 2018. Its partner DDK, a hospitality management and development company, will operate them. As a bonus, guests will also be able to buy the room furniture and other décor online.

Peter Fowler, head of West Elm’s hospitality and commercial furniture businesses, said that the company will be able to add the extra flourishes at no extra cost by tapping into its existing vendor base. “Our rooms are comparable to a typical boutique hotel, but cost about 40 percent less to construct and furnish,” he said. Hotels will have between 100 and 250 rooms, and prices are expected to range from  $175 to $400 per night.

Springhill Suites revealed its new West Elm design collection over the summer.

Last year, Restoration Hardware announced plans to open a boutique hotel and restaurant around the corner from the planned flagship store in New York City’s Meatpacking District. The company leased all of 55 Gansevoort St., a 25,000-square-foot building owned by Delshah Capital. The 14-room hotel will act in part as a showroom for the brand, including Restoration Hardware's furniture and fixtures, and will have a ground-floor restaurant. It is the first hospitality concept launched by the California-based public company.

"Given what's happening with the High Line and the Whitney Museum and the major office tenants going there, that neighborhood is gaining a lot of credibility," Jeffrey Davis, the head of JLL's hotels and hospitality group in the city, said at the time. "There's a lot of demand that bodes well for hospitality."

It's fashionable

Fashion houses like Bulgari, Fendi, Versace and Armani have also caught the hotel bug. All have their own hotels, and major brands like Chanel and Dior have created spas for luxury hotels. 

Then there is the inimitable Karl Lagerfeld. Chanel's head designer designed the pool at the Hotel Metropole in Monte Carlo, consulted on the Sofitel So Singapore and designed some of the suites at Paris’s Hotel de Crillon. 

Two years ago, Lagerfeld and a Macau casino operator were formulating plans to create a hotel. The 270-room Karl Lagerfeld Hotel is slated to open in 2017 in a 20-story Macau tower as part of the Lisboa Palace luxury development. 
 
Now, the designer is looking to build his own hotel brand. The Karl Lagerfeld Group has entered into an exclusive, long-term license agreement with the Brandmark Collective—an Amsterdam-based company that operates 25 international hotels—to launch Karl Lagerfeld Hotels & Resorts, the designer’s own hotel, restaurant and nightclub chain.

“Expanding our brand into the hospitality sector reflects our greater vision to broaden Karl Lagerfeld’s comprehensive lifestyle experience," said Pier Paolo Righi, CEO and president of the Karl Lagerfeld Group. "Developing the Karl Lagerfeld six-star hotel in Macau…has been an exciting process for our whole team, and we look forward to further expanding in this field.”

Following the Macau debut next year, the next hotels in the brand are expected to open in “gateway markets and resort destinations worldwide.” 

And don't forget the Versace brand, which has luxury properties in Australia and in Dubai. As of last year, Enshaa, the master developer behind the Palazzo Versace resort in Dubai Creek (pictured below), was exploring sites in Europe and Asia to develop more Versace-branded development. “Our company has the right of first refusal for a global roll out of Palazzo Versace, so we are exploring at the moment the development management and hotel management of several projects as we speak,” Enshaa CEO Raza Jafar said at the time. “We are exploring Europe, we are exploring Asia. They are two areas we are actively exploring.” 

Armani, meanwhile, has two hotels in Dubai and Milan, part of a collaboration with Emaar Properties PJSC. The Armani Hotel Dubai is located in Burj Khalifa, the world’s tallest building, while the Milan hotel is located in a former private palazzo.

Bulgari Hotels and Resorts was announced in early 2001 as part of a partnership with Marriott, and launched in Milan 12 years ago. The brand has since expanded to Bali and London, and hotels in Shanghai, Beijing, Dubai and Moscow are slated to open between 2017 and 2019, the brand’s 15th anniversary. “There is a reason these two industry areas (jewelry and hotels) combine perfectly,” Bulgari's CEO Jean-Christophe Babin said when the Moscow hotel was announced earlier this year. “Bulgari's clients expect a high level of service they can get not only in the brand stores, but also when staying in an extraordinary location with luxury services, in an environment that reflects the Bulgari spirit.” For the Moscow hotel, Bulgari partnered with Storm Properties, a Russian real-estate company. 

As a cautionary tale, however, not every fashion-inspired hotel brand, lasts, however. Missoni’s hotel brand launched in Edinburgh, Scotland in 2009 as part of a partnership with Carlson-Rezidor, and expanded to several countries (primarily in the Middle East) before the relationship ended in 2014. At the time, the two parties said they would cease to work together “by mutual agreement” because of “different long-term business strategies.”

Healthy move

Last year, Equinox Holdings, the New York company that runs Equinox fitness clubs, announced plans to launch a hospitality brand intended for health-conscious travelers willing to pay for high-end fitness facilities and amenities while on the road. “We are appealing to the discriminating consumer who lives an active lifestyle and wants to have that as a hotel experience,” Harvey Spevak, CEO of Equinox, said at the time.

The first hotel in the brand is slated to open in 2019 at Related Cos. Hudson Yards development under way on Manhattan's West Side. Equinox eventually expects to open as many as 75 hotels worldwide. Related, the company's majority owner, reportedly expects to invest or raise "several billion" dollars for Equinox hotels over the next few years.

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