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Hotels That Do Not Incorporate Retail
Into their Operations Are Missing Out
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Increasing Revenue Through High-end Merchandise

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July, 2005 - In today's competitive hospitality industry, the difference between success and failure is often the ability – or inability – to attract high-end guests. Recent research indicates that a large percentage of business and leisure travelers view shopping at luxury retailers such as Cartier, Gucci and Prada as an important component of their trips.

Savvy hoteliers now generate additional revenue either by leasing space to luxury retailers or offering these items for sale in hotel-operated boutiques to capture these purchases at the property. For hotels looking to attract top-flight retailers, however, it is essential to create a complete luxury atmosphere. Hotels that do not provide this ambience for their guests are missing an opportunity. Needless to say, a small sundry shop hidden within the hotel fails to meets the needs and expectations of high-end guests.

“Hotels that do not incorporate retail into their operations are missing out,” says retail expert Brad Kornfeld of The Kornfeld Real Estate Group. “Providing high-end shopping at the property increases revenue, improves guest satisfaction and loyalty, reinforces a property’s luxury appeal and ultimately generates repeat business. To maximize revenue from retail, hoteliers should realize that every aspect of the hotel’s operations present retail opportunities. In-room décor, spa products, recreational facilities and restaurants all have retail potential without significant capital outlay,” adds Kornfeld.

Creating a vibrant retail experience also requires innovative design. “Successful retailers know that design is an integral component in the sales process. Just look at Apple! It is amazing how color, texture, style, smells and sounds influence shoppers and their desire to buy,” advises Interior Design expert Hans Galutera, Principal, BG Studio International, Inc. “Strategic lighting, a fresh coat of paint, new flooring – even these simple changes can significantly alter the retail experience, and create a cachet of glamour and sophistication in presenting merchandise,” Galutera continues. Designing with ROI in mind is one way to maximize your budget and build loyalty with your guest.

The bottom line is that guests demand high-end merchandise in a luxury atmosphere. Fortunately, there are affordable and effective ways to turn an average property into a marquee destination. Hotels and resorts are increasingly realizing the economic benefits of retail. Shopping promenades offer more luxury branded goods than ever in an environment that rivals the most beautiful retail districts. Relatively easy and cost-effective initiatives include re-merchandising hotel boutiques and branding shops to enhance their luxury allure. Savvy hoteliers research their guests’ luxury purchases and the hotel area’s top-selling luxury items to increase the merchandise’s appeal and sales. Spas also offer tremendous opportunities to increase revenue through retail sales. The sale of spa products, apparel and other lifestyle goods are natural extensions of spa operations. Sales are often strong enough to merit a free-standing Spa Boutique at many properties. Creating alliances with off-site retailers and shopping districts to offer goods and services exclusive to their guests such as private shopping and package delivery can also generate significant revenue. 

The most recent trend in hospitality-retail is for guests to take home a piece of the hotel by purchasing design items found in their room or at the spa. Gone are the days of stealthy towel and robe ‘appropriations’ as hotels now feature these products and other ‘soft materials’ in menus available for purchase. Interest in robes and bedding has grown to include furniture, accessories and artwork as well as the bed itself. Hoteliers are discovering that, in addition to increasing revenue, sales of hotel décor items also serves a marketing purpose by continually reminding a guest of their stay at a hotel and leading to repeat business. Whether replicating a vacation experience at home or purchasing a glamorous signature product associated with the property, opportunities abound to reinforce a brand with guests onsite and again in their own homes.

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Contact:
Deniz Omurgonulsen
Strategic Planning Manager
The Leading Hotels of the World
denizo@lhw.com
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Also See: Hotels First Ventured into Retail Amenity Sales Offering Robes for Sale; Now Guests Are Laying Out $4,000 for a Complete Ritz Carlton Bed Set, The Broadmoor Generates $500,000 a Year Selling Room Amenities / May 2004
Luxury Hotels Transforming into Mini-department Stores; Hotel Guests Clamor to Buy Furniture, Sheets, Pillows, China / July 2004


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