Hospitality experts disagree on West Elm’s chances for hotel success

West Elm is getting into the hotel business.

As IBJ reported Monday, in a bid to sustain growth without opening up new stores, the home-furnishing retailer plans to open at least five hotels in the United States, in locations that range from Savannah to Detroit to Indianapolis. The hotels, which will start opening in late 2018, will be mid-sized (100 to 250 rooms) with price points from $175 to north of $400 for suites.

In Indianapolis, it plans to open a boutique hotel with at least 120 rooms and a rooftop bar in the former Coca-Cola bottling plant on the north end of Massachusetts Avenue.

“The brand will offer the experience of a high-end boutique hotel at the pricing of a mid-market player,” says Peter Fowler, vice president of hospitality and workspace at West Elm, in an interview. Like other small boutique chains, they're also doubling down on the reuse of historic buildings and design elements by local artisans.

The goal isn't just heads in beds; it's to sell more beds.

Which raises the question: Does anyone want to stay in a West Elm hotel?

The company does have a few things going for it. For starters, the properties are in markets that have few design-centric hotels. They will be affordable to create: The company estimates its construction and furnishing costs to be 40 percent less than typical builds. And the properties should ideally prove that West Elm can offer luxurious-looking design for a not-so-luxurious price, wherever the customer is.

And West Elm has what branding expert Erich Joachimsthaler, CEO of Vivaldi Consulting Group, calls "adjacent fit." When you look at brands that are trying to expand, he said, “You have to be careful that the markets should be complementary. With West Elm, there is a clearly a complement: You need furniture to furnish a hotel.”

The company has already furnished properties for other hotel brands, including Four Points by Sheraton and SpringHill Suites by Marriott. Presumably, those experiences have informed what West Elm knows about travelers’ demands.

Fowler insisted that the rooms won’t feel like showrooms and that the hotels won’t sell a single West Elm product on site; instead, hotel-related capsule collections will be available online. Whether West Elm will retain the ability to work with other hoteliers now that they’re jumping into the space themselves remains to be seen.  

Bjorn Hanson, of New York University’s Tisch Center for Hospitality and Tourism, expressed doubt at the whole endeavor, telling Bloomberg that he’s seen upwards of 40 retail and entertainment brands pursue hotel projects—only to abandon them down the line. For some companies, hotel projects ultimately “felt like too much of a risk” or a “distraction from the core business.”

If West Elm is to be the exception to the rule, he claimed, they’ll need to very clearly define the West Elm guest experience. “Will guests look at elements like hardware and fixtures with an emotional connection? I just don’t think so,” he said.

Put in practical terms: Would you rather Instagram yourself in the lobby of a West Elm hotel or the crystal-clad Baccarat?

Like Baccarat, fashion brands Armani and Bulgari have also launched hotel companies. But those luxury brands make a softer sell—purveying a glamorous lifestyle—as does a company such as high-end gym operator Equinox, whose hotels (coming in 2019) will double as a gathering place for people who value fitness and well-being (and spa-like bathrooms). In all those cases, positive brand associations should theoretically drive retail transactions. But the pitch is subtler, more about a mindset than, well, a moderately priced living room set.

None of this is to discount West Elm's massive success—26 consecutive quarters of double-digit comparative growth. But, said Hanson, brands that work as hotels have one thing in common: They offer "something extra."

In the case of Equinox, he said, "there will be a sense of extra cleanliness and hygiene—probably in the air quality and choice of fabrics—because the brand is about fitness. There’s an underlying sense that it will be healthy. And if I feel like exercising, it will be great."

For a brand that's based on accessibility and ubiquity, finding the "something extra" to rise above the already well-trod boutique formula will be a challenge. Your travels shouldn't feel everyday, they should feel extraordinary.

Then there's the question of risk. “If people have a bad experience, they will associate it with the brand,” cautioned Hanson, saying that the risk is magnified if the company calls its hotel chain West Elm Hotels. To that end, West Elm has hired DDK, a hospitality-management company run by former Commune and Thompson Hotels execs, to make sure that isn’t an issue.

Joachimsthaler agreed, suggesting that West Elm find separation between the nomenclature of the parent brand and its hospitality endeavors in order to “minimize risk exposure.”

Naming conventions, Fowler said, are still in discussion, and hotels may be individually named based on distinctive local inspirations. As to whether the hotel brand should stand alone or be seen as an extension of the furniture company’s retail goals, “West Elm Hotels is a brand extension, and it will be its own business within West Elm, like Workspace is,” he said, referring to the company’s corporate design business.

In other words, it's hoping to do better than Westin did with the retail push for its Heavenly beds—it took the company 12 years to sell 100,000 of them.  

Still, Fowler is unfazed. It was only in defending his concept against the skeptics that he put it best: “We believe there is great opportunity in great design and great value together.”

And if you’re looking for a little bit of inspiration for how to redo your bedroom, how better to test out the possibilities?