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Consumer Products Monitor

Tracking new products, new technologies, and new ideas for application to new consumer destinations.
Covid-19 Upended a Luxury Hotel Truism
Covid-19 Upended a Luxury Hotel Truism

Covid-19 upended a luxury hotel truism in 2020, that wealthy travelers make luxury accommodations impervious to economic downturns.   Those of us involved in the hotels and resorts industry, particularly the luxury segment, well remember the longstanding promoter’s line that luxury hotel investments were among the “least risk” real estate asset classes due to their business being about the rich.

 

As of November 2020, we see that among lodging segments, luxury hotels have been the most dramatically impacted by the pandemic.   Two of the leading luxury destination markets, experienced a decline in occupancy to 37% for the March through August, 2000 reporting period (per a CBRE report).   This is a remarkable result even given the pandemic.

 

Travel restrictions, quarantines, infection rates, and safety concerns have gutted corporate travel and group business of all kinds, adding to how Covid-19 upended a luxury hotel truism in 2020.   Looking ahead, although there is some evidence that the luxury segment rebounded reasonably well after past recessions, there has been no “black swan” economic event similar to this year’s pandemic.   Luxury travel will return, whether for leisure or business, but we may also remember this year as having propelled alternate accommodations – eco resorts, glamping, and the like.

 

Ironically, that staycationing concept and the driving distance lodging distances that are implied, proved to be the winner.  California’s coastal resort segment might have been one exception to the difficulties with luxury travelers, but the additional California policies for shuttering industries (including Covid-19 restrictions for accommodations) was an additional impedance.

 

We will now remember 2020 as the year that exploded this “luxury hotels are the safe investment” myth, perhaps fallacy.   There have always been independent luxury accommodations, since those days when our ancestors traveled the early highways and inns popped up along the way.  But it is the luxury “chain” concept were the “luxury can’t fail line” really took hold.

 

Some History of the Luxury Lodging Segment

 

William B. Johnson helped to propel this promotional line, in the years following his acquisition of the Ritz-Carlton hotel brand in 1983.   Most hoteliers are unaware that part of W.B. Johnson’s legacy is the initial founding of the Hotel Asset Manager’s Association (“HAMA”).   Founding HAMA members were asset managers involved with luxury hotel investments, each of which on behalf of owners deeply unhappy with the annual coupons coming from these assets.

 

Other luxury lodging brands were getting going in those days.  Just before W.B. Johnson, Rosewood Hotels & Resorts was founded by Caroline Rose Hunt in 1979.   And although a somewhat parallel development, between 1981 and 1983 the first of the boutique hotels opened.  These included the first Kimpton Hotel and the first Morgans Hotel (in New York, an Ian Schrager and Steve Rubell creation).

 

The 1980’s saw more luxury chains take hold.  The Mandarin Oriental name was established in 1985 following the merger of Mandarin International Hotels Limited and the holding company of the hotel The Oriental.   Aman Resorts got its start in 1988, the result of Adrian Zecha’s initial interest in building a vacation home in Phuket which became a plan to open a boutique resort with Anil Thadani and others.

 

In the next decade, in 1999, Fairmont Hotels would merge with Canadian Pacific Hotels, creating the truly iconic luxury lodging brand as we know it today.

 

There are certainly predecessors to these chain roll-outs, such as Four Seasons (which took hold following Inn on the Park in 1970), and, RockResorts which dates is origin story to 1956 at Caneel Bay on St. John USVI.   Few of these founders would have believed that a day would come when luxury hotels were the emptiest of hotels, when Covid-19 upended a luxury hotel truism in 2020.

the future of co-working places and players
The Future of Co-Working Spaces and Players

The future of co-working spaces and players has been propelled by the Covid-19 pandemic but new players were already busy entering the sector.   Coworking is an arrangement where workers from different companies share an office space, with access to common equipment, IT, utilities, and receptionist, and sometimes refreshments and mail services.

 

There has been a continuing evolution in coworking space since the 1960’s, when OmniOffices Group, Inc. (now IWG plc’s HQ brand) and Fegen Suites (whose legacy ended up with Barrister Executive Suites) pioneered predecessor sharing concepts.   Later entries such as St. Oberholz (Berlin) pioneered the Internet cafe and a fully communal experience.

 

The hotel industry is likely to take a large role in providing co-working and remote work spaces to travelers and local businesses.   Hotels and resorts have cost advantages over the myriad of co-working startups, as well as many excellent locations for this purpose, brand recognition, and the opportunity to provide food and beverage, additional personal services, and amenities.  Zoku in Amsterdam (established in 2016) is among the terrific examples –  a self-described “workmeetsplay hotel” concept for the global nomad.

 

The advantages of  the hotel industry are apparent with recent events.  WeWork is the Softbank-funded co-working company that has illustrated the difficulty of its business model; that simply being a well-funded first mover without any sustaining competitive advantages, is no business model at all.   As Covid-19 has weakened all co-working companies, the hotel industry is poised to make larger inroads.

 

In September 2020, AccorHotels has announced its £35 daily fee “Hotel Offices” work spaces, with the added perk of room service and lobby bar (in many locations).   Proper Hospitality is partnering with Industrious to bring the work-from-hotel concept to its hotels in Austin, San Francisco, and Santa Monica, with additional hotels to come.  Scandic Hotels, Sheraton, and Moxy Hotels (Marriott) have also announced similar programs.

 

Proptech firms such as LiquidSpace are bringing tech platforms to coworking, allowing any property owner to inventory and work with tenants desiring co-work, shared, or nearby remote places to work.   These Proptech applications are similar to the disruptive economics and connectivity of sellers and buyers, that companies  like Uber have brought to other industries.

 

 

Coworking Companies - the Latest

 

 

For More Information

 

We track the industry and the prospects for the future of co-working spaces and players, for clients exploring anchor tenant possibilities for projects.  For more information about the co-working industry, its players, history, and recent deals, click here:

 

Co-Working Companies – the Latest

Arc’teryx's store has four "experiential huts"
Arc’teryx’s Store has four “Experiential Huts”

AEC’s Consumer Products Monitor

 

Arc’teryx’s store has four “experiential huts” throughout its two-level, 8,000 SF store space in Shanghai; the retailer’s 30th store in China.   The outdoor apparel and gear store is among more than 3,000 locations globally for the retailer.  Arc’teryx Equipment specializes in technical high-performance apparel, outerwear and equipment, based in North Vancouver, British Columbia.  Arc’teryx Equipment is in turn owned by Amer Sports Oyj, a PRC-owned Finnish sporting goods company.

 

The immersive approach to the store’s design is an example of the kind of experiential retail necessary to make the -in-store visit compelling.  The four different experiential huts include: the “Hardshell Hut” featuring LED screen views and sounds of the Canadian mountains; the “Gore-Tex Hut” rain room; the “Hardgoods Hut” with the brand’s hard goods and a climbing wall; and the “Brand Hut” featuring a seasonally-changing virtual reality module.

 

Retailers that deliver in-store experiences are also what’s needed for shopping centers and retail districts.   As online retail purchases continue to rise, the relevancy of mall retail is more akin to the enduring interest of consumers for location-based entertainmentArc’teryx’s store with four “experiential huts” is the kind of hybrid retail/LBE that will allow physical mall destinations to make sense.

 

An interesting description of the store is available on the SGB Media website, at: Arc’teryx Opens Global Flagship Store In Shanghai

Facebook plans Augmented-Reality sunglasses with EssilorLuxottica
Facebook Plans Augmented-Reality Sunglasses, for a 2021 Launch

Facebook Plans Augmented-Reality Sunglasses with fashion eye-wear maker EssilorLuxottica.   The new smart glasses could hit retail as early as 2021 according to the company’s annoucnements at its recent Facebook Connect conference.  The smart glasses will connect by wireless (Bluetooth?) to a nearby mobile phone and project an image of a mobile screen on the lenses.

 

To help Facebook in developing the augmented features for these smart glasses, Facebook employees will wear “Project Aria” eyeglasses in public starting this month.   While this eye-wear does not have augmented reality features (and are not available now for the public), these devices allow for capturing video, audio, eye-tracking and location data to be used in designing features for the smart eye-wear.

 

The many free-room location-based entertainment (“LBE”) companies coming to retail have been anticipating the arrival of quality “smart” eye-wear enhanced with augmented-reality capabilities.   Such smart eye-wear will allow all manner of immersive A/R experience and advertising for consumers.  As well, the A/R eye-wear will be able to deliver heads-up displays of local environmental and incoming communications updates in the same way that Air Force fighter pilots view such information on their cockpit windows.

 

A full review of the announcement of Facebook plans for augmented-reality sunglasses, is available at Mobile MarketerFacebook plans to sell AR-equipped smart glasses from Ray-Ban

Most U.S. Halloween Attractions Will Operate this season.
Most U.S. Halloween Attractions Will Operate, Among Top 100

AEC’s Consumer Products Monitor

 

Most U.S. Halloween attractions will operate this season, according to a survey of the top 100 highly-ranked Halloween attractions in the U.S.  In fact, many have already commenced operations for the season, albeit with careful safety and distancing protocols given the COVID-19 pandemic.

 

The survey of attractions noted when each of these top annual offerings were established, which for many may be a surprise.  Most of the popular Halloween attractions in each region were established many years ago, indicating their substantial role in what is an $8.8 billion industry (2019).  CNN reported in 2019 that 172 million celebrated the Halloween season.   Given the contribution of this popular consumer out-of-home activity, it is not surprising that most of these U.S. Halloween attractions will operate this season.

 

The national survey was completed by The Horror Company for AEC’s Consumer Products Monitor.  Attractions were identified based upon the research team’s personal experience at various attractions, along with ratings from popular Halloween, horror, and haunt websites which review such seasonal attractions.

Themed Entertainment Consultants - The Horror Company product line - Halloween attractions that will operate this season.
A haunted hayride themed attraction in early ideation; a product of AEC's The Horror Company.
Mirror the at-Home Fitness Company to be Acquired by Lululemon

AEC’s Consumer Products Monitor

 

Lululemon’s $500 million acquisition of Mirror is a fascinating moment in the Convergence Era.   With the deal, Lululemon evolves its brand further into consumer lifestyle and with a decided new technology edge.    Mirror offers live classes weekly through its wall-mounted mirror device in addition to on-demand workouts and one-on-one personal training sessions.  The company is a competitor to Peloton.

 

The Mirror acquisition come as the retailer achieved surprising Q2 2020 sales results, actually achieving increased quarterly revenue during the Pandemic as compared to Q2 2019.   Lululemon’s Q2 results were propelled by its online sales being up 157% year-over-year.  The retailer’s sales at company-operated stores actually dropped 51% from the same quarter last year.

 

CNBC reported on Lululemon’s acquisition of Mirror on June 29:  Lululemon to acquire at-home fitness company Mirror for $500 million.

A Code for Age-Appropriate Design of Digital Experiences, is now in Effect in the UK

AEC’s Consumer Products Monitor

 

At a time when consumer privacy concerns are increasing around the world, the UK has emerged with a new code for children’s digital experiences.   The ICO (the UK’s Information Commissioner’s Office) has created the Age Appropriate Design Code, which comes into force from today, with a 12 month transition period.   The Age Appropriate Design Code is intended to protect children, and is aimed at designers and developers of online services and products.  The code is a set of 15 standards that these designers should follow so as to comply with the data protection law, and includes things like making sure the privacy settings are set to ‘high’ by default.

 

According to the ICO website, ” … Data sits at the heart of the digital services children use every day. From the moment a young person opens an app, plays a game or loads a website, data begins to be gathered. Who’s using the service? How are they using it? How frequently? Where from? On what device?   For all the benefits the digital economy can offer children, we are not currently creating a safe space for them to learn, explore and play.   This statutory code of practice looks to change that, not by seeking to protect children from the digital world, but by protecting them within it.”

 

The ICO office provides details about the new code on its website at:  Age appropriate design: a code of practice for online services

 

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