According to a report published by ILTM and authored by Barton and Wealth-X, though High Net Worth Individuals ('HNWIs', being those with a net worth of $1m or more) comprise only 0.3% of the world's population, they contribute 37% of global annual spend on luxury travel1. Such HNWIs have long been the focus of luxury brands, including luxury fashion houses and car manufacturers. That being the case, it tracks that collaborations between luxury hotels and luxury brands work – their target demographic is the same, with both sectors catering not only to HNWIs but also aspirational consumers and, in recent years, influencers.
For many years what may have sprung to mind when one thought of brand collaborations between hospitality and luxury brands is likely to have been limited to designer toiletries in the hotel bathrooms (this is still clearly important, with 46% of affluent travellers saying they prefer hotels that provide branded products for guests in hotel rooms)2. However, today collaborations between hospitality and luxury brands take an increasing number of forms, each of which bring with them a plethora of legal considerations, which we touch upon in this article. Some examples of fruitful collaboration are the Tom Dixon design-led Sea Containers Hotel, Southbank, formerly a Mondrian Hotel, which is now managed by Lore Group, Round Hill Hotel and Villas in Montego Bay, Jamaica which boasts rooms styled by Ralph Lauren, as well as the partnership of Belmond and Dior to deliver a pop-up spa experience in the gardens of Splendido, in Portofino, named the Jardin des Rệves Dior (Dior's Garden of Dreams)3. Similarly, at the Beverly Hills Hotel in Los Angeles, 'visitors can shop a limited-edition Dioriviera capsule collection… or book a special Dior beauty treatment before lounging poolside on Dior-branded cushions, under Dior-branded umbrellas.'4
Some hospitality brands such as Soho House have successfully created their own luxury products and mastered the 'in-house' format, with their Cowshed products and the Soho Home range – designed to allow people to feel like they are having the 'Soho House experience' at home. Others have limited this 'at home' experience to the ability to buy the bedding and furniture you experience in your hotel room.
On the flip side some luxury brands have looked to own and operate their own hospitality business. An obvious example is LVMH which set up and operated its own Cheval Blanc branded hotels and then acquired Belmond. More recent examples include Audemars Piguet's Hotel des Horlogers and the proposed First Louis Vuitton Hotel (due to open in Paris in 2026).
For a number of hotel brands owning and operating the hotel asset themselves is not realistic as they simply do not have the infrastructure to run a separate (albeit associated) business in this way. As such, for the majority of hospitality and luxury brands the better alternative (which allows the best synergies and sharing of CapEx costs) is to collaborate together.
This is where we see hotels which are fully associated with the luxury brand – with the name of the hotel, design and even the fixtures and fittings reflecting the relevant brand.
A very early example of this more extensive collaboration was Palazzo Versace on Australia's Gold Coast which opened in September 2000 and where the design and furnishing of the hotel was overseen by Versace. Since 2000, there have been further Versace hotels opened, such as the Palazzo Versace Dubai, which opened in 2016, with no expense spared on interiors – think golden ceilings, fine marble and mosaics, adorned with Versace's medusa head and house prints. Other more recent openings include The Karl Lagerfeld hotel in Macau, which opened in December 2023 and Vermelho (meaning 'red' in Portuguese), the first hospitality project of Christian Louboutin which opened in the Portuguese village of Melides in April 2023.
Branded residences have now become popular, with owners of such residences enjoying the comfort of their own apartment while in many cases also being able to benefit from use of the amenities of the associated hotel. The prestige of the hotel's brand is attractive for purchasers of such residences and the familiarity of their chosen brand will undoubtedly be a draw too. The OWO in London boasts 85 Raffles-branded apartments and other luxury brands (including brands from outside the hotel sector) have created similar branded residences, for example, The Bentley Residences in Miami, Aston Martin Residences also in Miami and the Bulgari Resort, Dubai. Branded residences are appealing for developers as the brand connection can bolster the value of the residences, meaning that the profits from the sale of the residences can provide development finance as well as sustain cash flow during the initial period following the hotel's opening. It's not only hotels that have had success through collaborating with luxury brands, however. Luxury brands have also been extending their offering through restaurants or cafes, as an extension to the shopping experience, to the delight of their clientele. Some examples include the Prada Café in Harrods, the Tiffany Blue Box Café also in Harrods, the Dior at Alto in Selfridges and Thomas's Café by Burberry.
Collaboration need not always be through design; some partnerships have been established to deliver experiences to a shared target market. Take the Waldorf Astoria and Aston Martin collaboration for example, summarised in the words of Aston Martin: 'From exclusive guest access to Aston Martin's most recent cars, to bespoke drive and stay packages in some of the most sought-after destinations in the Waldorf Astoria portfolio, the collaboration combines the exceptional standards of sophistication and service that are at the heart of both brands'5. By identifying synergies in target markets, brands can benefit from a reduction in marketing costs and efforts and guests can enjoy that all-important all-encompassing luxury travel experience.
Similarly, a number of Four Seasons resorts in the US have teamed up with Mercedes-Benz USA to give guests access to a fleet of luxury cars during their stay and Soho House have joined forces with Porsche to deliver 'No Passengers' which is 'a new joint endeavour, which will encompass talks, workshops and films to highlight the brilliant minds who are pushing culture forward'6.
So, guests can stay at an exclusive hotel, surrounded by soft furnishings from one of their favourite brands while enjoying luxury toiletries, with access to a fleet of high-end cars – what's not to like? From a guest's viewpoint, there are countless benefits: no need to travel with your own toiletries or research hire cars yourself as your hotel has that covered! In a saturated hospitality market, this seems to be an angle which could set the most exclusive hotels apart. So how can this be achieved? What is there to think about when considering a collaboration of the kind we've discussed already? Of course, no two arrangements between companies will be the same, but the following are worth considering during the course of negotiations and when documenting such arrangement:
- Reputational issues: of course, you've chosen your collaborator carefully and you consider that your values align with theirs, but with 2024 cancel culture and the age-old threat to revenue that is bad press, it is key to consider (and document appropriately) at the outset of the relationship, what will happen if the brand (or indeed the hotel) falls victim to such negative press. How can the collaboration be terminated, to avoid too much reputational damage to the 'innocent' party?
- Structuring the arrangement: how can the commercial agreement be documented most effectively? This could be by management agreement, licence agreement, defining ownership interests or profit sharing (and a number of other ways depending on the particular circumstances).
- FF&E and fit-out contracts: you must ensure that the relevant interior design, FF&E and fit-out contracts adequately protect the interests of both parties, and it will be important to carefully document the design responsibility and any design approval mechanisms that may have been agreed.
- Intellectual property considerations and shared approach to marketing: tailored and thorough intellectual property advice will be required to carefully document these arrangements. It is for example essential that thorough due diligence is done to ensure that the luxury brand has the appropriate trade mark registrations in place.
It is clear to see the huge benefits that collaboration can have for both brands (and their clientele), but a word to the wise: it is critical that such arrangements are carefully documented and legislate for all (or as many as possible) eventualities. In the same way that nobody wants to spoil an engagement by broaching the issue of a pre-nup, it's important to look to the future of your collaboration and it will pay in the long run to invest in thorough, tailored advice and contracts which deal with all outcomes of the relationship: be they successes or otherwise.
Our dedicated hotels and hospitality team is available to discuss and advise appropriately.
Footnotes
1. https://view.iltm.com/wp-content/uploads/2019/11/The-Global-Luxury-Travel-Ecosystem-FINAL-1.pdf
2. https://business.yougov.com/content/7807-global-whitepaper-2023-luxury-travel-post-pandemic
3. https://blog.luxurygold.com/luxury-fashion-brands-experiential-hospitality/
4. https://fashionista.com/2023/07/luxury-hotels-fashion-retail-shopping
5. https://media.astonmartin.com/aston-martin-and-waldorf-astoria-where-sports-car-performancenbspmeets-service-and style/#:~:text=From%20exclusive%20guest%20access%20to,the%20heart%20of%20both%20brands
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