Coping With COVID-19: Luxury Hospitality Brands

Coping With COVID-19: Luxury Hospitality Brands

March 29, 2021

Luxury hospitality brands have had to pivot and alter their business models, supply chains, and operations. Here is a rundown on the state of the luxury industry and where it’s headed: 

The Effect of the Pandemic on the Luxury Industry

Luxury goods and services saw deep declines in 2020 due to financial strains and lockdowns. While luxury retail stores suffered, some segments of the luxury industry thrived. Here are some effects of COVID-19 on the luxury industry:

  • The Rise of Luxury Consignment

Luxury consignment has gotten a boost from the pandemic as people had more time to clean out their closets. Luxury consignment is hip, cool, ethical, and environmentally friendly. Additionally, the ability to sell luxury items and get fast cash has been an appealing factor for financially-strapped Americans. 

ThreadUp notes reselling a piece of clothing extends its life by two years and has an 82% reduced carbon footprint. Luxury consumers care about how their clothes are made and its environmental impact. 

For example, that $1500 Hermes handbag in your closet can be sold for cash on resale sites Poshmark, ThreadUp, or RealReal. Over the last three years, the luxury resale market has outpaced new clothing sales by a 21:1 margin. By 2023, the luxury consignment industry is predicted to reach up to $51 billion.  



  • Remote Service is Beneficial All-Around

COVID forced many luxury brand companies to change how they operate. Some shut down their brick-and-mortar stores and moved online. Others offered curbside pick-up, virtual appointments, and delivery services.

Consumers concerned about their health have turned to the safety and convenience of online shopping. The virtual nature of doing business also benefited companies with greater productivity and cost-savings. RealReal observed their salespeople booked more virtual appointments per day because they did not need to travel to physical ones. 


  • Online is Where the Sales Are

E-commerce skyrocketed in 2020 as homebound consumers took advantage of the convenience of online shopping. According to the U.S. Census Bureau, U.S. consumers spent $211.5 billion on e-commerce. Online shopping accounted for 16.1% of all sales in 2020 due to Coronavirus concerns. 

The Buying Habits of Luxury Consumers

Throughout the COVID-19 Pandemic, luxury consumers have altered what they buy and how they buy. With trips canceled, luxury customers had more to spend on items like home entertainment, fitness equipment, furniture, and home goods. The retail e-commerce market continued to grow in 2020 and will likely continue over the next few years.  

Online privacy, well-being, and family health were concerns for luxury consumers in 2020. The proliferation of online shopping has increased the risk of scams. Health and well-being were reflected in what consumers bought and their online shopping habits. 


Short-and Long-Term Luxury Hospitality Industry Forecast

The U.S. luxury  industry shrank by 27%, to $73.6 billion in 2020 due to the Coronavirus pandemic. An Altagamma Consensus report notes that luxury stores experienced a 40% drop in revenue in 2020. In 2021, they should rebound by 8%. 

Many companies will maintain their online stores until customers feel comfortable congregating in large numbers. When that happens, brick-and-mortar stores will be experience centers. Stores will be sleeker and utilize AI automation to bring fast, personalized service. 

The North American luxury market will increase by 14% in 2021. Despite the positive outlook, 2021 will still have plenty of uncertainties.  Luxury brands can cash in on the spending consumers would otherwise spend on travel. 

While the pandemic has devastated the luxury hospitality industry, there is a glimmer of hope on the horizon. The rollout of COVID vaccines, federal economic interventions, and relaxing travel restrictions will bring luxury consumers back. The selling of luxury goods will remain online for many years to come.  


Successful Marketing Strategies for Luxury Brands

The COVID-19 pandemic has changed the way consumers interact with luxury brands. To make up for losses, those in the luxury industry must adapt their marketing efforts. Here are some marketing strategies to implement for 2021 and beyond: 


  • Focus on Voice Search

Nearly half of all Internet searches are via voice. On a worldwide scale, 27% of those with Internet use voice search. In the U.S., 25% of Americans own a smart speaker that they use for browsing the internet.  

Asking Siri or Alexa a question is easier and quicker than typing a query into the search bar. Twenty-two percent of consumers purchased items online via voice search. This thriving sector is expected to become a $40 billion industry

 Search engine optimization for voice requires the use of long-tailed keywords and anticipates questions searchers will ask. The average search length is three words on mobile, six on a computer, and 29 words in voice search. You can alter your digital marketing efforts to accommodate voice through interactive Q&A, industry trivia, and customized product guidance. 



  • Rally Behind a Cause 

Younger luxury consumers support brands that are active in making a positive impact in the world. Simply providing superior products will not cut it anymore for today’s luxury buyers. Brands must now prove they care about current issues like sustainable practices, social justice, online privacy, and ethical business practices.  

The heart of your luxury brand marketing plan must center around causes important to your customers. Luxury consumers are more likely to support brands aligned with the issues they care about.


  • Invest in Making Podcasts

Due to the lockdowns and stay-at-home orders, podcast views increased significantly. For entertainment and engagement, luxury consumers are hungry for audio and visual content, making podcasts a top 2021 marketing trend

Podcasts are great tools to inform and entertain customers while also boosting brand credibility, transparency, and trustworthiness. Podcasts can be in any format that is aligned with your brand and captures the interests of customers.Dior, Gucci, and BMW are a few luxury brands that have launched podcasts around social issues, influential women, and music. 

2020 was challenging for the luxury hospitality industry. Companies had to move online. The luxury industry will rebound, but brands need to gear up for voice search, podcasts, and advocate for a cause. 



One Reply to “Coping With COVID-19: Luxury Hospitality Brands”

Comments are closed.