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Sustainable Strategies and Challenges in Luxury Hospitality

The Sustainability Channel 1.6k Add to collection

Verb Brands reveals key insights from their recent breakfast talk

Sustainable Strategies and Challenges in Luxury Hospitality

The luxury hospitality industry is one of the sectors experiencing noticeable rapid growth. One of the key reasons behind the influx of luxury hotels is the increase of tourism and travel in order to meet the increasing demand for unique customer services; luxury hotels are constantly striving to improve their services by keeping their consumer at the heart of their commercial strategy. 

The Rise of the Eco-Consumer

One of the trends shaking the hospitality sector today is the rise in the number of consumers prioritising sustainability. For an industry with a track record of waste production and pollution, it has become a number one priority and it still remains a major challenge for brands competing in this crowded market. WWF (World Wide Fund, 2019) noted that the 21st-century luxury consumer is one that is increasingly well-educated and concerned with social and environmental issues. Millennials and Generation Z consumers are driving 85 per cent of global luxury sales growth, and their expectations for luxury brands to be aligned with their values becomes increasingly important.

At Verb Brand's recent breakfast, we asked our group of luxury experts if they’d seen an increase in the amount of their customers interested in sustainability. Ronald Holmberg, managing director at the Century Club, suggested that their consumers certainly have a sense of curiosity. Members regularly question where things coming from and equally, how they’re being disposed of after – they want to feel satisfied that the business they’re investing in are doing what they can for sustainability. 

1 Hotel is a great example of a brand pioneering the way. The 1 Hotels website immediately communicates its commitment to the environment. On the homepage, an aerial view video sweeps the user into a natural setting and sets the tone of what their guests are about to experience: nature. The hotels are thoughtfully designed with reclaimed wood, natural light, hemp mattresses and live green moments. 

Inca Waddell, marketing and communications director at Art Farm, had a very different take on sustainability. The Art Farm, a premium hotel group, includes sustainability at the heart of their business – focusing on supporting people and culture. She stated that although they’re expected to use ‘hyper-local’ produce and fulfil basic requirements such as asking guests to keep their towels, The Art Farm can provide something else equally as valuable: jobs in the local community. Based in remote locations, staff retention is one of the hardest challenges that the group faces. Inca explained that 260 local artisans were employed to complete the Fife Arms in Braemar, Scotland. Their aim is to bring tourism to this beautiful area whilst at the same time supporting the local community.

There has also been evidence of consumers searching online for sustainable hoteliers said Ben Askins, managing director at Verb Brands. Brands are now needing to focus on introducing key terms such as ‘vegan’ into their SEO strategy, to maintain their spot in the google rankings. ‘Even traditional hotels are coming out with vegan menus, I never thought I’d see that!’. 

Repositioning Yourself as a Sustainable Brand

After identifying that all the brands invited to the roundtable breakfast had a large proportion of their audience interested in sustainability, we wanted to understand how they planned to position or reposition themselves to suit this. 

Stephanie Mechanic, head of events at the Conduit, a members club for those working in the sustainability sector, shared her experience about the transformation of the club into a sustainable enterprise. From the physical building to the food served, every element of The Conduit’s offering has been made as eco-friendly as possible. "We have an impact committee which takes special care that everything we do is as ethical as possible. Take the flowers, they’re dried, British flowers – they’re still beautiful but they don’t need to be thrown away after one use. This thinking applies to the food we serve too, there will be no Prosecco nor avocado since both items need to be imported, despite any members requests. If they don’t agree with this, then maybe they aren’t the right fit for The Conduit." Stephanie hopes that education and accessible alternatives will encourage social change.

However, what if your brand is not built on a foundation of sustainable thinking? Chris Donnelly, founder and CEO of Verb Brands, implied that the worst thing for brands is to lie. "I’d far rather see a brand being honest about the small steps they’re making, than claim to be plastic-free when it’s clear they’re not. Sustainability is not a gimmick, it needs to be true if you’re using it for marketing purposes." Gavin Chetty, former director of marketing at The Mondrian agreed with this, adding that Cafe Royale is a great example of a company, who traditionally are not viewed as ethical nor sustainable, but are promising a level of commitment to change. This can be seen on their website with their CSR commitment piece, this includes eco-friendly materials and design, energy reduction, local produce and purchasing, and waste reduction.

Inca Waddell went on to explain how they’ve actually redefined what luxury is in their premises. "The luxury is that you’re in the middle of nowhere with no TV in rooms, we give people the opportunity to engage with nature and reconnect with the natural world." It’s interesting to see how luxury brands are pulling back from the ‘more is better’ approach and turning other elements into their USP. 

Positive Luxury’s head of marketing, Line Andersen, also spoke about how important transparency is in the luxury hospitality and travel industry. Positive Luxury provides companies with accreditations to demonstrate their commitment to social change. They’ve noticed that increasingly, brands are demanding tools that will allow them and guide them towards a stronger sustainable and ethical commitment. Positive Luxury not only assesses top luxury brands but also helps them to implement action plans that allow them to become truly sustainable. Any areas for improvement will quickly become apparent with their thorough test procedure, sometimes taking up to four years for larger companies who are just starting to implement this. Brands need to reposition themselves, yes, but they need to do it authentically. 

Key Marketing Channels

Once we deciphered the brand’s intentions from a sustainability standpoint, we wanted to find out which digital channels they were using to share their message. It was a mixed response from the luxury team of experts.

Gavin Chetty said he thought social media was the best place to tell a story – this is something that we wholeheartedly agree with, Instagram is one of the most relevant channels for inspiration regarding luxury travel. Inca Waddell agreed but suggested that there’s a challenge when it comes to creating an omnichannel experience with their digital platforms – the story should be consistent throughout. 

From social media, we touched on using influencer marketing to share your story. Art Farm had a unique offering of forestry courses and other outdoor activities, Chris Donnelly agreed that this would be the perfect opportunity to invest in influencer marketing – giving the public a more realistic insight into life at The Fife Arms. This was not a strategy that the member’s clubs, The Conduit and The Century Club, necessarily agreed with, as one of their selling points is their exclusivity. Although it was suggested that a little social media and cautious influencer marketing activity was good to spark curiosity on the outside for non-members.

Another channel that was discussed was the use of OTA’s. Inca strongly felt that OTA’s would not be suitable for The Fife Arms, they were keen to keep all interactions with customers under their control. Other members around the table agreed that it did have its risks but for bigger hotels with a higher number of rooms, OTAs can help raise brand awareness and reach to worldwide consumers that otherwise wouldn’t know your brand.

The last channel to be discussed in depth was PR. Inca mentioned their deliberate decision to maximise the PR surrounding the launch of The Fife Arms. They promoted their unique offering with a whole host of online and offline publications which saw a dramatic increase in the attraction of direct traffic both online and offline. "You can rely on this head start for 12-18 months with great PR but we’re heading out this now, and finding new ways to spark interest is something that we’re concentrating on." Gavin agreed with the statement, adding that PR is crucial to driving the momentum around the opening, particularly with a hotel with such a unique proposition.  

Achieving Customer Loyalty

In an industry that tends to discourage customer loyalty with hotel offers and OTAs, it can be difficult to build a sense of loyalty amongst your customers. However, there are other ways in which a brand can encourage the return of customers. 

Ronald gave us some insight into the current challenges that The Century Club, and members clubs in general, are facing in terms of increase in shared workspaces. With the rise of Wework and other co-working brands, The Century Club has to ensure it’s members also have the space to work in the day and socialise at night. However, the use of the club as a workspace also implies some members are decreasing their expenses in food and beverage. Not only is this affecting culture as a club but it is also a financial risk.

In addition this, he touched on the way consumers feel about in-house restaurants within hotels. "There seems to be a negative connotation around them, I’m not quite sure why we choose very carefully who we want to cook for our members." Gavin agreed with this, echoing the care and consideration that Sea Containers take in choosing the right partner. However, interestingly both suggested that perhaps the restaurant and the hotel need to be two brands in themselves to encourage people to use them and want to try them.

Inca shared Art Farm’s strategy for building their own customer loyalty. "We have tribes of people loyal to a property in particular but we want them to be loyal to the group. The way we do this is through art and culture. The same thread runs and will run through all the Art Farm properties but they will be very different from each other. We want our visitors to be inspired and left eager to try another one of our hotels."

Next, the conversation moved on to the more technical side of customer loyalty. CRMs were a big point of conversation with most agreeing that segmentation and targeting were still one of their biggest challenges. Ronald, thought that the perfect CRM doesn’t exist and so he relies on many systems – this was found amongst the others too. Ben Askins, relayed that the issue at the core of this was data input and the reliance on people to enter accurate information into the system. "The advantage that The Conduit has, for example, is that they are small and they can train their staff the right methods from the start – bigger brands can’t do this."

Once the correct data has been inputted it has the potential to achieve a dramatic increase in customer loyalty. Ronald gave a great example of this at The Century Club with a specific event they run for enthusiasts. They send very specific, targeted emails surrounding the event to only 120 guests, thus making the conversion rate very high. Chris Donnelly agreed. "It’s important to use the data you have efficiently and effectively. If a brand remembers a person has severe food allergies, for instance, they would really value it and will be more likely to return."

Can luxury hospitality ever be truly sustainable?

The short answer is sadly no. However, that is not to say that the luxury hospitality industry as a whole doesn’t have a responsibility to try the best to be sustainable, particularly big businesses with the power to do so. 

If you enjoyed reading about the complexities of introducing sustainability and tech into luxury hospitality, please join us for our next TREND event where we’ll be discussing all these topics and more. It’ll be at White City House, 6-9pm on the 19th of September, reserve your place on the guest list now.

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Verb Brands, Fri, 06 Sep 2019 12:59:04 GMT