The luxury hospitality industry of today has changed immensely because of the rise of new consumer preferences. The study will research these changes and analyze how impactful they are to the luxury hospitality industry. The study targets companies and people working in this industry who can benefit by taking note of how to capitalize on these emerging trends. Today's consumer wants everything polished when they interact with the hospitality industry (Duma, et al.., 2016. Therefore, when the ordinary people visit hotels, they expect luxury. The attitude has led to changes in the ownership structures, branding, and business models in the luxury hospitality business. The paper will address how hotels have changed ownership from single companies to third ones. They have become more inclined towards franchises and mergers and acquisitions to expand into new territories of the emerging consumer (Jang & Moutinho, 2015). Branding has also changed to concentrate on the aspects of wellness, authenticity, staff and design, all of which enhance the experience of the consumer (Yang & Lau, 2015). The industry has witnessed a growth of new business models that put emphasis on diversification and expansion. All of these changes are part of a response to the new consumer who prefers luxury. They have brought forth economic, psychological, business, and sociological impacts upon which this industry can capitalize and increase profits.
Relevance and Importance of the Trend
The luxury industry has witnessed vast changes in its ownership structure. Most businesses in this industry used to concentrate on one company ownerships. However, the structure has since changed and now companies provide franchises (Ferrary, 2015). The companies in this industry also prefer management by a third part so as to increase the level of efficiency needed to handle the growing demand for luxury products. For example, the Marriott hotel that is among the largest luxury brands. A few years ago, The Marriot Company had the full management of this chain of hotels (Ferrary, 2015). However, the recent past has witnessed a change in the ownership structure as many franchises have opened up in different parts of the world. The Marriott group of hotels are also managed by a third company that specializes in luxury brands. The change in this case was a necessary part of cost leadership on the part of Marriott hotels. By changing ownership, the company was able to save so as to afford on luxury branding while still maintaining prices for goods and services.
Today's ownership has also changed to include many acquisitions and mergers. The acquisitions expand hotel chains to many parts of the world and formulate the largest of brands. An example of the most recent mergers is Marriott's acquisition of Starwood in an effort to increase its market share(Yang & Lau, 2015. The merger created the world's largest brand in the luxury industry. Another example is Intercontinental and its acquisition of the EVEN group of hotels (Duma, et al, 2016). All of these mergers are necessary because of the changes in consumer preferences in the hospitality industry
The branding of hotels is consumer-oriented in nature. In the past, the luxury hospitality industry consisted of companies that branded themselves according to the features they offered (Tsai et al., 2015). For instance, a brand would be concentrated on its price and make this part of its image. Others would capitalize on aspects such as location, cleanliness, and so on. However, the branding today focusses on the consumer and their experiences (Liu. Et al., 2017). It focuses on core aspects such as; authenticity, wellness, design, and the staff. The luxury hospitality industry consists of brands that intend to establish a relationship with the guest and ensure they turn them into loyal clients (Basak & Khanna, 2017. For instance, most luxury hotels today have suites that have a personal touch. If a customer makes an early reservation, the hotel management will make everything according to their tastes and preferences.
One of the new business models is the adherence to product and service diversification. The luxury hospitality industry has witnessed a surge in competition in the recent past. (Holmner, 2011). Businesses have chosen to diversify and provide additional products and services to facilitate more income. For example, hotels offer room options, carrier services, and have mobile phone applications to better the experience of guests (Holmner, 2011). Some hotels in Dubai, for instance, sell unique pillows, soaps, and other aspects that are branded. Others may provide tour options for their guests at a small fee. Another business model is the aspect of expansion (Jang & Moutinho, 2015). The luxury hospitality industry is expanding to other places that remain unexplored. There is concentration on the international market that emanates from the franchises. For instance, the Marriott Group of Hotels is located in Africa and makes a lot of money in this emerging market as individuals acquire a taste for luxury.
A Critical Evaluation of the effects to the luxury hospitality industry.
The changes in ownership positively impact the luxury hospitality industry because it leads to more sophisticated products and services. It is a way to ensure the industry generates more profits to suit the needs of the clients (Lopes, 2016). From a business perspective, this change leads to the ability to meet needs and increases competition as well as sales in this industry (Radojevic, et al, 2015). For instance, when Marriott merged with Starwood, it acquired a more cultured taste because of the new clientele (Ferrary, 2015). The rise of youth with exposure to the world through technology necessitates the need to acquire different tastes. Brands have to invest in luxury products and services and cannot afford to remain average. The millennial who travels a lot constantly looking for new challenges and exciting features. Businesses can only meet these demands when they come together through mergers (Ferrary, 2015). For instance, franchises reduce aspects such as labor costs that increase due to new trends in the hospitality industry.
From a psychological point of view, the trends in this category provide more satisfaction of the ability to acquire luxury products and service. The decrease in costs and increase in creativity and innovation all lead to more glamorous products and service (Udunuwara & Sanders, 2016). Even consumers from the middle income percentile are able to meet these new demands of a culture that embraces luxury because the companies in the hospitality industry can provide the said products and services at an affordable price. . The branding has a positive impact of increasing consumer satisfaction. It enhances relationships and improves the overall level of happiness among individuals in the society (Lin, 2015). The position also leads to growth of the luxury hospitality industry that is able to come up with products and services more suited to their brand image and the needs of customers (Cetin & Walls, 2016). All of this leads to more sales because individuals are well-positioned to make purchases. However, from an economic point of view, this form of branding could also be detrimental to this industry because of the high costs of production (Bowie, 2018). While the consumers of today may not care about pricing and are more concerned about the experiences, they will also go to hotels that are affordable in the long-run.
From a sociological point of view, this is a positive aspect for the industry because it opens it up to a new group of clients. For instance, the hotels are expanding to places such as Africa and Asia while airlines also extend their routes to these places. The approach opens them to new clients from these parts of the world that come with different cultures, tastes, and preferences that are necessary for the growth of this industry (Yang, et al., 2016). They help to shape innovative ideas that are in turn pertinent to the growth of the luxury hospitality industry. c) Opportunity Emerging from this Trend
There is an opportunity to expand markets and create wealth using the average members of the society. In the traditional society, the luxury hospitality industry only seemed accessible to the richest people. They are the ones who could afford yachts, holidays, and expensive hotels. However, these new trends are pushing dynamics completely and making luxury hospitality available to most people in the society (Wood, 2017). Therefore, the accessibility of this industry as determined by aspects such as ownership structures and an adherence to experience branding as opposed to prices expands the market of who can be part of these changes (Schuckert, et al., 2015). Business models that include expansion and diversification bring these luxury brands closer to the average person and in turn leads to the creation of new markets. The same is an opportunity to increase profits because these businesses are moving away from a struggle for the few rich people (the 1%) and going after the 99% (Tanford et al., 2016). Larger sales volumes in turn create more profits that are larger than what these brands would make with the 1% alone. The expansion also provides opportunities for innovations that would appeal to new cultures. With the current wave of expansion and interaction of cultures, consumers receive exposure that refines their tastes from different products and services, which could lead to innovation and new revenues.
Business can tap into these emerging opportunities by creating different products and services. The trend has illustrated that every consumer wants to live the luxurious life, which means that they will buy additional products that represent the same. The product line's target market is both the middle and high income percentile. The rationale is to make the experience of the average person one that creates the same feeling when they walk into a hotel considered to be luxurious. Mergers, branding, and the new business models have made it possible for the customers to be part of the luxury revolution. Businesses can enhance the same feeling by creating products and service that extend to these needs and preferences. They can venture into actual product lines as it is the case with industries such as the fashion one. For instance, these brands can have toiletries manufacturing lines that are attractive and play into the narrative of luxury (Ryan, 2015). They can create both need and demand for such products by making their brands personalized and thus seemingly unique to the consumer who wants to feel important (D'arpizio et al., 2015). For example, people will buy soap from the Marriott brand when it is well-positioned and personalized to their needs. The market is available and brands have changed their approach. The business models are also in support of these initiatives because they allow for mass purchases. For instance, expansion means that more people are exposed to these luxury hotels. The increase in the number of customers from different parts of world translates to more sells. The branding trends enable the establishment of trust that can facilitate sales.
The brands should create a need for these products through a radical marketing approach that makes consumers feel that their lives would not be complete without them. The next stage would be introducing these...
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