The Daily Telegraph - Saturday - Travel
The £1,000-a-night hotel is here to stay (and this is how they justify the prices)
Starting rates at London’s new Raffles and Peninsula hotels mean the capital is following in the footsteps of Paris, says Mark C O’Flaherty
There’s a lot of money out there right now. Obscene amounts. None may be passing through your fingers, but there’s a growing demographic of young, wildly wealthy individuals internationally who want to spend it. This is why we’ve seen a boom in hotels where the cheapest room is £1,000 a night (breakfast not included). What better way to burn through money than by booking a weekend away that costs more than most people’s monthly rent?
A recent study by Deloitte found that at the top end, Expedia is out of fashion and the travel agent is back in favour. The super-rich want experiences tailored to their needs and to feel they are getting a certifiable luxury experience. They want frills. One of the buzz terms that agents are using to sell products is “ultra-premium”. That’s not really quantifiable, but then neither is “luxury”.
Whether they have their cash from crypto, inheritance or currency exchange turmoil, the luxury-hungry rich are a dream demographic. These people want to pay to feel like they are getting something special, even if it’s not, and there are a lot of people who want to take their money.
The Deloitte report found that the luxury travel industry had a global market value of $1.2trillion in 2021, with a projected compound annual growth rate (CAGR) of 7.6 per cent until 2030. This is where the £1,000-a-night hotel comes in. Demand. People can afford it and want to pay it. And London leads the way. We recently saw the opening of the Peninsula and Raffles London at the OWO, where rates start at £1,300 and £1,100 respectively. Both are busy. Coming soon, in the same price bracket, are a Six Senses in Queensway and the Chancery Rosewood at the former US Embassy in Grosvenor Square.
A global phenomenon
While we’ve seen the price for a room at the top end double in London over the past decade, those tariffs have been common in Paris for some time. To be able to call yourself a “Distinction Palace” hotel is something only 31 properties in France can do. The category is beyond five-star, but amorphous, down to fairly subjective consideration of history, architecture, service and food. Each has to be investigated by Atout France, the organisation that promotes the country internationally as a tourism destination.
When the Hôtel de Crillon (cheapest room currently £1,700 per night) was refurbished a few years ago, the project cost $300million. I was in the New York studio of artist Peter Lane a few months before it reopened and watched him meticulously piece together the sculptures that would decorate the pool area. I can’t imagine what they cost, but I know how much a single lamp from Peter costs: $10,000 (£8,200). When I saw his work in the bar at Yannick Alléno’s new Pavyllon restaurant at the Four Seasons London, on Park Lane, it felt like insider code to mark out the space as super-luxe.
These hotels can afford the art, because they know what they’ll be charging their guests to see it. And fundamentally, you can’t create a dream palace with a jar of glitter and a pot of glue. “People come to us not just for a stay, but for an experience they will remember,” says Lynn Brutman, general manager of Four Seasons Hotel London at Park Lane. “The intricate interior design by Chahan Minassian helps our guests create true multi-sensory memories that they will remember well, long after they return home.”
Who’s staying
While that may sound like marketing speak, it’s a solid business model and one of the reasons why many wealthy
travellers feel an allegiance to the Four Seasons over other brands. Ditto the Aman and Peninsula customers who will fly to a destination purely to stay in one of those groups’ new hotels. A room at the Aman New York starts at $1,950 (£1,600) a night next month (but does include breakfast!).
These brands don’t distil their customer to a single type. With the world in such geopolitical flux, no one bets on being bankrolled by a single nationality anymore.
Last year, Reuters ran a report on how Russian money was seen as “toxic” in Europe and previously big spenders had seen their accounts frozen. This summer, the same news outlet reported that Chinese bankers were being advised to curb their spending on fashion and five-star hotels as part of an austerity drive and an attempt to quash corruption in the country’s $57trillion financial sector.
“It’s not possible to standardise the luxury consumer today,” says Silvio Ursini, group executive vice-president at Bulgari, which has recently opened in Rome with rates starting at £1,300. “We aim to predict our customer needs and customise the experience. Generation Z is interested by whatever is authentic and real, and we need to consider the way they utilise technology [when we] communicate with them, rather than change anything about our style or service.”
Just why does the authentic experience have to be so expensive? I was unsurprised to get a “no comment” reply from almost every brand I approached with the question, but we know that inflation is partially to blame for currently aggressive pricing. Staffing and stock costs have rocketed, so room rates have had to go up with them.
But let’s be real: when you’re working out a business model that treats your hotel like a casino, hoovering up money as fast as possible, you want to go big and go hard.
The inflation on Park Lane is the same inflation that the Premier Inns have been dealing with, but when something already costs more than £800, nudging it past £1,000 isn’t going to put off that many customers. At the other end of the market, a £20 increase will set alarm bells ringing, because you can translate that instantly in your head into a decent bottle of wine.
You get what you pay for
So, what are you actually getting for that £1,000? Well – your hotel will probably have at least two members of staff for every guest, and the rooms will be impressive in scale and furnishings. It should feel both fantastical and functional – somewhere to wear a tux or tiara, but also where you know every need will be fulfilled in seconds. There will be a fleet of branded classic cars out the front, and enough restaurants that you don’t eat in the same place twice. But bear in mind – you’re paying on top of the room rate for all of this.
While writing this story, I began to think about what the comments would be like below it in the digital version. I imagine the divide will be between people who, quite rightly, find the idea of paying a grand a night just for a bed totally bonkers. Others (less likely to comment) will think: “I’d actually really fancy a weekend at the new Raffles.” I’m not saying these hotels are a rip-off, but I’m also not not saying that.
Would I queue up outside a branch of Chanel just to be allowed to spend a fortune on something that has gone up by 16 per cent in price in a year? No. And not just because I don’t want a Chanel bag. I don’t want to be made an idiot of. I love Hermès, and I have shopped there, when funds allow, for decades. However, if I wanted one of its most coveted items – the hard-to-get Birkin bag, for instance – I’d be expected to join a digital lottery to try to get an appointment at the Paris store. If I was successful (customers are reportedly assessed by previous spending habits), then I’d be offered first refusal on a few pieces at the sales assistant’s discretion. You can’t just rock up and get what you want in black. I don’t want to spend my hard-earned money like that. It’s ridiculous. And it’s this world that has created the £1,000 hotel room.
If you can afford it and it creates a treasured memory, I’m happy for you. Me? I’d rather just have dinner at the top-end hotel and then stay somewhere decent for a quarter of the price. But the £1,000 hotel room is here to stay – and is only going to get more expensive.
‘It’s not possible to standardise the luxury consumer today’