Why the Trend-Seeking Luxury Consumer Loves the Branded Residence Sector

 This article first appeared in Hospitality Insights in mid-October.

Aston Martin. Baccarat. Porsche. Versace. Aside from being ultra-luxury brands, what do these companies have in common? All have lent their names to branded residences.

Branded residences emerged as a real estate market segment about 20 years ago, when hotel brands started creating mixed-use developments. Adding a residential element to hospitality projects made it easier for developers to get financing and more immediate return on investment while simultaneously benefiting from a long-term revenue stream on the hotel side. 

For hotel companies, branded residences were a natural brand extension for luxury groups like Four Seasons and Ritz-Carlton, trading on a tradition of hospitality, service and high-end amenities. After all, who wouldn’t enjoy living in a place that shared concierges, housekeepers, celebrity chefs and spas with the most discerning hotel guest? Riyan Itani, head of Savills International Development Consultancy, put it simply: “The concept of branded residences, from its inception, has been based on the provision of services and facilities that one would typically find in a hotel.”

The synergies between high-end hotel brands and branded residential developments, then, are somewhat obvious. But what value does an automotive brand, or a jewelry brand, or a fashion brand bring to the dining room table?

The Porsche Design Tower in Miami

According to Savills, during the last ten years, the number of branded residences increased by 170 percent, adding more than 52,000 units across 370 projects. In the beginning, branded residences were almost exclusively the domain of luxury hospitality brands, but that is changing. as more and more non-hospitality luxury brands enter the fray. Part of the reason for the shift is that some markets have reached capacity in terms of luxury hospitality branded offerings, while in places more driven by trends, developers are looking for sexy points of product differentiation.

Palazzo Versace, Australia

While a few such non-hospitality brands were prescient early on (Palazzo Versace on Australia’s Gold Coast was actually quite revolutionary when it opened in 2000), most of the newer players have come on the scene during the last five years. The Porsche Design Tower opened in Miami in 2017.  Aston Martin will add more automotive cachet to the Miami residential scene in 2022, and Bentley will enter the mix there by 2026. Lamborghini is shifting into high gear in Dubai with an immense project (8,000 residential units) to be opened by 2024. Italian car design firm Pininfarina is growing its presence through branded residences in Brazil and Guatemala. High-end consumer goods brands like Baccarat, Roberto Cavalli and Armani are also players, although most of these branded developments are one-offs, mostly located in hot branded residential real estate markets like Dubai and Miami.

Cyrela by Pininfarina, Sao Paolo, Brazil 

The Appeal For Companies, Developers and the Consumer

There are three stakeholders in every branded residential scheme. There’s the brand, the developer and the consumer. In theory, the branded residences sector offers an opportunity for high-end products to expand their brand profile and diversify their business model, while giving developers a unique selling proposition and providing consumers with bragging rights. For non-hospitality brands to succeed, says Chris Graham, author of The Branded Residence Report, an understanding of local markets and developers, careful buyer targeting and brand alignment are all essential.  

Having branded residences allows the Bulgaris, Versaces, Armanis and Baccarats of this word to attach an experience to their products, according to luxury branding expert Piers Schmidt, while at the same time, says Graham, offering a big WOW factor that will result in extensive PR. 

“Brands can create a theater of dreams; a temple to the brand at which the consumer can come and worship,” said Schmidt. Theoretically, this can lead to a deeper relationship with the brand’s consumer. But that prospect comes at great risk to these brands, according to Barry Landsberg, a long-time veteran of the branded residence world. “The service culture is inherent in the DNA of hospitality brands. Non-hospitality brands do not bring the advantage, so that to be successful competitors in the high-end residential space, they will need to invest in the hospitality ingredients that have been a mainstay of the industry, or potentially risk tarnishing their brand equity. If they don’t get the service component right, that’s the biggest risk if they don’t deliver.”

For the developer, a non-hospitality luxury brand may offer more flexibility in terms of design and required levels of service. That’s because non-hospitality brand deals may not come laden with extensive royalty fees, license fees and service charges, along with strict requirements to ensure the development meets brand service standards, according to Landsberg. Furthermore, developers are always looking for an edge, and adding a seductive brand label to a building, particularly in saturated, status-savvy markets, can increase the allure and the price of the product. That said, Savills notes that while luxury hospitality brands add an average of a 31 percent price premium to branded residences, non-hospitality luxury brands bring in a price premium average of 25 percent.

So, it appears that some consumers are still willing to pay a premium for their non-hospitality branded residences. But the experts say there are caveats, especially given that there is not an automatic assurance of consistent quality service that is baked into hospitality brands.

For a non-hospitality branded residence to sell, a consumer must really buy into the brand at hand. But is that enough? After all, while there are natural synergies between luxury hotels and luxury real estate, one may wonder what value crystal or car brand brings to a potential homeowner. How do you translate the brand essence of a dress or a piece of jewelry or an automobile into where you live? After all, “new car smell” doesn’t really translate in a home environment. But automotive brands, for example, in trying to bring the brand aesthetic home, are doing everything from adding automotive elevator systems which enables residents to store their vehicles in their very own “sky garage” (a multi-car glass display case situated right next to their living room), to sweetening the purchase of a multi-million dollar condo with a “throw-in” of a car, to adding design elements borrowed from the car itself. There may be more relevant synergies in terms of design with fashion houses, particularly those that have homeware or interior design in their portfolios, but in all cases, the service factor is still an unknown. 

A "sky garage" in the Porsche Design Tower
cnn.com

What the Future of Non-Hospitality Luxury Residences May Look Like

What kind of competition will these schemes offer vis-a-vis hospitality projects?

For a while, it looked like non-hospitality branded residences were merely the new shiny object. But, according to Landsberg, certain projects have proven that "if a brand has the ability to draw from a dedicated affinity group; if it works with a developer who understands the local market and the branded residence space; and it brings on designers to incorporate elements of product integration," he said, "in other words, there is a managed process through architecture, design and service, it can be a success, especially in places like Miami and Dubai, which are dynamic, design-forward markets, and developers there understand their markets well and are looking for ways to differentiate in those crowded markets." 

In fact, the success of the schemes may be more dependent on market than on brand, according to Graham. In his Branded Residence Report, he writes, “The non-hotelier segment is typically more focused in emerging markets than the branded residence sector as a whole. Demand for high-end properties has risen quickly in emerging markets in parallel to wealth creation. The nouveau riche buyer may be more attracted to unique products and these lifestyle orientated brands resonate well amongst brand-friendly and knowledgeable purchasers.” Such  buyers, he added, are quite prevalent in places like Dubai, Miami and Brazil, where “bling and design appeals.” 

Because of their success in those places, Graham says “the viability question of non-hospitality brands has been put to bed. Look at brands like Versace and Armani, which all decided to license their names and design as a brand extension and way to get additional revenues. They took a leap of faith that the product would extend into residential and people would pay a premium and it came to be. Subsequently, the sector has taken on a life of its own.” 

Piers Schmidt, however, is not quite as bullish on the sector. “I am pretty negative about it, given that many schemes have not worked and those that have haven’t grown beyond one or two brand residence properties," he said.

Unlike hotel brands, which seem to be able to plant their flags anywhere, non-hospitality brands will be limited, to those specific markets that may be more prone to be susceptible to the label factor of a brand. In that respect, non-hospitality luxury branded residences may end up being more of a one-off novelty than a replicable international model.

The Story Behind the Color Choices of Luxury Hotel Logos

What is the color of luxury? If you assess the answer by looking at the logos of luxury fashion houses, the answer is literally black and white. Chanel and Prada and Dolce & Gabbana and nearly all the others sport black type against a white background.

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“Black is a symbol of power. With its diametric partner in crime, white, black stands for sophistication, weight, and seriousness. Black is timeless and effortlessly stylish. Think the little black dress,” said Brian Lischer, founder and CEO of branding agency Ignyte,

However, when you look into the world of luxury hotel brands, the color palette broadens just a tad. High-end hotels that venture into the spectrum frequently use gold or blue either as an accent or as a primary color. The reason for these choices becomes apparent when one digs into the world of color analysis

Pantone Chart
codingsolutions.net

“A fundamental aspect of neurobiology is that there’s a sequence of cognition – how the brain processes information,” said Dr. Bevil Conway, a scientist at the National Eye Institute, part of the National Institutes of Health.

“Color is a primitive form of information. It’s an emotive cue, so it’s an important differentiator for brands. It signals identity; it tells people what team you are on.”

Because so many brands employ wordmarks rather than shapes and symbols, color ends up becoming the visual component people remember most about a logo.

According to countless color psychology studies, blue is frequently the most common favorite color among the world’s population, especially with men.

homespage.neiu.edu

“This global preference and environmental omnipresence makes blue non-threatening, conservative, and traditional. Brands are not taking any risks when they call on a shade of blue for their identity,” said Lischer, “as it is seen as a sign of stability and reliability.” Hence why so many airlines and banks use it in logos.

The same goes for hospitality. “Blue has long been associated with reliability and trustworthiness. For example, blue chips are stocks you can depend on. What do we want from hotels? In part, you are trusting them with your safety,” said Conway.

Gold and silver are other colors regularly incorporated in luxury hotel brand logos.

“Hospitality brands often opt for classic colors like black, gold, and blue to create a mature, trustworthy and sophisticated impression on potential customers. Gold and silver, as the colors of precious metals, create an impression of wealth, prosperity and success that resonates well with audiences targeted by luxury brands,” said Pam Webber, chief operating officer of global creative platform 99designs.

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Taking a look at luxury brand logos, one discovers that Capella and Kempinski use blue. Jumeirah uses blue and gold. Gold is a component of the logos of Conrad, Viceroy, Langham, St. Regis, Mandarin Oriental and InterContinental. Silver/Gray pops up from time to time, often when logos are replicated in monochromatic ways.

It seems this type of color clustering is common among various industries. “It’s convention, doing what everyone else is doing,” said Conway. “Logos of similar industries tend to cluster. It’s not because it’s hard-wired, but we have established a convention (the use of particular colors) imbued with social meaning.”

Interestingly, there are a few outliers among the bunch. Virgin Hotels, a brand that always dares to be different, uses bright red, a color of power, passion and energy. According to digital marketing firm WebFX, “A red logo shows that your brand is powerful and high-energy.”

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“Virgin, with its unique and immediately identifiable shade of red, is a perfect example of this: it reflects passion, playfulness and energetic modernity – all elements that encapsulate Virgin’s brand personality,” Webber said

Another outlier is wellness hospitality brand Six Senses. A company spokesperson said the logo contains purple, but the Pantone chart indicates that the color used is deep magenta. Either way, the color interpretation works.

“Magenta is a color of emotional balance and physical harmony. Magenta is redolent of compassion, support, and kindness, and is associated with feelings of self-respect and contentment. It’s a color of transformation, suggesting the sloughing off of old ideas and the embrace of new ones,” said Lischer. Perfect for a wellness resort, right?

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Meantime, if the eye perceives the Six Senses logo as purple, that works, too. “Purple is among the rarest colors in nature,” said Lischer. “It’s imbued with spirituality, contemplation, and mediation, suggesting creativity and imagination.”

One other big outlier in luxury logos is Andaz. The brand opts to use a different color for each letter of its name. Lischer calls it “a childish logo. It’s criticized in the design world as looking dating and childish, like building blocks. The logo does not represent luxury…it looks like a logo for a preschool.”

Ouch. Interestingly enough, Hyatt is “revisiting the color palette,” according to a spokesperson, while clarifying that “no work is being done to change the brand logo or colors for now.”

This story originally appeared in Skift, where I am the publication's luxury correspondent.

Canvassing the Art Scene at Hotels

In times of yore, many hotels used art as the visual equivalent to Muzak. But in today’s Instagram world, the curation of hotel artwork is much more deliberate, as properties try to project their personalities onto the crowded canvas of the guest experience.

Museum 21C Hotel, Bentonville

According to expert curators, art placed throughout the hotel, from the lobby to guest room corridors to the rooms themselves, can serve multiple purposes. It can help sculpt brand image or further claims to a local provenance. Moreover, art collections can create conversations, along with responding to the desire of guests to project who they are by where they stay.

Artwork at The Drake

For Mia Nielsen, the art curator at The Drake in Toronto, the process of selecting art should begin by asking, “What kind of experience do you want to create for your guest? Is it something connecting to the local environment or broader conceptual ideas?”

At The Drake, hotel art “can be an essential way to celebrate what is going on locally, especially for travelers, who get an entry point into what’s happening locally,” Nielsen said. "There are real opportunities to build audiences at a local level through art." The Drake caters to residents by “creating a new context for them to think about how the art produced locally fits into a bigger cultural conversation," Nielsen added.”

Gallery Space at the 21c Museum Hotel Louisville

On the other hand, properties in the 21c Museum Hotels collection (which AccorHotels recently bought) take a more global approach. “Art isn’t just integrated in 21c, it’s our whole reason for being. The vision was to develop a multi-venue museum, a holistic institution with 80,000 square feet of exhibition space across eight hotels," Alice Gray Stites, the company’s chief curator and museum director, says.

The art selected for rotating public exhibitions "reflects what is going on in the world, and is designed to promote conversation and connection,” Gray Stites said. However, as a nod to the hot hospitality mantra of local, local, local, each guest room floor sports a specially designed alcove adjacent to the elevators showcasing the work of area artists.

Guest Room at the 21c Museum Hotel Oklahoma City 

The right art can further the guest experience at all kind of hotels, from lifestyle brands to more traditional properties. “Having unique and intriguing local art with a story adds to a memorable guest experience in the hotel, which is essentially what lifestyle hotels strive for, but can be equally applied to traditional branded hotels, too," Nancy Sweeney, principle at Vail, Colorado-based Art Advisory Service, says.

When incorporating local themes, however, Gray Stites warns against “being too literal. Be cautious about being too kitschy. You can use art to tell the local story, but do it in a sophisticated, understated way.”

Beyond establishing local credentials, Sweeney, whose firm has worked with Rosewood, Ritz-Carlton and Four Seasons, believes "artwork helps each brand create its own identity and maintain brand standards." If a hotel is using art to convey the brand message, Gray Stites advises considering how the mission of the hotel intersects with the theme of the artwork. Sweeney adds that the property should select art to reflect its clientele.

Hotel Arts Barcelona
www.ritzcarlton.com

Both curators agree it’s important take some risks. “By selecting original multi-media, three-dimensional, commissioned works that are singular, you create Instagrammable moments” that  can “show clients how innovative you are,” Sweeney says. Gray Stites adds, “Don’t underestimate your audience. People like to be challenged. When they see places and faces unfamiliar to them, it provokes curiosity and empathy. There's a hunger for people to connect to new ideas through art.”

As hotels ponder beefing up their art menus, it's also important to "define the key sightlines and spaces in the hotel," according to The Drake’s Nielsen. As they select art, hoteliers should "take a volumetric, spatial approach rather than focusing on flat walls. Walk through spaces and consider how a guest can interact with art to create moments of surprise and wonder."

No matter the approach, the bottom line is that art is not only an investment in aesthetics, but also in, well, the bottom line. “If you find work that people connect to, that is iconic, it will get tagged in social media,” Sweeney says. “There’s your free marketing. And that's how you can justify budgeting more money for art."

A version of this article originally appeared on Skift.com, for which I serve as the luxury correspondent.