Each year, when Interbrand, Forbes, and others release their rankings of the world’s most valuable brands, the usual suspects appear: Apple, Nike, Louis Vuitton, Hermés, Porsche. Luxury hotel companies don’t make the cut: Not Four Seasons. Not Ritz-Carlton. Not Mandarin Oriental.
Interbrand’s latest list of the best global brands only includes public companies, which explains why private companies like Four Seasons haven’t made it.
“The biggest technical reason the large hotel groups don’t make the lists is that they don’t disclose the profit and loss on each brand,” said Interbrand’s global director of brand economics, Greg Silverman. “If the larger brands with scale disclosed, they would probably qualify,” Silverman said. “They’re creating brand ecosystems that are terrific.”
Forbes’s list of most valuable brands includes private companies, but it hasn’t recently included luxury hotel brands.
Brands With Promise
Several luxury hotel brands that haven’t made the lists show potential.
Mandarin Oriental and Raffles performed better than other hotel brands in surveys of European consumers by BVA BDRC’s Brand Margin.
Four Seasons’ cost-effective placement on the hit series “The White Lotus” has boosted its brand awareness.
Aman is the rare ultra-luxury hotel group that fosters a devoted group of loyalists, as you can see by searching for the #amanjunkies tag on social media.
The recent launch of Ritz-Carlton Yacht Collection suggests the power of the hotel brand. About half of the guests on its first two vessels had never sailed on a cruise ship, but they tried it on the promise of the Ritz brand.
Yet all those brands are among the outliers.
Luxury hotels face obstacles to becoming truly iconic global brands for reasons that go much deeper than the methodologies behind some lists. Skift spoke to industry experts to discover what may be holding back luxury hotels.
The Badge Factor
One challenge is that luxury hotel brands lack physical presence. There are 133 Four Seasons properties, 119 Ritz-Carltons, and 34 Waldorf-Astorias, yet Hermès has 294 stores. It’s simply more visible.
Mandarin Oriental CEO Laurent Kleitman notes that luxury goods brands create products that function as “badges” — signals of status and taste.
“By definition, they’re badges you wear,” said Kleitman. “Your clothes are visible, your bag is visible. So they are badge brands. And ultimately, the hospitality brands… are born in experience and buildings.”
Translating the badge concept into hospitality is tricky.
“How often do you see someone carry a tote bag with, say, the logo of the Four Seasons or the Ritz-Carlton on it?” said Piers Schmidt, founder of the Luxury Branding consultancy.
“Not nearly the same as they show they’re fans of Louis Vuitton, Chanel, Hermès, etc.,” said Schmidt, who gave an industry talk on luxury hotel brand power last year.
A Gap in Spending and Talent
A bigger challenge is money.
“The biggest brands are spending billions, literally billions, and we spend a fraction of that,” said Alex Schellenberger, Mandarin Oriental’s global senior vice president of brand.
Savvy brand management can be cost-effective. Hèrmes, Starbucks, Cisco, and Oracle typically spend only between $200 million and $400 million a year on advertising, yet make it on the top 100 lists.
Another challenge is talent. Many hotel company leaders have come from real estate and operational backgrounds rather than marketing.
“Great brands have a profound and often simple clarity,” said Colin Nagy, a Skift columnist and marketing strategy executive at a major tech platform.
“A lot of the higher-end hospitality brands are trying to be too many things to many people,” Nagy said. “They’re outsourcing their north star and higher order purpose to uninspiring consulting firms because they have no sense of it themselves.”
Learning from Louis Vuitton
Many luxury hotel executives are now studying the playbook of luxury goods brands.
When Louis Vuitton’s parent company, LVMH, acquired luxury hospitality group Belmond, it introduced concepts like “clienteling,” or nurturing long-term relationships with the highest-value customers (such as perhaps sending birthday gifts).
“LVMH said, ‘What do you mean there’s no clienteling in hospitality?'” said Belmond’s CEO Dan Ruff. “LVMH also had us look at what some of the niche hotel players are doing and demonstrate that we could do comparable things at medium scale.”
The issue? Many luxury hotels never follow up with guests after they check out.
“Until hospitality learns to romance the guest between stays — not just during them — its brands will remain under-loved, under-leveraged, and under-valued,” Schmidt said.
LVMH isn’t afraid of boldness. When Louis Vuitton put its flagship stores up for renovation in Paris and New York City, it hid the construction work with cladding made to look like one of its storage trunks.
“The earned media value of that … has been quite incredible,” said Schellenberger. “But any hotel CFO who would look at that would tell you to go to hell.”
The Asset-Light Trap
Unlike a fashion brand like Hermès, which controls every stitch in production and all channels of distribution, hotel operators typically don’t own or fully operate their buildings and must negotiate with property owners about everything from paint colors to staffing levels.
“The construct of our industry is fundamentally different from that of luxury goods,” explains Sharan Pasricha, founder of Ennismore. “When you’re an asset-light operator, you can influence, you can suggest, you can provide guidelines, but you don’t own the complete vision.”
Thomas Cahalan, whose agency Dorsia Travel serves ultra-luxury travelers, agrees. His clients’ favorite properties tend to be ones where the brands have a strong say over the real estate and operations.
He cites a couple of examples: Airelles, a France-based chain that owns and continually renovates its properties in France and Italy, and The Peninsula, which has full ownership of properties in Hong Kong, Tokyo, Bangkok, New York, and Chicago, and part ownership of others.
Maintaining Soul at Scale
Another factor is having a strong sense of what a brand means and maintaining that soul as you scale up.
“The deeper issue is not visibility, scale, or even spend — it’s identity,” Schmidt said. “Too many luxury hotel brands have become generic hospitality offers masquerading as maisons. They borrow clichés like ‘sense of place’ or ‘crafted experiences,’ but few articulate a truly unique or protectable point of view.”
Robin Hutson, founder of The Pig Hotel brand, observes that scale presents unique challenges for service brands that physical product brands don’t face.
“In hospitality, you don’t just suddenly say, ‘We’re going to serve the best steak.’,” Hutson says. “It doesn’t happen like that.”
“That steak, if that’s going to be the best steak, that probably takes three months to get right, because the supplier won’t be right, and then you have to change your personnel and they won’t cook it quite right, and so on.”
Worse, a sense of mission can be lost as an organization grows unless managers are vigilant.
Hutson credits Four Seasons with admirably overcoming this challenge. He also sees some Southeast Asian brands, like Soneva, Aman, Rosewood, and Anantara, as having a lot of brand momentum from word-of-mouth referrals.
Others also believe that some of today’s luxury hotel brands have a strong shot at becoming global icons.
“On the surface, it may seem luxury fashion brands are winning in recognition, but luxury hotel brands have mastered emotional connection in a way that most other brands can only dream of,” said Hermann Elger, CEO of Forbes Travel Guide.
“Guests are committing not just money, but the even more precious commodity of their time,” he says. “That’s an enviable level of trust.”
Perhaps the most strategic move toward becoming one of the world’s most valuable brands is for hotel groups to focus on knowing their customers better than anyone else.
“Being honest about your core customer is your superpower in a crowded market,” Nagy said. “Pulling this down to the molecules of your customer experience is how to stand out.”
Accommodations Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.
Read the full methodology behind the Skift Travel 200.
