November 2013 | GUILT-FREE CONSUMPTION

It’s this tension – between the values that consumers hold, and the pervasive awareness that the actions they take run counter to those values – that manifests itself as the potent, nagging guilt trip that haunts many consumers today.This month’s Trend Briefing highlights nothing less than the future of consumerism, if not that of business at large (yes, the future of humanity will follow next month ;).

Building on our recent Trend Briefings on CLEAN SLATE BRANDS andDEMANDING BRANDS, and bringing together various strands of the HUMAN BRANDS and BETTER BUSINESS mega-trends, GUILT-FREE CONSUMPTION (GFC) is a compelling answer to the current, epic quest for more aware, more ethical, more sustainable consumerism.

Definition:

Fueled by a pervasive awareness of the conflicts between their consumerist impulses and their aspirations to be 'good', experienced consumers are increasingly wracked with guilt. The result? A growing hunger for a new kind of consumption: one free from worry (or at least with less worry) about its negative impact, yet that allows continued indulgence.

Note: This Trend Briefing was inspired by a recent comment from Gerald Lawless, CEO of Jumeirah Hotels, on how the future of luxury would be ‘guilt-free’.

1. DIVIDED SELF

One of the Big Human Needs is to consider oneself ‘good’. And human beings feel good about themselves when they live according to their most deeply-held values and aspirations.

Yet mature consumers are ever more aware that the desires and impulses they experience – and worse, that they constantly act upon and satisfy inside the consumer arena – often run counter to these values and aspirations.

Transparency Triumph

Every day, consumers are served more information on dysfunctional business processes and ethics, hear the strained voices of workers from developing countries, or receive scientific insights on the health drawbacks of many a favorite (and processed) snack or beverage.

It has thus become completely impossible for any individual in near- and fully mature consumer societies to claim ignorance over the havoc his or her consumption is and has been wreaking.

Clean Contrast

While on top of this, the flaunting of ethical and responsible behavior by a whole host of CLEAN SLATE BRANDS only highlights the deeply flawed nature of many established products and brands. Take condoms, for example. How many consumers considered the ethical dimensions of condoms before Sustain Condoms highlighted the environmental and social abuses often found in the production of latex?

With every brand that shouts about not employing 9 year old child workers in Bangladesh, aboutnot force-feeding poultry, whose products do not depend on tarry oil-fueled engines, consumer doubt towards those that keep quiet grows.

Can't Stop, Won't Stop

However, a very human mix of status, indulgence, conditioning, addiction and genuine pleasure (derived from everything from tasty Whoppers, to romantic easyJet/AirAsia/JetBlue city breaks, to dirt-cheap-yet-coolish H&M outfits, to shiny phablets), stops consumers from substantially changing their knowingly damaging consumption needs and patterns.

2. NEXT: THE GUILT-SPIRAL

Some Stats:

When presented with the statement ‘I feel guilty about the impact I have on the environment’, 28% of global consumers* scored themselves 4 or 5 (out of 5, with 5 being ‘strongly agree’).

(National Geographic Greendex, July 2012)

* Somewhat ironically, some emerging economies had a higher guilt level: 45% of Indians, 42% Chinese and 40% of Brazilians rated themselves 4 or 5. Contrast this with only 23% of British, 21% of Americans and 19% of Australians.

In 2013, 27% of US consumers were ‘more concerned’ about food waste than in 2012, with only 5% ‘less concerned’.

(BAV & Sustainable America, March 2013)

When asked about their own diet and levels of physical activity, and to assign themselves a grade from ‘A’ to ‘F’, US consumers gave themselves an average grade of ‘C+’ for their level of physical activity, and their personal diets an average grade of‘B-’. Only 12% gave themselves an ‘A’ or ‘A-’.

(International Food Information Council Foundation, May 2013)

The good news: beset by these contradictory needs – to seek pleasure in the satisfaction of impulses, and to shake off a rising feeling of guilt –consumers are now hungry for a new kind of consumption, one that will allow them to continue to enjoy consumption, yet not worry (or at least worry less) about its negative impact.

Indeed, a recent global study identified 2.5 billion of these 'aspirational consumers' (representing one third of the global consumer class). These consumers are defined by their love of shopping ( 78% ), desire for responsible consumption ( 92% ) and their trust in brands to act in the best interest of society ( 58% ).

(BBMG, GlobeScan and SustainAbility, October 2013)

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3. ABSOLVING GUILT

To become a GFC brand, brands need to first understand the various kinds of guilt currently tormenting ‘aware’ consumers. Three* types of consumer guilt:

• SELF: Guilt about what one brings on oneself.
• SOCIETY: Guilt about what one causes, directly and indirectly, to other people (and other living creatures).
• PLANET: Guilt about one’s impact on the environment at large.

Now, GUILT-FREE doesn’t have to mean either zero-impact, ethically perfect, health-optimum consumption, or even no consumption at all**.

Most consumers do not hold values that mean that even the slightest negative impact on the planet, on society or on themselves is unacceptable to them. They just want to know that this impact is as little as practically possible.

Indeed, for now at least, the most potent GFC innovations will target those areas where there is greatest tension between consumer values and impulses, and help absolve the most tormenting guilt.

* When it comes to guilt, these aren’t the only dimensions of course. Just as an example, witness how some newly-minted urban consumers often experience ‘cultural’ guilt: split between their desire to dive into the global consumer arena and the thought that they are ‘abandoning’ their identity and heritage (to assuage that guilt, turn to our CELEBRATION NATION trend ;)

** Only truly reducing one’s consumption, i.e. consuming less, offers the ultimate redemption. But that’s something 99% of consumers seem not ready for yet. And neither are most brands.

GFC & SELF:

As a brand, identify the consumption choices that cause most guilt when it comes to physical and mental wellbeing: sugar, fat, alcohol, inactivity, and more. Then take steps to absolve that guilt.

September 2013 saw fast food giants McDonald's and Burger King sparring with GFC initiatives. Burger King launched Satisfries - French fries with 40% less fat and 30% fewer calories than the McDonald's equivalent. While McDonald’s announced a global partnership with the Alliance for a Healthier Generation to make specific commitments, including always offering a choice of a side-salad, fruit or vegetables as a substitute for fries in a value meal.

Or learn from a more light-hearted example: the Peddler’s Creamery ice-cream shop in Los Angeles opened its doors in April 2013, and powers its churner by asking customers to peddle an in-store bicycle. GUILT-FREE indulgence indeed!

GFC & SOCIETY:

As a brand, identify the consumption choices that cause most guilt when it comes to other people: poor working conditions, sub-poverty wages, exploitation, and more. Go ahead: absolve the guilt!

Check out Fairphone, the smartphone from the Netherlands now in production after easily breaking its pre-order target of 5,000 sales in June 2013. It's manufactured without using conflict minerals and with a focus on worker welfare.

Or how about online retailer Shop For Social, launched in Singapore in July 2013. The site partners with and curates products exclusively from local social enterprises and nonprofits, and includes handicrafts made by disabled or disadvantaged individuals.

GFC & PLANET:

Fossil fuels and CO2 emissions, wasteful packaging, non-biodegradable materials, rainforest destruction: there is no shortage of potent guilt when it comes to the planet.

A few recent examples to learn from:

The already-iconic Tesla Model S aims to absolve the vast guilt that exists around driving. Quartz recently reported Tesla was outselling Buick, Cadillac, Chrysler, Fiat, Jaguar, Land Rover, Lincoln, Mitsubishi, Porsche and Volvo in California this June.

Eating sushi is notoriously environmentally suspect. Miya’s Sushi in Connecticut, US, goes beyond simply not including endangered fish such as yellow tail tuna on its menu: it offers dishes made with non-native, invasive species that are damaging the local habitat, and thus eating (and enjoying) them makes customers part of the solution. How’s that for GUILT-FREE?!

An energy efficiency hackathon in Singapore was recently won by the Wish Lit app. It allows the user to enter the cost of a desired object and then calculates how much energy they need to save in order to purchase it.

And there are endless other big brand examples too. Just recently: Patagonia’s ‘Responsible Economy’ research effort, Chipotle’s ‘The Scarecrow’animation, Nike’s Making app, Dell’s zero waste initiative, and Unilever’s purchase of algae-derived oil…   

So be more than just eco-conscious, and embrace everything from cradle-to-cradle, the circular economy, collaborative consumption (Airbnb is a great example of experience indulgence 'allowed' because it's using existing assets) and more in your quest to become totally eco-neutral if not eco-positive.

TOTAL GFC

The sweet spot for any GUILT-FREE brand is, of course, to deliver in all three categories simultaneously.

If your brand can identify the guilt attached to what you do across the SELF, SOCIETY and PLANET domains, and then absolve it, you’re nearing TOTAL GUILT-FREE CONSUMPTION.

The ultimate? Consumption that goes beyond GUILT-FREE, and becomes actively positive in its impact across every domain. That is, true consumption nirvana. Is it possible? How big is the universe? We don’t know! Yet ;)

NEXT

The opportunity to absolve consumers is an enormous one. Sure, virtually every brand now claims to be a green brand, a responsible brand, a human brand, a sustainable brand, an honest brand, or a transparent brand. But striving towards offering GFC might encourage more purpose and direction – internally too – than lofty social or environmental goals, especially since GFC is focused on what counts most in business: actual end users’ (deep) needs.

With that in mind, we look forward to your innovations, and are expecting them to come with a proud (recycled) ‘GFC’ sticker to boot.

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Want to get going with GUILT-FREE CONSUMPTION? Then why not use our free CONSUMER TREND CANVAS tool to structure a brainstorming session? You may feel guilty if you don't ;)

Our next free Trend Briefing – our big, year-end '5 Big Consumer Trends for 2014' – will hit your inbox on 4 December 2013, so make sure you’re subscribed. Until then, good luck! 

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via trendwatching.com http://www.trendwatching.com/trends/guiltfreeconsumption/

Marketing to Affluent Customers, for High Margins

SEPTEMBER 18, 2013 • ARMANDO ROGGIO

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Many online retailers compete on price. But selling luxury products to relatively affluent shoppers with annual incomes above $100,000 per year is an exercise in brand building and content marketing.

Shoppers buying luxury apparel and accessories spend $902 per purchase on average, according to a Google Think Insights report released this month, and $3,835 per purchase on jewelry and watches on average. Other luxury purchases may include electronics or household items, including furniture.

Products that Appeal to Affluent Shoppers

If you’re unfamiliar with luxury brands take a moment to visit a few websites representative of the market. For example, visit Ermenegildo Zegna’s site, where you can spend $2,495 for a leather jacket — albeit an admittedly handsome one. T-shirts on the Zegna site sell for between $88 and around $145.

Zegna is an example of a luxury product site.

Similarly, check out the Trinity De Cartier collection on the Cartier website and you will find that the large Trinity bracelet retails for $16,300.

Wealthy shoppers are willing to pay a lot of money for these sorts of products for three reasons, according to the Google Think Insights report.

First, about 62 percent of affluent shoppers simply want a better product that is superior to lower-priced alternatives. A Zegna jacket will, in fact, be made of better materials, manufactured to a high standard in a form that leads fashion trends rather than follows them.

About 39 percent of affluent shoppers are looking for a custom fit item. To continue the example, made-to-fit clothing is another service that Zegna or similar brands provide.

Lastly, about 33 percent of luxury shoppers, again according to Google, want to distinguish themselves in some way from others, and few things can set you apart in a crowd more quickly than Cartier jewelry or similar items of quality and worth.

It is important to remember that all luxury purchases are not only aimed at high fashion. In fact, even somewhat rugged items might be a luxury purchase of sorts. GORUCK, which makes very high-quality rucksacks, as an example, might be considered a luxury brand, given that its GR2 rucksack sells for $395, while similar sized rucks from lesser brands might be as lower as $25.

Luxury items are high quality, often custom fit or customized, and set owners apart.

How Wealthy Shoppers Make Luxury Buying Decisions

The Google Think Insight survey found that 78 percent of wealthy shoppers will research a luxury product online before buying and nearly every affluent shoppers (98 percent) will do research of some kind.

It is likely that those shoppers will look more than once, checking products and specifications from desktop or laptop computers (67 percent), from tablets (29 percent), and smartphones (29 percent). On average an affluent buyer will check 4.6 resources before making a luxury purchase.

The Problem of Where Affluent Shoppers Buy

Unfortunately, for pure-play ecommerce retailers, the majority of luxury purchases are made in physical stores, with some 69 percent of affluent shoppers saying that they wanted to touch and feel the luxury item before buying it.

Most luxury purchase are made in physical stores, according to the Google Think Insights report.

Opportunities for Online Luxury Retailers

Although affluent shoppers may like to hold the luxury items they buy as they are making the purchase, there are still three good opportunities for Internet merchants: convenience, time, and value.

The Google Think Insights survey found that 69 percent of relatively wealthy shoppers made luxury purchases online because it was convenient and “no stress.”

Unlike what some might imagine, 81 percent of affluent shoppers — both male and female — work, and have the same time constraints (or even greater time constraints) than other shoppers. Thus, 60 percent of those surveyed bought luxury items online because they could shop anytime, anywhere.

Finally, affluent shoppers are not affluent by accident, and 44 percent of them liked shopping online because they could find “good deals” on the luxury items they wanted. Perhaps, put another way, these shoppers are willing to pay $2,495 for a leather jacket, but they are perfectly happy to pay less for it.

Convenience, availability, and value give online sellers an opportunity to address the luxury shopper.

Taken collectively, the Google Think Insights survey data may provide some excellent ideas for marketing to affluent shoppers.

Build Brand

First, given that shoppers want high-quality goods that help them to stand out, merchants might be able to succeed by focusing on building brand, that is convincing potential customers that the brand’s (store’s) products are, first, very well made and, second, exclusive in some way.

To revisit an example, think about how GORUCK has succeeded in building just this sort of brand. Whether or not you were familiar with the company, take a look at the its website. Notice how much space is devoted to describing quality. Also consider how the company markets its brand through events. These events feature military-like training while wearing GORUCK rucksacks loaded with weights. The workout is clearly not for everyone, but neither is the GORUCK brand, rather it is higher quality and exclusive.

Market with Content

The Google survey, which found that many wealthy shoppers research purchases, may also indicate an opportunity for content marketing. Consider the Mr. Porter website, as an example.

The high-end site has a editorial section called “The Journal” that provides great quality content. The September 17, 2013 issue included a profile of fashion model Kate Moss and a short article about “Eight Ways to Look Fresh for the Office.” Mr. Porter is using content to attract shoppers, who may also use the site to research products and, of course, buy something.

Be Convenient

Remembering that convenience was the top reason that wealthy shoppers purchased luxury items online, an ecommerce retailer would be wise to limit barriers to the sale. This might be as simple as implementing a quick buy or even one-click purchase option or ensuring that many forms of payment are accepted.

Another aspect of convenience could be offering customer service or live chat after regular business hours.

Provide an Immersive Experience

With a majority of luxury shoppers saying that they liked to touch and feel expensive items before making a purchase, online sellers might consider providing a more immersive, if you will, online shopping experience.

This experience might include relatively more video, larger or even full screen graphics, and different shopping formats. Zegna’s site, as an example, encourages customers to shop by look.

via Practical Ecommerce http://www.practicalecommerce.com/articles/58666-Marketing-to-Affluent-Customers-for-High-Margins

Coach.com’s rules for content

By JENNIFER OVERSTREET | Published: JULY 17, 2013

Be the first to comment | This entry was posted in Events, Marketing, Merchandising, Retail Companies

For millions, it’s easy to love Coach. The brand’s style is clean, classic, and functional, with just a touch of whimsy. But Coach is more than just handbags, and it wants to mean more than just handbags to its customers. With around 4 million visitors a month, Coach.com is a gateway to the brand and an essential part of not only its image, but also its customer experience. So it’s essential that the site is engaging, tells the bigger brand story and, of course, sells merchandise. During Shop.org’s Online Merchandising Workshop on Tuesday, Coach Vice President and Creative Director for New Media Colleen Stokes and Vice President of E-Commerce Tracey Strauss shared an inside before-and-after look at how the organization refreshed its website.

Coach started by focusing on four key things: navigation, the category grid, the product detail page and storytelling. You can already see the changes on Coach.com. Note the top navigation on the homepage and the clean and simple product detail pages. Focusing on product photography led to subtle but important changes that show products being used and using real models instead of mannequins.

For the ever-important storytelling objective, the Coach team focused on creating content. But content isn’t just pretty fluff. Creative web content has to meet three important strategic requirements:

1. Be relevant. Know your customer.

2. Be optional. Don’t ever make a customer watch a video if all she wants to do is buy a bag.

3. Be focused on the product. Big, beautiful photographs on the Coach site not only show off the merchandise but also make it easier to purchase. Users can hover the mouse and the name and price of the featured product pops up.

The speakers gave examples of the kinds of content that work for Coach. Some simply integrates with a larger brand campaign in stores, print, and other media, while Coach’s latest collaboration with the Sartorialist fashion blog, “Summer in the City”, which captures “Coach on the Street,” is now is featured prominently throughout the website and on social media such as Coach’s Facebook and Pinterest pages.

Content produced for product collaborations include this very cool baseball collection that was featured with a 3D photography look for Father’s Day

 

So how does the new and improved site perform? As with any redesign, the process is continuous and involves a lot of user testing, so the team is still in the early stages of refreshing and gathering data. But Stokes and Strauss said they’ve seen positive results so far: higher traffic to the right pages, lower bounce rates, and more customers finding what they want and finding it faster.

via Shop.org Blog http://blog.shop.org/2013/07/17/coach-coms-rules-for-content/

Defining lifestyle/boutique needs broad canvas

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24 October 2012
By Jeff Higley
Editorial Director
jeff@hotelnewsnow.com

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Story Highlights

• Individualistic, unique and experiential are three essential components for any lifestyle or boutique hotel.
• A focus on luxury makes a big difference.
• Plenty of secondary urban markets are ready for this type of property.

Jason Pomeranc (center) of Commune Hotels & Resorts makes a point as Patrick Goddard (left) of Trust Hospitality and Jay Coldren of Marriott International listen during last week’s Lifestyle/Boutique Hotel Development Conference.

MIAMI BEACH, Florida—Lifestyle hotels and boutique hotels are and will remain closely associated because they overlap in so many key areas, according to speakers at last week’s fourth annual Lifestyle/Boutique Hotel Development Conference.
Panelists participating in the opening general session agreed such hotels need to be individualistic, unique and experiential.
“Label it what you’d like, for us it’s about having a local experience as a traveler,” said David Duncan, president of Denihan Hospitality Group, a New York-based privately held, full-service hotel management and development company that owns and operates 14 boutique hotels in major U.S. urban markets.
Patrick Goddard, president and CEO of Trust Hospitality, a management company with 27 hotels in its portfolio, said guests see the definition “as a reflection of themselves.” His company spends time developing a brand identity with a voice that caters to that.
He said things such as high-end finishes, personalized experiences from pre-arrival to post-departure, sensory elements and community engagement also are critical components.
“A boutique hotel or lifestyle hotel is a big hotel trying to be small, and that’s OK,” said Jason Pomeranc, co-chairman of Commune Hotels & Resorts, a management company formed by a partnership between Thompson Hotels and Joie de Vivre Hotels & Resorts that has more than 30 assets in its portfolio. “This sector is less about branding the hotels than letting the guest brand themselves. … Hotel brands and hotels individually are a similar reflection of one’s individuality.”
Large hotel branding companies, such as Marriott International, see the segment as a lucrative opportunity to augment their portfolios.

Jay Coldren Marriott International

“When we think about our lifestyle portfolio, we really think it’s people who crest over from wanting space, state and rates to wanting to define themselves by their choice of where they stay,” said Jay Coldren, Marriott’s VP of lifestyle brands.
According to STR, parent company of HotelNewsNow.com, the segment includes 797 U.S. hotels. However, defining it can prove elusive, which means numbers tend to be exaggerated, Pomeranc said.
“We just see everything else being called ‘lifestyle,’” he said “There are lifestyle tires, lifestyle this, lifestyle that. It’s becoming a meaningless term. It’s being watered down in the world. We sort of struggle with, ‘OK, what does it mean? Where do we break the category, so we’re firmly in this sensory, experiential boat? Where do we really focus on consistency and quality and comfort?’”
“We’re all struggling with the title,” Duncan said. “How do you put it into a box? Call it what you may, but what we are trying to do is achieve outsized room rates on a design that is not overly expensive but is exceedingly appealing.”
The size equation
Duncan said size is an important factor when determining a boutique hotel. Denihan’s hotels range in size from 100 rooms to more than 600 rooms.
“Our sweet spot is really 200 to 400 rooms. It’s all about guest experience,” he said.
“It gets more complicated to personalize when you get above 300 or 400 rooms,” said Goddard, who added that Trust prefers hotels with between 60 and 250 rooms. “It’s not impossible, but it’s a little more challenging to personalize because then you get into automation. And when you get into automating personalization, it feels less like personalization.”
Coldren said Marriott’s lifestyle hotel portfolio ranges from the 3,000-room The Cosmopolitan Las Vegas that’s part of the Autograph Collection to a 15-room retreat.
“It’s a different psychology and a different attention and personalization in the boutique segment,” he said. “We see lifestyle spanning a wide gamut of hospitality options.”
Driving rate
With the repeated use of the word “luxury” throughout the 75-minute discussion, it was clear the panelists had a high expectation on their return on investments in the boutique segment. Data provided by STR indicates the segment’s year-to-date metrics are on the rise: room demand (+5.4%), occupancy (+3%), average daily rate (+4.5%), revenue per available room (+7.7%) and room revenue (+10.1%).
“The trick is not only building beautiful hotels that are not only consistently appealing from a design perspective, but achieving room rates everyday for 365 days a year,” Duncan said. “You see a tremendous amount of compression from the big hotel companies. Every one of them is launching something like this because they recognize that the local developer who built these beautiful hotels may or may not have the underlying platform of revenue management and business intelligence and underlying digital platforms to drive revenue.
“So if there’s something to been learned here,” he added, “it’s just because you built it doesn’t mean they’ll come. And just because they come, doesn’t mean they’ll continue to.”

David Duncan Denihan Hospitality

Like traditional hotels, the market plays a major role in establishing rates.
“I’m in a lot of markets where weekends are stronger than weekday,” Pomeranc said. “If you can yield those shoulder days properly, there’s a lot of money to be farmed out of that.”
“Some of our smaller hotels in non-primary cities don’t have function facilities and don’t have meeting space, and that does hurt you on weekends,” he said. “Realistically, you have to accept that reality that you might have to kind of shift that, and you could be doing $500 a night Monday through Thursday and $249 on weekends.
Some secondary major markets also present better opportunities for expansion possibilities, the panelists said.
“The gateway cities are highly competitive,” Goddard said. “So if you don’t have the capital to execute properly, look for a secondary market. We’ve had incredible success in places like Milwaukee and St. Louis, where we had RevPAR penetration levels well north of 150% compared to our branded competitors.”
Because the level of sophistication changes in secondary markets, the amount of capital on a per-key basis changes, and it’s a different investment in many ways, he said. “It’s hard to find financing in those secondary and tertiary markets.”
Goddard and Coldren said there are dozens of cities in the U.S. that could absorb the boutique type of product. Goddard pointed to Portland, Oregon, and Tampa, Florida, as prime examples. Duncan said that while his company is partial to coastal cities, markets such as Chicago and Austin, Texas, are quite appealing as well.
“Chicago has a big upstart in lifestyle, boutique product in a lot of areas,” said Pomeranc, whose company has two projects in Chicago in development. “What’s interesting is that it is a repositioning of Chicago; it has been a traditional hotel market or conventional hotel market, but they’re opening up to a different type of product.”
Pomeranc said Seattle, Washington, will “see a surge” and Sacramento, California, has been a strong market for Commune’s Citizen Hotel. He said secondary markets such as college towns, research centers and medical centers are prime candidates to add lifestyle hotel inventory.
Coldren said Marriott’s ambitions, particularly with the Autograph Collection, stretch beyond U.S. boundaries.
“We look at the opportunity for the entire continent of Europe is about boutique hotels and what that means for us …” he said. “Asia is a gigantic open field, and there are a lot of things you have to overcome to operate in those markets, but we see amazing potential there as well.”

MIAMI BEACH, Florida—Hotels that fit the definition of being a lifestyle hotel or boutique hotel are attracting consumers from all generations and countries, although some are more lucrative than others, according to panelists at the fourth annual Lifestyle/Boutique Hotel Development Conference.
Jay Coldren, VP of lifestyle brands for Marriott International, said Generation Y during the next five years will be double the size of the baby boomer generation and become the most influential generation in terms of buying power.
“We know this generation … they look for these lifestyle segmentations and these lifestyle experiences, more sensory travel experiences, discovery travel experiences, so we see a seismic shift in the industry to a more lifestyle preference,” he said.
Jason Pomeranc, co-chairman of Commune Hotels & Resorts, said he agreed with Coldren but there’s a big caveat: Don’t count out the baby boomers just yet.
“You have people in their 50s and 60s who are discovering that they don’t want to be in what they perceive as their parents’ hotels at this stage of their lives,” he said. “Internally, we call them the Grateful Dead (population). … The best part is they’re established financially so they’re going for the luxury end of the sector.”
David Duncan, president of Denihan Hospitality, said the “Grateful Dead traveler” doesn’t bat an eye at a $1,200 nightly rate, but they expect perfect service. That’s where the personalization aspect should be maximized.
“If I were a developer, I wouldn’t do it by myself,” Duncan said. “If you want to do it by yourself, I will introduce you to a handful of folks who have, and most of them have converted in their thinking to moving with partners like us.
“I would just leave you with the following: I hope (the business plan) is not only on revenue and (revenue-per-available-room) index, but net margin,” Duncan said. “If you had to pay 10% more to get 10% more, you’re not better off.”
The segment is appealing to travelers worldwide, the panelists said.
Duncan said inbound international travelers to the U.S. are prime targets for boutique hotels because they are 15% less likely to pick a branded hotel when planning their trips.
“This concept of self-expression and expressing yourself through your lodging is becoming increasingly commonplace,” said Patrick Goddard, president and COO of Trust Hospitality.
He said it’s prevalent in the Caribbean and Latin America.
“It’s the type of product we as developers need to put out there,” he said. “The outlook is extremely bright for the segment.”
—by Jeff Higley