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Boutique Retail Hotels: Introducing The New Meaning Of “In Room” Shopping

Co-authors

In this ever changing world, retailers are continuing to invent new ways to highlight their products, provide customers with an interactive experience and to stay competitive. We have previously discussed strategies used by brick and mortar stores to compete with their online counterparts, but retailers know that they need to think even further outside of the box in order to boost sales. A merger of the hospitality and retail worlds is one such approach that popular retailers are pursuing.

Hotel chains such as Westin, Marriot and Hilton have been selling their beds, linens and accessories in retail stores for many years. For example, you can purchase Westin’s Heavenly Bed at Pottery Barn and its linens at Nordstrom. Westin has reported that they have reached profits in excess of $150,000,000 since 2000 from the sale of mattresses and pillows alone! More recently, it has become common for luxury retail brands to open luxury hotels in Europe, including the Villa René Lalique, developed by the French crystal brand, in Alsace,  Palazzo Versace in Dubai where all of the furnishings have been designed by Versace specifically for the hotel, and Museo Salvatore Ferragamo in Florence which features a private art collection with works by Picasso and Cocteau.

American retailers are now seeing the exposure that the hotel and retail partnerships can provide by allowing retailers to showcase their products within guestrooms and hotel common areas.  The introduction of boutique hotels sponsored or owned by retailers now immerses travelers into a brand and provides them with the unique opportunity to see and try products while traveling.  The ultimate goal is of course that guests will purchase these products to bring the vacation experience to their own homes long after their hotel stay is over.

West Elm, a division of William-Sonoma, has partnered with a leading hospitality management team, DDK, to create West Elm Hotels which will feature West Elm products throughout the facilities. West Elm had earlier identified this business opportunity, but recognized that they needed to identify a partner with experience in the hospitality industry in order to be successful. With more than 60 years of combined hospitality and investment experience, DDK is an ideal partner for this venture. In addition to the use of West Elm’s products, they plan to commission local artists to produce work to display at the properties and local chefs to provide the appropriate dining experiences. West Elm Hotels will debut the first five boutique properties in late 2018. The initial hotels will be located in the cities of Detroit, Minneapolis, Savannah, Charlotte, and Indianapolis, which are all cities where the brand has little or no retail presenceWest Elm executives view hotels as a way to build their brand by creating exceptional customer experiences without over saturating markets with new stores.

In addition to West Elm, retailers such as Shinola and Restoration Hardware are actively working to enter the hotel market with their products. Shinola, which markets watches, handbags and a variety of products, is scheduled to open a 130-room hotel in downtown Detroit in 2018. Restoration Hardware is in the process of obtaining permits to renovate a building in the uber-hip meatpacking district of New York in order to open a 14 room boutique hotel there which will use its entire line of products.

In order to achieve the maximum results, it is important that retailers partner with a business with expertise in the hospitality industry. This appears to be the key to the success of the retailers that have already pursued these ventures. This innovative approach to brand and product marketing may well allow retailers to reach new and different customers, thereby increasing their market share.

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Melissa Rivers's picture

Commercial transactions, including representation of clients in connection with the acquisition, financing, disposition and leasing of real property are the focus of Melissa Rivers’ practice. Melissa is a Senior Attorney in the firm’s Real Estate group.

Prior to joining Goulston & Storrs, Melissa was part of the legal team at a major national retailer, where her focus was on new store leases and related matters. Melissa has also worked for a major national REIT where she handled leasing and property matters associated with both new development projects and operating retail shopping centers. In addition, Melissa worked for a successful real estate development company where she was involved in many complex projects including multi-property acquisitions and dispositions, development and leasing of mixed use projects and ground leasing and financing of shopping centers anchored by supermarkets and home improvement stores. Her career spans 17 years dedicated to the real estate industry.

Melissa is also a member of the adjunct faculty at North Shore Community College and Suffolk University.

Co-authors

Retail development is the center of Nancy Davids' real estate practice. Nancy represents retail landlords and tenants in enclosed mall, lifestyle and mixed use projects. She also represents developers of office and retail projects in connection with zoning and land use issues. Nancy is a Director and the Co-Chair of the Goulston & Storrs Retail, Restaurant & Consumer industry group.