Brand extensions are a common part of corporate growth strategies. Sometimes they work well; sometimes they don’t. In the 90s, Blockbuster was the biggest name in video rentals, but when it attempted to expand its entertainment footprint into other areas (e.g., music, gaming, play zones, etc.), it found its iconic brand did not translate into additional success outside its core business.
Blockbuster eventually scaled back to its original concept of video rental outlets before fading from existence all together as the market changed relative to how entertainment content was delivered. Had Blockbuster been successful in its brand extension efforts, it might have found a way to survive to present day.
Over the years, numerous retail and entertainment brands have expanded into the hospitality business. On the retail side, luxury brands such as Armani and Bulgari are now associated with five-star hotels in beautiful destinations. The decor and styling of these hotels directly reflect the brands after which they are named. Parachute, Shinola, Muji and Williams-Sonoma are also among those opening branded hotels.
The furniture and home furnishings retailer West Elm announced that it will open branded hotels in five U.S. cities, joining a list of high-profile retailers and consumer products suppliers that are expanding their brands into hotels as a way of more directly targeting aspirational customers, notes Building Design + Construction.
Perhaps the most intriguing brand extension was the recent opening of The Bell: A Taco Bell Hotel and Resort. This hotel integrates all things Taco Bell into the hotel design and branding and so far, seems to be a great success. Retail and product brand expansion into hotels, explains Conde Nast Traveler, lets companies cut out the middleman and market themselves directly to aspirational hotel patrons. “Design brands flowing into the hotel business is an opportunity for devotees to live the lifestyles the companies espouse,” writes the magazine.
Another new entrant extending its retail brand into the hotel space is Restoration Hardware, an upscale American home-furnishings company. Restoration Hardware sells furniture that is uniquely suited for boutique hotels and is now opening its own branded hotel, a 14-room property in New York City’s meatpacking district, that will serve as a showroom. This seems like a perfect brand extension as guests get to ‘try before they buy’ Restoration Hardware’s home products. They can literally take their hotel experience home.
Much has been made of lifestyle branding in hotels. Branding is all about identification. People choose brands because they see those brands as extensions of themselves and they represent values with which customers identify. The greater the identification, the stronger the emotional attachment. Building hotels around brands with which customers identify is a way to create further emotional bonds, as hotels add a high touch service element to an already existing product affinity.
While retail brand extensions into the hotel space are noteworthy, hotel brand extensions into the retail space are much quieter. Hotel brands like Marriott, Hilton, and Wyndham have online stores which offer guests the opportunity to purchase the items they enjoyed during their stays, such as bedding and bath collections or high-quality brand name housewares and electronics.
The Four Seasons hotel chain is another example of a hotel brand that’s offering to let guests take their experience home as it has partnered with Simmons to offer exclusive mattresses complete with toppers and opulent sheets. Hotels are offering to extend their brands and experiences, but it’s fair to say most of these products aren’t heavily advertised and marketed in retail stores.
One exception is how Westin was able to successfully market its Heavenly Bed and later, its Heavenly Shower products directly to consumers. In 1999, Westin launched the Heavenly Bed, which was a complete departure from the earth-tone and cheap polyester bedspreads of the past, points out Arun Rafi in an article written for Medium. “The Heavenly Bed offered a custom-designed pillow-top mattress set, high thread-count triple sheeting, three different types of down blankets, a comforter, a duvet, and five goose feather pillows,” Rafi notes. The entire ensemble was white – creating a halo effect – and completely changed the way customers looked at hotel bedding.
As a result of its success, Westin took things one step further, aggressively marketing its heavenly products so consumers could recreate their own hotel bed and shower experiences at home by purchasing directly from the online Westin Store. The Heavenly branding was something uniquely Westin and there was a clear link between the product and hotel branding.
On the surface, brand extensions for hotels make sense because the trappings of the hotel experience – furniture, food items, bathroom amenities, cleaning products, even scents – are easily transferrable to home products. Brand extensions could represent an opportunity for hotel companies. However, if a hotel company was thinking about product brand extension, it would need to scrupulously, and honestly, address the following questions.
Are the hotel brands trusted?
It’s safe to say that many hotel brands are, indeed, trusted brands. Parent brands like Marriott, Hilton, Four Seasons and others offer consistent experiences to their guests. However, other brands often represent a mix of good and not-so-good properties. Brands must be predictably good to be successful. If a hotel wants to extend its brand, it must know its guests associate the brand with consistent quality. If the guest experience can’t always be trusted, then neither can any product extension.
What retail products do customers really want that a hotel could best provide?
While branding amenities, food products, or electronics might seem like a logical extension for hotels, the question is whether these new products would provide a perceived advantage from what already exists. Extra comfortable bedding has worked well as a hotel brand extension idea because people are always seeking better sleep. Who better to provide it than a hotel company who is in the business of providing a restful, relaxing evening? Are there other products that people want, and believe would best be delivered by a hotel brand?
Has research been done to show that a product extension represents a viable opportunity?
Ideas that seemed reasonable at the time but didn’t work out, scatter the landscape. As referenced above, it certainly seemed logical that Blockbuster, a company so closely identified with video entertainment, would have no problem transitioning into audio entertainment or gaming. Yet, these concepts never really took off. Although Blockbuster was heavily into market research, it appears a valid consumer study never identified whether there was a sustainable market for these brand extensions. No one could fault the intuitive logic of extending the brand, but the market was apparently not properly sized.
Pricing is also an area that often gets ignored. Many times, product extensions are conceptually embraced by customers, but feelings change when a price tag is attached. For example, high-end bedding costs thousands of dollars. People may love the idea of taking their five-star sleep experience home, but upon seeing the price tag, may not be as interested.
Is there a solid marketing and distribution strategy in place?
The success of retail products is largely connected to marketing and distribution capabilities. Currently, several brands have online stores, but beyond that, the marketing of retail products is not front and center. It is likely because brand extensions are not the core part of the business and represent ancillary revenue only. Perhaps this is all the brands prefer to handle at this point, but certainly there is limited or no overt advertising around hotel branded products.
Sometimes, branded products are limited to the exclusive use of the hotel only. For example, the Armani Hotels in Dubai and Milan provide bottles of high-quality branded shampoo to their guests. However, if you ask to purchase this shampoo, you will be told it is for the exclusive use of hotel guests only and is not for sale in the spa. Of course, many other Armani branded products are certainly available to guests and non-guests in these locations.
The evolving brand extensions of retail products into the hotel space is becoming more common. Lifestyle branding in hotels lends itself to guests wanting to take their hotel experiences home with them. The path from retailer to hotelier is a relatively short one. If you like Shinola watches or Taco Bell food, you are sure to love the hotels that carry these brands. Yet, there may be a reverse path for hotels to expand their brands into retail space at a much more aggressive pace than currently realized.
It is not easy, however, as it takes hotels out of their core business and requires strategic thinking to ensure success. It’s an interesting undertaking but one that needs to be weighed against opportunity costs associated with potential extensions.