Retailers Want You to Stay With Them, Too

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By AMY ZIPKIN

A prototype West Elm hotel room. West Elm, the furniture and accessories retailer, plans to open hotels in five cities beginning next year. Credit West Elm

Inside a Brooklyn warehouse that has been converted to office and design space are the seeds of a new type of collaboration between the hospitality and retailing industries.

There, West Elm, a division of Williams-Sonoma that sells modern furniture and accessories online and in nearly 90 stores nationwide, has created model hotel rooms. Next year, it expects to begin opening boutique hotels in five cities, including Detroit, Charlotte, N.C., and Savannah, Ga.

“It’s more-approachable travel coming to life,” said Peter Fowler, vice president for hospitality and work space at the company. Room furnishings will be similar to those in stores, but are expected to be more durable to withstand repeated cleaning.

Mr. Fowler said the company was also looking to create a network of local artists at each location who would display their work at the hotels.

The hotel business is diversifying. More travelers are seeking homey surroundings at Airbnb and HomeAway and turning to boutique hotels for their non-cookie-cutter designs. (According to STR, a hotel research firm, domestic occupancy rates in boutique hotels rose to 75 percent in 2015 from 67 percent in 2010.) That is one reason some retailers and designers see an opening for their hotel concepts.

At the same time, traffic has declined at retailers with brick and mortar stores, forcing them to look for new ways to sell their wares.

“As online channels steal business from retailers, hotels provide a retailer with a unique, direct and immediate environment to interest consumers,” Henry Harteveldt, a travel industry analyst at Atmosphere Travel Group, said in an email.

Travelers, particularly leisure travelers, are also shoppers. According to the U.S. Travel Association, a trade group in Washington, shopping was the second-most popular activity among leisure travelers, after visiting relatives.

Still, retail hotels are in their infancy and can be a high-risk and expensive undertaking. “It’s not as simple as people check in and you clean the room,” said Bjorn Hanson, a professor of hospitality and tourism at the Tisch Center of New York University.

But, he added, opening a hotel creates a halo effect. “The brand has a whole new sense of importance.”

Several hotel brands and chains, among them Westin, Marriott and Hilton, already sell beds, linens and accessories.

Westin also sells its Heavenly Bed at Pottery Barn, a separate Williams-Sonoma division. Linens and bedding are available at Nordstrom.

“It was driven by customer demand,” Brian Povinelli, senior vice president and global brand leader for Westin. Since 2000, he said, the brand has sold 100,000 mattresses and 175,000 pillows, worth some $150 million.

The convergence of hotels and merchandise started, perhaps unsurprisingly, at luxury properties. Almost two years ago, Baccarat, a French crystal manufacturer, opened a 50-story building with a hotel and apartments across the street from the Museum of Modern Art, six blocks from its Manhattan flagship store.

Crystal designs are displayed in public areas. Guests can order from the display and have their purchases shipped to their homes, saving time and a trip to the retail store. Select guest room entrances exhibit art inspired by crystal pieces.

“It allows the guests to interact with the brand in their experiences in the hotel,” said Hermann Elger, managing director at the property.

Bulgari, an Italian designer of jewelry, watches and leather goods, has properties in Bali, Milan and London. Hotels in Shanghai, Beijing and Dubai are expected to open by the end of the year. The hotel website links to an online store.

Stephani Robson, a senior lecturer at the School of Hotel Administration at Cornell, said retail companies that open hotels had to work with companies that had hotel experience. “You need partners and financing,” she said.

Bulgari, for example, uses the Marriott reservations system, but does not participate in its loyalty program.

Tommy Hilfiger, whose designs include apparel, luggage and linens sold at Macy’s, Kohl’s and online, purchased the Raleigh Hotel in Miami Beach in 2014 and is developing it in conjunction with the Dogus Group, a Turkish conglomerate. Mr. Hilfiger is scouting a second location in Los Angeles.

The symbiosis between the two industries makes sense to him. “Retail and hospitality are both dealing with disruption,” Mr. Hilfiger said.

Although his name will not be identified with the property, he said he planned to create a line of Raleigh products that would include home and bath goods, fragrances, shampoos, sun creams and beach attire sold only at the property. “It has to be special and exclusive,” he said.

Design hotel properties are likely to be small. West Elm properties are expected to range from 100 to 200 rooms. Mr. Hilfiger is anticipating 88 rooms. Ms. Robson, of Cornell, said about 120 rooms were “the sweet spot,” requiring only two elevators and providing sufficient revenue while keeping expenses low.

As projects move ahead, municipal regulations may affect them. Restoration Hardware trademarked the name RH Guesthouse and applied to the New York City Landmarks Preservation Commission and the Department of Buildings to convert a building in the meatpacking district that is designated a landmark. The site has active permits requiring review by the landmark commission and the local community board.

The company filed another application with the Department of Buildings in late June for interior renovations and a proposal to use the building as a hotel. That application was not complete by the time the plan was ready for review and was disapproved. Restoration Hardware may resubmit the application if it wishes to proceed with the plans. The company had no comment.

Current West Elm customers are not sure what to expect. Danielle Lundberg, a photographer in Northern Virginia, said that she appreciated the West Elm aesthetic but that her decision to stay at a property would not be limited to considering furnishings.

She prefers hotels that accept pets and said she would evaluate star ratings and prices, then whittle down a selection. She is also guided by neighborhood and parking.

“Boutique hotels feel a little more personalized,” she said. “You don’t have the exact same room as everyone else.”

Susan Chancey, a stylist and designer in Asheville, N.C., said she had purchased West Elm pieces for clients and her stepdaughter. She said the ambience at a hotel was important to her.

Ms. Robson said she expected that West Elm was hoping to reach beyond existing customers. “A brand like West Elm can signal ‘our brand is experiential’ — reinforce positioning for customers not familiar with the brand,” she said.

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