Luxury Brands, Hotels and Resorts Trim Prices

Popular wisdom among luxury brands is never to cut prices or risk devaluing the exclusive perception. But in these times when even the top economists and business leaders can’t seem to find the route to prosperity, everything is up for re-evaluation. The Wall Street Journal, just reported that Chanel, Versace, Christian Louboutin and Chloe are cutting their prices from 8 to 10% on most products sold in the U.S. Ralph Toldedano, chief executive of Chloe said, “This is an unusual time. You have to be creative at this moment”.  A face-saving explanation? “The dollar’s recent strength has allowed us to pass on greater value to our customers,” continued John Galantic, U.S. president of Chanel.  Could Hermes be far behind? In January they’ll decide whether to follow suit in the U.S. and Japan.

Luxury hotels and resorts until now have pretty much stuck to giving free nights, resort shopping and airline credits (all value adds), but that was until October. As Travel Weekly reported, it’s a different ball game with blatant discounting, minus the face-saving gesture of the top fashion brands. In Vail, the Resort Company is promoting 40% discounts during Thanksgiving and Christmas, and on Travelocity 4000 hotels and resorts worldwide are offering discounts of 40 to 70%. Even New York City’s recession-proof rates have dropped 10%.

My question is: will the discounting attract new customers or merely dilute the rates of travelers who were coming anyway?  If everyone starts to discount, how will a luxury hotel or resort stand out from the pack and break through the clutter? For further insight into strategies that appeal to other traveler needs and motives beyond price, we invite you to read our most recent newsletters which discuss these topics.

By: Karen Weiner Escalera

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