Fashion designer Giorgio Armani recently opened his first hotel in Dubai and plans another in Milan. Both are part of trend among designers to extend their brands through hotels -- while making big money along the way. (Rooms range from $1,100 to $11,000 a night.) After all, the wealthy always need a place to stay, so why not in a designer hotel?
While some may ponder the wisdom of opening of a high-end hotel in a recession, Armani's hotel has been almost eight years in the making. Apparently designers think it's a good fit, because the fashion house of Gianni Versace is also opening a hotel in Dubai later this year --complete with an air-conditioned beach -- so visitors can escape Dubai's 100-plus degree heat. From the Economic Times:
"What they're after is the aspirational traveler... It's trying to make a statement to a certain type of luxury consumer,'' said Alex Kyriakidis, who heads the global tourism division at professional services firm Deloitte. "Will that work? Time will tell.''Through a partnership with Arab company Emaar Properties, the Armani empire - worth $2.4 billion - will develop more hotels, resorts and other properties around the world. The hotel in Dubai is the first tenant at the Burj Khalifa, the world's tallest building (see photo). Dubai, part of the United Arab Emirates, remains a wealthy country despite its real estate implosion, so expensive hotels can be a dime a dozen -- but a haute couture hotel is something else.
And nowhere does it seem more clear than in Dubai. Armani has been bankrolled by Emaar, the largest listed developer in the Arab-speaking world, and a company that apparently sees a future in the luxury segment. Other design houses, like Versace, are following the money. So far in 2010, Dubai's luxury hotel market has a robust 92% occupancy rate, significantly higher than the U.S.'s anemic 61.4%.
From Bloomberg News:
In the new millennium, fashion designer-turned-hotel-designer Todd Oldham created The Hotel in Miami's South Beach, Christian Lacroix made his Parisian vision the Hotel du Petit Moulin and Donatella Versace designed the Palazzo Versace in Queensland, Australia. Other designers like Diane von Furstenberg, Salvatore Ferragamo and Oscar de la Renta have also partnered with hotels and lent their designer name.
Although no one will reveal the dollar amount of these deals, many suspect it's lucrative. While several designers see it as simply an extension of their brand and possible in-hotel sales, others see it as a labor of love. The fashion house of Salvatore Ferragamo owns a line of Italian hotels where his name is nowhere to be seen.
Fashion is business, of course, and a well-designed hotel can act as a live-in portfolio. "A designer hotel acts as a great branding tool for a major brand that seeks a new audience," said Brandusa Niro, Editor in chief of TheFashionWeekDaily.com. "A hotel is a great way to open up an old-school brand to the new and the young."
A guest at the Palazzo Versace, for example, will be immersed from floor to ceiling in the Versace lifestyle--linens, rugs, cutlery and toiletries are not only part of the experience but of course also available for purchase at the on-premise Versace boutique.
Leonardo Ferragamo insists they're neither extending their brand nor creating a new one: "You need success because of substance, not branding. Branding can reassure--it doesn't drive the business."Others like the Benetton family, say they are simply diversifying their portfolio with hotels. Some designers are partial or whole owners and are deeply invested in the hotel, while most others are simply designers for hire. In a sad note, the House of Christian Lacroix went bankrupt in late 2009, but his stylish hotels still live on with lovely reviews.
If a hotel doesn't work, it can hurt the brand. Ferragamo, however, won't admit to that possibility. "A fashion brand has to have a vision," he says, "a sense of beauty, of good taste, of lifestyle. If you are fine with that vision, why not extend it?"
The pairing of luxury lodging and designer brands may continue as luxury hotels lose ground and are lost to foreclosure. An expensive hotel is nothing new and competition is fierce. But a hotel blessed by an arbiter of fashion and taste, whose fashions show up 250-feet tall on Times Square billboards, may have an edge over a plain-old Ritz-Carlton.