Luxury Institute News

October 4, 2014

Williams-Sonoma returns home to celebrate heritage

SFGate
Janet Fletcher
October 4, 2014

The store that introduced America to food processors and copper fish pans has returned to its Wine Country roots.

For many decades, Williams-Sonoma thrived by being one step ahead of its customers, selling them housewares they didn’t yet know they needed. But with this weekend’s opening of its newest venue, in Sonoma, the trendsetting company is looking back to celebrate its 99-year-old founder and recall its humble debut.

The project also reflects the Boomer-fueled brand’s efforts to woo a younger generation — Millennials, who aren’t exactly rushing to buy homes and stock kitchens.

This retro Williams-Sonoma, at the site of the original store, re-creates the look of the shop that Chuck Williams opened in 1956, down to the black-and-white checkerboard floor. “It’s going to be a total doppelganger,” said Wade Bentson, one of Williams’ first employees, who helped with its design.

With a 12-seat cooking school showcasing local talent, an edible garden, vintage merchandise and museum-style kitchenware exhibit, the store is opening in a town famously hostile to chains. But the billion-dollar retailer, for the most part, is being welcomed like a hometown hero.

“I’m totally excited about it,” said Sheana Davis, a community activist and proprietor of Epicurean Connection, a nearby cafe and cheese shop. “If you’re looking for opposition, I’m not it.”

Williams, who celebrated his 99th birthday this week, operated his store near the historic plaza for only two years before decamping to San Francisco. But his later success made Sonoma itself an international brand.

Visitors still inquire about the chain’s birthplace. “I’ve been introduced as his son several times,” said Steven Havlek, who owns Sign of the Bear, an independent kitchenware store on the plaza.

Re-creating the original

When the site at 605 Broadway became available in 2012, the retailer swooped in. The property included both Williams’ original 570-square-foot shop and an attached home and garden that he had shared with his mother.

“We found enough pictures and enough from (Williams) to rebuild the store exactly as it was,” said Janet Hayes, president of the Williams-Sonoma brand. The restoration includes original signage and the clean-lined open white shelving that became the stores’ trademark.

The new Sonoma store includes an exhibit of ingredients and tools that Williams popularized, such as Fini balsamic vinegar, Maldon sea salt, Le Creuset cookware and French mandolines. Williams’ restored home, attached to the store, has been repurposed as a design studio and showcase for Williams-Sonoma Home furnishings. The store is not all retro; the made-over garden boasts an outdoor kitchen with pizza oven and lots of merchandise from the company’s new Agrarian line, launched in 2012 in keeping with a younger generation’s fascination with urban farming.

The DIY cheese-making kits and high-end chicken coops that Williams-Sonoma is betting on today were definitely not in the mix when Williams began his retailing career. The society matrons who patronized Williams-Sonoma in the late 1950s were lured by the gleaming copper saucepans, Pillivuyt porcelain and fluted tart tins that Williams discovered in France. Jackie Kennedy and Julia Child were about to make French cuisine the epitome of chic, and Williams was poised to profit.

Cooking to entertaining

Urged by his affluent customers to move the shop to San Francisco, Williams listened when one of them suggested a spot near Elizabeth Arden, the high-end salon on Sutter Street. “In those days, women had beehive hair that required a lot of attention,” recalled Bentson, who began working for the store in 1961. “It wasn’t unusual for them to go to Arden’s two or three times a week, and they went right by our store.”

Women from Hillsborough, Piedmont and Marin would have their ball gowns shipped to Williams-Sonoma, drop their dogs off at the store, and then go and have their hair done, recalled Mary Risley, who founded Tante Marie’s Cooking School in San Francisco and is a longtime friend of Williams’. They bought Christmas presents and wedding gifts at Williams-Sonoma, especially after the merchant — again nudged by a customer — created a bridal registry to compete withGumps and Tiffany.

Child’s popular television show, which debuted in 1963, also fueled Williams-Sonoma’s sales. If Julia used it, “people beat the way to our store to get it,” Bentson said. San Francisco cooking teachers like Risley andJoyce Goldstein sent their students to the store for quiche pans, flan rings and souffle dishes — equipment that department stores of the day did not stock.

“Everybody was either taking cooking lessons or giving cooking lessons,” recalledJacqueline Mallorca, an early customer and ad agency employee who persuaded Williams that the store needed a mail-order catalog. Begun in 1972 and, for years, written by Mallorca, the innovative full-color mailer put Williams’ finds and favorite recipes within reach of all Americans.

Today, the recipes have migrated to the company’s website, and the catalog copy is far more clipped and concise. The September issue still includes Le Creuset and All-Cladcookware but also features packaged mixes for Bundt cakes, quick breads, waffles and breakfast bars — a shift noted unhappily by the culinary doyennes of San Francisco.

“There’s an awful lot of tableware,” sniffed Mallorca, an Englishwoman whose polished manners don’t conceal her dismay. “People today are not so interested in cooking as much as entertaining.”

Positioning for future

Goldstein, who later collaborated with Williams on several cookbooks, concurred. “At some point, Williams-Sonoma made the shift from being an educating store to being a lifestyle store, with tablecloths, napkins and pottery,” she said.

The publicly traded company’s other concepts — among them, Pottery Barn, Pottery Barn Kids and West Elm — are thriving, but the net revenue of the Williams-Sonoma brand has been stagnant in recent years and the store count is down. Branding experts and trend forecasters see both opportunities and challenges for the chain as it positions itself for the future.

Many affluent young consumers aren’t hurrying to buy homes, they say, and are more inclined to spend on experiences than on stuff.

“I’ve been invited to buy wedding gifts at experiential websites,” said Kara Nielsen, culinary director for Sterling-Rice Group, an advertising and branding agency in Boulder, Colo. Nielsen and others also point to a minimalist trend, a preference for smaller, less cluttered homes and simpler lives.

“A lot of Millennials believe in access but not ownership,” Nielsen said, pointing to the success of businesses that enable consumers to share cars or rent special-occasion clothes.

Building in diversity

Like other retailers, Williams-Sonoma needs to respond to changing demographics, marketing experts say. “Diversity has to be built into their product range and into their staff,” said Milton Pedraza, CEO of the Luxury Institute, a consultant to high-end brands. Pedraza points to his own multicultural family, which includes Colombians, a Jewish lawyer from Long Island and a Hindu doctor.

“We make samosas for Thanksgiving with turducken and Spanish rice,” he said. “And we’re not atypical.”

Marc Halperin, a food and beverage consultant with San Francisco’s Center for Culinary Development, believes the chain is still a tastemaker and sharp observer of trends. The Agrarian line dovetails neatly with the urban homesteading wave, Halperin said. And the shift toward offering tableware, juicers and other appliances that have little to do with cooking may also be wise.

“There’s clearly a huge understanding of the consumer,” Halperin said. “The number and variety of espresso machines they’re selling is mind-boggling.”

Janet Fletcher is a food writer and cookbook author in Napa. E-mail:home@sfchronicle.com

Company milestones

1956: First Williams-Sonoma store opens on Broadway in Sonoma.

1958: Chuck Williams moves his thriving cookware store to Sutter Street in San Francisco.

1972: Williams-Sonoma mails its first cookware catalog, with a print run of 10,000.

1973: Williams-Sonoma opens its second store, in Beverly Hills. Chuck Williams introduces the Cuisinart food processor, a revolutionary French appliance.

1978: Chuck Williams encounters balsamic vinegar in Italy and begins to import it.

1983: With its initial public offering, Williams-Sonoma becomes a publicly traded company to raise money for expansion.

1986: Williams-Sonoma releases its first cookbook, starting a hugely successful publishing program.

1999: Williams-Sonoma starts its e-commerce site.

2006: Debut of Williams-Sonoma Home, a furniture and home decor collection

2012: Williams-Sonoma starts Agrarian, a line of products designed for urban homesteaders.

2014: Williams-Sonoma opens its240th store in Sonoma, at the site of the original store.

Source: http://www.sfgate.com/homeandgarden/article/Williams-Sonoma-returns-home-to-celebrate-heritage-5800000.php

October 1, 2014

Exclusive: Wealthy Consumer Survey 2014

Previews Inside Out
Coldwell Banker
October 1, 2014

You may picture wealthy Gen Y and Millenials as iPad-toting jetsetters who aren’t anxious to tie up their cash in a home. But they are among the most active players in luxury real estate, according to a new survey of ultra-wealthy consumers by Coldwell Banker Previews International® and the Luxury Institute.

“Young affluents recognize the value of real estate,” said Ginette Wright, vice president of marketing for Previews®/ NRT.  “And they are often bullish when it comes to real estate—they own more properties and tend to spend more on average. Their outlook on long-term appreciation is also more positive.”

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The survey found that 73% of wealthy consumers under the age of 35—the most out of any age group—are considering a purchase of additional residential real estate in the next 12 months for personal use. These buyers also expect their home to appreciate by an average of 16% in the next five years, compared to 13% for buyers ages 45-64 and 11% for buyers 65 and older. Additionally, they are among the biggest spenders, as they paid $7.8 million on average for their last home, compared to $6.8 million for buyers between 35 and 44 years of age, $2.7 million for those between 45 and 64, and $1 million for buyers 65 and older. One reason for the price difference could be due to the kinds of homes they desire. Nearly three-fourths (72%) of respondents younger than 35 said that buying a move-in-ready home is important.

“Our agents in cities like Los Angeles and Miami tell us the same thing: new construction is king right now,” added Wright. “Younger luxury buyers are not looking for a project—they want everything turn-key, right down to the décor and furnishings. All of which, of course, adds to the home’s overall price tag.”

While location and price remain the most important elements in the decision making process for the majority of ultra-wealthy buyers, younger affluents are less inclined to choose a property based on geography. Thanks to convenient travel options and the ability to work from anywhere becoming more widespread, just 25% of the under-35 group reports that location dominates their search criteria, but 75% say that lifestyle considerations drive their choice of which home to buy. At the other extreme, 88% of buyers 65 and older say that location is the most potent driver of their next property search.

Younger affluents are also interested in different home amenities than their seasoned counterparts. Safe rooms (37%), home theaters (36%), pool (34%), outdoor kitchens (33%) and “green” or “eco-friendly” amenities (29%) remain at the top of the wish list for buyers under the age of 35. Compared to the 65+ demographic, those same features ranked far lower: 7% wanted safe rooms, 12% wanted home theaters, 16% wanted a pool, 17% wanted a pool and 10% wanted a “green” home.

To find more interesting comparisons between the age groups, download the complete Wealthy Consumer Survey: http://www.previewsinsideout.com/2014/10/exclusive-wealthy-consumer-survey-2014/

July 7, 2014

Used Chanel bags are worth a lot, but Marc Jacobs? Not so much

By: Erin Griffith
Fortune
July 7, 2014

They’re all considered investments, but which luxury brands hold their value the best may surprise you.

There’s a reason they call them “investment pieces.” At $22,000 for a Proenza Schouler tote or $9,000 for a Ralph Lauren dress, luxury goods are meant to last a lifetime and hold their value. That’s why the market for used designer goods is the most attractive category for online consignment.

One such marketplace, a website called The RealReal, is on track to do $100 million in sales this year. (The company takes a cut of each sale.) The RealReal recently tapped its database of 500,000 luxury goods from 500 designer brands to find which brands have the highest resale value, and which ones hold their value the longest. The startup found that Chanel, Christian Louboutin, and Hermès hold their value the longest. Tod’s and Versace lose their value the fastest.

Perhaps more surprising is which brands carry the highest and lowest resale value. Items from Givenchy, Victoria Beckham, Charlotte Olympia and Alexander McQueen all sell for much closer to their original price than goods from Marni, Alexander Wang, 3.1 Philip Lim, and Marc Jacobs.

Resale values of fashion or luxury goods can fluctuate depending on buzz around a certain designer, particularly if a fashion houses hires a a new creative director or chief executive, according to Rati Levesque, Chief Merchant at The RealReal. “When Phoebe Philo joined Céline as the creative director, it added more resale value to the brand,” she says.

But more important than buzz is availability and discounting. If a luxury brand frequently discounts its goods at outlet stores or online via flash sales, consumers will perceive that they don’t have to pay full price for that brand, says Milton Pedraza, CEO of Luxury Institute, a luxury industry research group. While baby boomer shoppers tend to research something online and then buy it in the store, millennials do it the other way around. They “showroom,” the term for checking out an item in the store before finding the best deal for it online.

“These days you can find ways to arbitrage the brands, because you have so much information and the market is inefficient,” Pedraza says. “Brands have to be careful where they allow their product to be sold.”

For example: Chanel and Hermès do not hold sales in their stores and they have a limited number of outlet stores. Chanel doesn’t even sell its goods online, with the exception of beauty products. “In that sense, it creates a perception of purity,” Pedraza says.” The brands then “back it up with design quality and heritage,” he says. “If I buy something, I will think, ‘Wow it has long term investment value.’”

Below are some luxury brands that fall on both sides of the spectrum.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute:http://fortune.com/2014/07/07/which-luxury-brands-have-highest-resale-value/

May 30, 2014

Affluents Don’t Want Texts from Luxury Brands

Far more affluents would opt in to luxury brand emails
E Marketer
May 30, 2014

Targeting affluents? Don’t expect to reach them through texts. In Q1 2014, Luxury Institute found that just 17% of US affluent internet users, those with an income of $150,000 or more, had signed up or were somewhat/very likely to opt in to messages from a luxury brand.

Even tech-savvy affluent millennials weren’t interested in luxury brand messages popping up on their phones: Just around one-quarter said they had or would be interested in receiving such communications, a percentage similar to Generation Xers.

Instead, emails may be the way into affluents’ digital inboxes, with 49% of respondents saying they had or were somewhat/very likely to opt in to receiving emails from a luxury brand.

While this wasn’t a majority activity among the entire group, the total percentage was skewed lower by boomers, as over half of millennials and Gen Xers were interested in receiving messages this way.

Either way, digital didn’t appear to play a major role in US affluent internet users’ research or purchase processes when buying luxury items.

Just 22% of respondents said they researched online and then purchased in-store, indicating they may not get inspiration for luxury purchases during digital browsing. Meanwhile, only 15% of respondents researched in-store and then bought online, possibly because they didn’t feel comfortable making expensive purchases digitally—or maybe they just wanted their luxury items instantly.

August 2013 research by Shullman Research Center found that online channels were where US affluent internet users—those with a household income of at least $250,000—felt least comfortable making purchases, with half saying they did not feel OK buying something via a smartphone, tablet or computer. Meanwhile, just 7% said the same about making a purchase in-store.

See article at: http://www.emarketer.com/Article/Affluents-Dont-Want-Texts-Luxury-Brands/1010867/1

 

May 23, 2014

60pc of affluent Baby Boomers inclined to use social media: report

By: Joe McCarthy
Luxury Daily
May 23, 2014

Generational distances regarding social media use are not as wide as commonly thought, according to a report from the Luxury Institute.

Eighty-five percent of millennials surveyed for the report said they were inclined to use social media, compared to 73 percent of Generation X’ers and 60 percent of Baby Boomers. As luddites become further marginalized, brands must adopt a marketing approach that prioritizes individuals over segments and personas.

“The surprising part for me is that Boomers, Gen X’ers and millennials are all consuming all of these media at some level,” said Milton Pedraza, CEO of The Luxury Institute, New York. “It’s not as if they’re getting left behind. These are all affluent people, and tech savvy.

“Life stage matters tremendously but because of the new age of data, analytics and one to one marketing, we can look beyond the segments to the individuals and market to them,” he said.

The Luxury Institute surveyed 1,200 consumers 21 and older with an annual household income of at least $150,000.

Less boundaries
The report aims to get marketers to reconsider media consumption in general. The dynamic of how consumers “consume” is messier than the laser-drawn segments of millennials, Gen X’ers and Baby Boomers suggests.

Age provides broad indications of consumer behavior, but individual behavior is more granular, rife with the unexpected.

Baby Boomers do watch more television, with respondents averaging seven hours per week, but millennials are also flipping through channels, with these respondents averaging four hours per week. About 70 percent of all segments surveyed watch previously recorded programs on DVR.

“Marketers need to go beyond stereotypes and propensities, and start doing real one-to-one marketing now,” Mr. Pedraza said in a press release. “The data and analytical firepower are there to build relationships, and wealthy consumers, especially millennials, demand it.”

“We have to look at individual needs, lifestyles and life stages and combine something that’s optimal for each person,” Mr. Pedraza said.

See full article with quotes from Milton Pedraza, CEO of Luxury Institute: http://www.luxurydaily.com/60pc-of-affluent-baby-boomers-inclined-to-use-social-media-report/

May 2, 2014

Consumer Spending Trends: What Drives Luxury Purchases

New survey finds generational differences in how wealthy shoppers make luxury purchases.

By: Donald Liebenson
Millionaire Corner
May 2, 2014

What becomes a luxury brand most? A new consumer spending trends survey finds that regardless of age, superior quality and craftsmanship are the two most essential elements of a luxury brand that wealthy shoppers consider.

The Luxury Institute surveyed U.S. consumers ages 21 and up with a minimum annual income of $150,000 about what they consider to be important in luxury brand purchases and the specific triggers that motivate their spending decisions.

Six-in-ten wealthy respondents also said they consider superior customer service and design as vital attributes to a luxury purchase.

The consumer spending trends survey found generational differences in what influences luxury purchase. Millennials put a high premium on the opinions of others. Nearly seven-in-ten (68 percent) of wealthy shoppers born after 1980 ask someone they know about their experiences with a luxury purchase before buying it. The becomes less important among Gen Xers (64 percent) and Baby Boomers (58 percent).

Millennials, who came of age during the recession, are more likely than previous generations to give greater consideration to a brand’s history, a product’s uniqueness, and investment value when it comes to evaluating luxury brands. They also grew up in the digital age of online discounts. Playing into the stereotype of their generation as entitled, the survey also found the wealthy Millennials “have developed expectations that luxury brands should show their appreciation for any purchases made by providing complimentary shipping and rewards programs.”

In addition to free shipping, wealthy shoppers of all ages agree that user-friendly return policies and lifetime guarantees are the two most potent features of luxury brands that enhance the luxury shopping experience and compel them to buy from a particular merchant.

There is little generational difference in how the wealthy make their high-end purchases, according to the consumer spending trends survey. Online shopping is no pervasive enough that Baby Boomers, Gen Xers and Millennials are all nearly equally as likely to have made their last luxury purchase online as in-store.

Brand websites are universally the most popular sources of information wealthy consumers use when preparing to make a luxury purchase. Three-in-ten most rely on online consumer reviews and friends and family, while 27 percent most rely on sales associates. More than three-fourths of wealthy Millennials (vs. 70 percent of Gen Xers and 67 percent of baby Boomers) say they are susceptible to being swayed by advertising. They are also much more open to receiving emails or text messages from luxury brands and sales representatives as well as using social media, mobile applications or other digital platforms to further engage with luxury brands.

Click the link to read the entire article: http://millionairecorner.com/Content_Free/Consumer-Spending-Trends-Luxury-Purchases.aspx

April 30, 2014

Millennials value heritage more than Gen X’ers: study

By: Joe McCarthy
Luxury Daily
April 29, 2014

A new report by the Luxury Institute found that millennials scrutinize investment value and heritage of purchases more than Generation X’ers and Baby Boomers.

The study also found that millennials regularly search for one-of-a-kind items as a way to signal status. While brands often treat “showrooming” as a threat to brand integrity, the research that accompanies the trend indicates that improved customer service and responsive multichannel efforts can turn the phenomenon into a benefit and a source for more revenue.

Millennials want the heritage of the brand, they respect history, and they see it as a validation of investment value,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“They don’t have all the money in the world, they’re just starting out, so they want to make sure they’re buying appropriately,” he said.

“But they do have much higher expectations, so that’s a little bit of a paradox. They care far more deeply about certain aspects of a luxury brands.”

This study is the first in a series of three comparatives studies of millennials, Gen X’ers and Baby Boomers by The Luxury Institute.

Click the link to read the entire article: https://www.luxurydaily.com/millennials-value-heritage-more-than-gen-xers-study/

April 12, 2013

Auto consumer mindset changing dramatically

Ford exec says buyers want cheaper, well-equipped mobile technology platforms that sip fuel

By Keith Morgan
Vancouver Sun
April 11, 2013

Ford and Lincoln global marketing executive vice-president Jim Farley  recently delivered the keynote address to the 2013 New York International Auto  Show. Today, we publish extracts from his speech which offered a view on the  role the recession has played in shaping a new consumer outlook.

While the recent recession has fundamentally reshaped the automotive industry  over the past few years, the real game changer may come from a new  post-recession consumer mindset, demographic shifts and how automakers respond,  says Farley.

Click the link to read the entire article which includes findings from a recent Luxury Institute survey: http://www.vancouversun.com/cars/Auto+consumer+mindset+changing+dramatically/8230977/story.html

March 18, 2013

Women Earn The Big Money In Wealthy Families, And Decide How It’s Spent

(NEW YORK) March 18, 2013 – The independent and objective New York-based Luxury Institute surveyed wealthy women from U.S. households earning at least $150,000 a year about their economic situation, personal aspirations, family responsibilities and companies and industries successfully marketing to them.

Wealthy women are economic engines within their families, with 67% employed or running their own businesses; 41% report earning more than half of their family’s total income, up sharply from 27% who were bigger breadwinners in 2008. Women have been earning college degrees at higher rates than men since 1985, and educational attainment has produced economic muscle: median salary of the working women surveyed is $181,000; 66% earn more than $150,000, and 20% have annual incomes of $300,000 or more.

“Luxury executives should know that given the trends we see now, we predict that the Millennial women will achieve parity or surpass the achievements of their male counterparts in managerial, entrepreneurial, income and net worth levels in the next 2 decades,” says Luxury Institute CEO Milton Pedraza.

Despite career prowess, 90% of women 35 and older say that their most important aspect of life is family, and 34% say that their long-term career goal is to retire and enjoy more family time. Women control a majority of spending in 78% of households, with food (85%), clothing (78%), shoes (78%), and vacations (62%) also especially dominated by women.

“Shifting gender roles require brands in traditionally male dominated industries to connect with strong, successful women, but new marketing campaigns are not enough,” says Pedraza. “Companies must drive engagement through channels like social media and one-to-one communication with empowered sales professionals who serve as brand ambassadors.”

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

March 6, 2013

Why Care About Gen Y?

Aloft Hotels sees them, as well as Millennials, as the perfect target to build lifelong loyalty. Here’s how they are achieving that goal.

By Caryn Eve Murray
Hotel Interactive
March 05, 2013

The generation is celebrated for its youth, momentum, propensity for bold statements and for always going new places. That’s how Starwood describes Aloft, a relatively new generation of its hotels being welcomed into the hospitality world. A baby born in June 2008, Aloft Hotels could well be called the Millennials of the marketplace. This upstart is defined by loft-like interiors, dynamic public spaces for socializing without a loss of privacy, a bar scene showcasing up-and-coming music talent and guest rooms offering easy hookup to personal media.

So it comes as no surprise that Aloft Hotels are, in fact, something of an architectural counterpart to the very generation of guests they target: travelers born sometime in the early 1980s and beyond, now ripening into successful and peripatetic young adulthood. These Millennial Generation guests are gaining recognition as an enviable catch for anyone, and Aloft in particular.

“When Starwood thought of launching Aloft it was looking at the changing trends in the marketplace and understanding how travelers are traveling differently – the different demographics as well as the psychographics,” said Paige Francis, vice president of global brand management for Aloft. “The next generation of travelers would be the Millennials and those that share that mindset as well.”

In other words, said Francis, the brand recognizes that youthful thinking isn’t just found in the very young. “Who is actually coming to our door?” she said. “As you know, this appeals to a larger variety of the population, depending on their mindset. The self-driven early adopter, tech-savvy social person isn’t just limited to an actual age segment.”

Indeed, as Millennials come of age, suitcases in hand, they become a force the greater industry cannot ignore. Even the most traditional bed-and-breakfast segment has had to come to grips with the question of whether to shake the dust off its doilies, and strip its floral wallpaper, judiciously, to attract them.

“It’s not that baby boomers are exiting, they are still going to travel,” said Milton Pedraza, chief executive officer of the Luxury Institute, a ratings and research company that focuses on high-end branding. “But the emerging Gen X and Gen Y, the Millennials, are traveling too. Their world is so interconnected, they learn about new destinations and want to go sooner than we ever did as baby boomers…Global travel today is second nature, especially to these American consumers.”

And unlike the backpack-toting, hostel-focused youngsters of their predecessor generations, said Pedraza, “they are not into roughing it. They want to experience luxury and at least a minimum level of quality in the premises and amenities. They are not willing to compromise on that and they shouldn’t. The world has much higher standards now for travel and hospitality and a lot of options.”

The rapid expansion of Aloft bears this out. Some 63 hotels have been launched so far, with another five to open this month, said Francis. “Clearly this is a product that has been answering a need,” she said. That is as true in the U.S. as it is overseas, where Aloft is making advances into China, India, Malaysia, Latin America and Thailand.

“Generation Y is poised to become the largest consumer buying group,” Francis said. “They are a very quickly growing group defining the present and will continue to define our future.”

But inns and bed-and-breakfast establishments, which grew popular by serving up tidy slices of the past, have been rethinking their Millennial strategies too. In the spirit of last year’s concurrent presidential campaign season, innkeepers launched “Doily Decision 2012,” a tongue-in-cheek social media debate that tackled the importance of adherence to old-time traditions in the face of a youthful, text- and WiFi-driven world of travel.

“A lot of B&Bs have transcended the doily,” said Jay Karens, chief executive officers of the Professional Association of Innkeepers. But, he said, appealing to the Millennials is not just about tossing out the old – or keeping it – or necessarily being gadget-friendly.

“That’s a fallacy,” he said, referring to the notion that if you capture cutting-edge tech, you capture the Millennials’ hearts and wallets too.

“Where B&Bs are hitting the sweet spot is a more contemporary experience.” He said B&Bs appeal to Millennials now by offering an antidote to what he called “the typical corporate experience.” That often means a slightly more modern environment and a strong desire to build relationships, one-on-one.

The most successful hoteliers build their Millennial business on relationships, not transactions, said Pedraza. “For follow-ups, they don’t just send a generic email, they make a phone call. They suggest something for next year’s vacation. This is authentic human interaction as opposed to commercial gobbledygook speech.”

Millennials are being courted along the whole spectrum of inn styles, he said. “They run from the old-fashioned Victorian to the super modern and super elegant with everything in between,” Pedraza said. “There are plenty of innkeepers on that bell curve, offering the modern sophisticated experience. It might be a 200-year-old home but they have updated their interiors so it looks more like Pottery Barn than Laura Ashley.”

In Vermont’s Mad River Valley, Janice Hurley Hollis opted to mix allegiance to tradition with an advance into the bold and new. Hollis, operations manager of The Round Barn in Waitsfield, Vt., took stock of the 12-room inventory at the 19th century property and charted a varied course.

“Our travelers are changing,” she said “and we were thinking of what we can do at the property to make sure we attract all kinds of guests. We looked at our rooms and asked, ‘are there one or two rooms we could change the style in so we could have broader appeal?’ In our property we have a lot of traditional rooms done in the style you would expect. We went in one of the rooms, the Wait Room, and we did it over as a more modern style that doesn’t have wallpaper. We painted it a nice relaxing bluish tone with chocolate browns. It is not as busy as some of our other rooms.”

Much of the accommodations do, however, remain intact. “There are people who want to come and feel like they are staying in an older farmhouse and they want the wallpaper and that feeling,” she said. “We would never change the whole style of the property.”

Still, with the Wait Room as the inn’s first of a handful of Millennial-driven changes, the Round Barn also ramped up its digital welcome mat, updating its website and strengthening its Facebook presence. Online marketing means bold and beautiful imagery, she said. “We use lots of visuals,” she said. “And we stick to the three rules of marketing: People don’t read, people don’t read, people don’t read.”

She believes the inn and B&B segment is the market’s most Millennial-friendly because of its easy flexibility. “You always have to be conscious of who is the next traveler, and how do we maintain the balance of appealing to our current guests while appealing to our future guests. Finding something that appeals to everyone. B&Bs can do that. You are not coming to a hotel where the whole hotel appeals to one type of traveler.”

But whether the property is an inn, a major hotel or even a cruise line or tour, the ingredients for appeal are the same. “You need to have a bold customer culture, something that differentiates you and the way you deliver your experience,” said Pedraza. “The way people greet you, check you in…the people you interact with have to create a fabulous human experience.”

In the end, he said, it comes down to living up to the Millennials’ own expectations. “They think: ‘You have collected data on me, you know my needs and my desires and you had better deliver them, or I will consider your kind a dinosaur in the digital age.’….So don’t neglect the Millennials, they are the future.”

http://www.hotelinteractive.com/article.aspx?articleid=28468

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