Living the label

Thanks to brand extensions, loyalty is on the rise. But are fashion-house hotels a step too far, asks Jessie Hewitson

You've got the Armani sunglasses, Mulberry bag and Missoni tie—if you're really rich you may have even kitted out the interior of your jet in wall-to-wall Versace—and now you can stay in your favourite label's very own hotel. All these luxury brands have turned their perfectly manicured hands to launching hyper-extravagant, super-stylish, fully branded hotels.

It started with Versace. The Milan-based fashion house was approached by Soheil Abedian, founder and managing director of Australian-based property developer Sunland, who pointed out that it was missing a branding trick. Abedian suggested Versace put its name to a development—Gianni Versace had envisaged a similar project before his death in 1997—and Palazzo Versace on Australia's Gold Coast opened for business in September 2000. The next one will open in Dubai later this year.

The way Abedian explains the synergy is that high-end hotels from different chains are often indistinguishable, whereas fashion names trade on their unique look. "You wouldn't mistake a Gucci bag for a Prada one," he says. The hotel industry seemed ripe for branding in the same way. "People purchasing a luxury product normally want the assurance that they are buying into a brand that is immediately recognisable and has the highest attention to detail and quality."

Armani is launching its first hotel operation in Dubai's tallest building—the tallest in the world, in fact—the Burj Dubai. Both brands are selling property within their hotel developments to provide some of the initial funding. Even by fashion standards this is expensive bricks and mortar. The cheapest apartments in the Armani development cost £2.4m; Versace's are a relative snip, starting at £1.85m.

There are plenty of other opportunities to live the label, with designers queuing up to welcome guests. So what's going on? According to Camilla Mabbott, director of branding specialist C&M Consultants, whose client list includes Armani's Casa home furnishings line, it's simply a useful platform to showcase products.

"We are living in a brand culture and opening hotels provides a stage to demonstrate a new range—like interiors for Armani, for example," she says, adding that it gives a designer credibility beyond the fashion world. "As luxury is all about lifestyle these days, it works in their favour if it is in a chic location and associated with an amazing bar or hotel. It increases the opportunity to find new clients who might not usually come to their boutiques."

Abedian agrees that this is a way to grow the brand. "It is somewhere to base a flagship store but also a way of extending the product line," he says. "Versace isn't just about menswear and womenswear; it's about furniture, fine dining, lights and bed linen. And with our hotels you know the minute you see the Medusa head on the gate at the driveway that this is Versace."

Indeed, the famous Versace attention to detail borders on the fanatical. To put it into context, at a recent launch of the development for UK journalists, Donatella's personal chef was flown in from Australia just to make the canapés. Guests at the hotel will eat from Versace plates costing £180 each and wrap up in bath robes costing £1,800. The fashion label will be overseeing literally everything in the hotel. Every member of staff working at Palazzo Versace in Dubai, including security guards and chamber maids, will be trained at its sister hotel in Australia. No stone is left unturned—no grain of sand, for that matter, as the hotel will have the world's first "chilled beach", where cold air is piped underneath the sand to ensure guests' toes are kept cool.

Armani and Versace have both chosen to launch hotels in Dubai for the same reason a large number of the luxury brands are investing in the Middle East—soaring oil prices. Oil-rich clientele and luxury goods make natural bedfellows. "To get to brass tacks, the people who spend the most money at the Palazzo Versace on the Gold Coast are Arabs and Asians," says Abedian. "Visitors from Dubai, Abu Dhabi, and Qatar come on holiday, buying horses and spending a lot of money at our hotel. I mean a lot."

Luxury brands opening hotels is very much the way things are going, according to Tanya Rose, former head of marketing at the Savoy, who now owns Mason Rose, a PR company looking after premium hotel brands including Ritz Carlton. "It used to be that in Milan the best hotel was the Four Seasons. Now the Bulgari hotel has opened and it's doing just as well—in fact it's achieving a higher room rate. I think the reason is that people know when they go into a Bulgari hotel they can expect the very best. It's not necessarily that they dress in head-to-toe Bulgari and want to stay in a Bulgari hotel too; it's more that they're reassured by the brand values and know they won't be let down."

The conspicuous consumption of the 1980s and 1990s appears to be back in fashion. Brand-driven guests may well be looking for top-notch customer service, but also for a hotel to confirm their social standing.
"People are staying in these hotels as a status symbol and also because they identify with the brand already," says Gaby Gramm, general manager of the Steenberg Hotel in Cape Town. "For a luxury brand it is also a way to maintain its image, often to form joint ventures with hotel operators who will assist them in their expansion and marketing." But what is the difference between these ventures and any other luxury hotel chain? "They are seemingly in an easier position to sell a lifestyle to the client, and offer not just a hotel stay. After all, guests are seeking a travel experience and this brand exposure is a form of enhancing it."

The client base at the existing Palazzo Versace on the Gold Coast consists mainly of three categories: honeymooners, business people and celebrities. Some may question the wisdom of launching hyper-luxurious hotels at a time when much of the world is experiencing great financial uncertainty, but not Abedian. "I passionately believe that quality, exclusivity and luxury are timeless commodities, and quality is always in demand," he says. "There continues to be a strong and sustained demand for exclusive luxury brands globally. Palazzo Versace opened on the Gold Coast a year before 9/11, and its business still did well. This end of the market is far more immune to fluctuations."

"Big brands are likely to be able to ride it out," says Rose. "Smaller boutique hotels may go by the wayside, but the deep pockets of the big names will be able to weather the storm."

Abedian estimates that applying the Versace brand adds anything from 10 per cent to 100 per cent to the value of the object, be it a tie, shirt or a hotel room for the night. In order for brands to command these premiums, points out John Hitchcox—whom many credit with starting the trend for branded property when he founded the Manhattan Loft Corporation in the 1990s—there needs to be some substance behind the surface.

"The emperor's got to have some clothes," says Hitchcox, who now co-owns Yoo, a design-led international property development company, with designer Philippe Starck. "You have to get your product right. In Chicago, people pay more for Frank Lloyd Wright buildings because he is an artist. When I started the Manhattan Loft Corporation it took 10 years to take off—a lot of people thought they could replicate it, but it's very hard work and a large proportion of our work is quality control. Staying at a hotel controlled by a fashion brand is an extra insurance policy for the purchaser. You can rely on Versace or Armani to look after your interests. They are thoroughbred, top-of-their-game fashion designers. If Topshop were to open a hotel, it would need to have more than its brand to make it work."