Retail Revolution   /   August 11, 2021

With travel in flux, brands are rethinking hotel partnerships

This story is part of a Modern Retail editorial series looking at the future of travel-based retail. 

Travel hasn’t returned to pre-pandemic levels, but brands are beginning to think about hotel partnerships.

Over the years, hotels presented a unique opportunity for brands looking to market — or even sell — their products. In 2019, for example, Rent The Runway partnered with the W Hotel, letting customers order pieces that would be available when they checked in after booking a room. And Bergdorf Martin once partnered with the Mark Hotel, offering guests a free pedicab to its storefront. Much of these partnerships focused on larger brand names, and giving hotel visitors easier access to the companies they know and love.

But the coronavirus changed all that. In 2020, hotel occupancy hit 44% in the U.S., down from 66% in 2019. And, according to one estimate, occupancy will likely hover around 52% in 2021 — still well below where it was pre-pandemic. As a result, branded partnerships no longer have the gravitas they once held. Now, some startups are changing the way they think about hotel partnerships — using it as a vehicle for brand awareness, or pitching themselves to hotels as a way to better meet customers’ needs. Meanwhile, some hotels are seeking out different types of companies with which to work, inking deals with those that offer pandemic-friendly services and products.

Copper Cow Coffee, a home-brewed Vietnamese coffee company, had signed a deal with Hilton Hotels to have its products featured in certain locations. That proposed deal, however, has been “on ice” since the pandemic first began, said founder and CEO Debbie Wei Mullin last June on the Modern Retail Podcast.

A product like coffee, she said, is perfect for a hotel partnership. “It is an incredible fit for an in-room coffee experience,” Mullin recently said. But despite the fact that hotels are beginning to see occupancy slowly come back, most hotels she’s spoken with aren’t quite ready to sign a large-scale distribution deal just yet as occupancy has remained extremely low. (For a product like Copper Cow’s, hotels usually do pricing based on sales volume, Mullin said, and some hotels told her last spring that capacity was at 0%.)

Meanwhile, much of the high-profile partnerships being inked now focus on the in-room customer experience. Last June, GrubHub announced a program with Resorts World Las Vegas that gave guests room service from 40 different food and beverage locations. At its heart, this was a technology partnerships — making it possible for guests to order food from their phones, have it delivered to the place of their choice and then be able to charge it to their room. But it provided an updated type of hotel-branded experience and service that catered to the new needs of pandemic-era travelers.

How startups are working with hotels

Hotel partnerships aren’t just reserved for the biggest brand names.

For startups, hotels partnerships are representing a new way of approaching brand marketing. “Last year, e-commerce was up almost 30%,” said Aubrie Pagano, general partner at Alpaca VC. “It is now harder than ever to advertise online and get those eyeballs.” Hotels represents — for the time being — a potentially nascent opportunity, she said, especially for brands that provide some type of unique value-add to the travel experience.

Sexual wellness brand Maude, for example, has worked with a number of high-end names like the Ace Hotel for the past two years. Maude sees two different revenue streams from hotels. At places like the Ace, it makes exclusively branded products like condoms that can easily be purchased from mini-bars. Maude has also sold products like its vibrators in lobby locations like gift shops. “From a marketing perspective, hotels have made a lot of sense to us,” said Lily Sullivan, Maude’s senior manager of brand marketing and content.

While Maude’s partnerships remained intact during the pandemic, the startup is now beginning to notice a bit more interest on the wholesale side. “We were in a lot of conversations [about hotel wholesale partnerships] right before the pandemic,” said Maude’s director of product Tyler Aldridge. “A lot of people are now reengaging.” These hotels, he said, “are capitalizing on the amount of people who are traveling after vaccinating,” he said.

Maude’s overall hotel partnerships strategy hasn’t changed, but the startup is focusing on following where much of the new demand is. For example, more hotels have been asking about co-branded products to include in mini-bars,  such as condoms that feature a hotel’s logo.

That ramping up of more customized products on the wholesale side hints at hotels rethinking the way they’re presenting and curating their rooms. Before the pandemic, said Aldridge, “I noticed a lot of hotels were going with legacy brands.” But there’s been keener interest in sprucing up the inside of rooms. “We are really developing a customization program to make it more exclusive to those partners,” said Aldridge, “even though they are the same internal products.”

Meanwhile, other types of brands are finding hotel placements because their products have a newfound use in the hotel setting. For example, executives at the California-based eco-friendly luxury hotel Post Ranch Inn learned about the air purifier company Mila during the pandemic and decided to include the products both in rooms and in its restaurant as an added safety precaution.

According to Mila CEO Grant Prigge, while Post Ranch sales represent a negligible percentage of total sales — “we sell more in an hour than we would sell [in total] to Post Ranch,” said Prigge — the program is important from a branding aspect. Explained Prigge, word of mouth drives 50% of sales, and so having Mila’s products show up in more places is important.

With that in mind, Post Ranch Inn — a retreat that takes great pains to make every aspect both luxurious and have as little of a carbon footprint as possible — presents a way to get in front of new customers. “We look for things that are out-of-the-box,” said Post Ranch owner Mike Freed. “We don’t have any interest in working with a brand we don’t believe in,” he said, “and we typically don’t let them promote the fact that we partner with them.” Indeed, only a few companies — such as Mila and the car company Lexus (which provides hybrid vehicles for guests to drive) — have achieved full-fledged brand partner status with the hotel.

Most hotels’ businesses — save for Post Ranch, which remained essentially sold out through 2020 — had a rough pandemic. Now, some are seeing sales return — but things remain in flux as the pandemic rages on. Now, hotels are likely looking for buzzy brands to work with — as well as ways to earn more money. “If a brand says [a certain product] is a new revenue channel, it’s a win-win for everyone,” said Pagano.

While some hotels are beginning to ink more deals, for others it may still be the early days before a full recovery. According to Copper Cow’s Mullin, hotel sales reps have been calling, but they haven’t able to explain what the future opportunities may be. “They don’t even know what to do with their time,” she said. “They’re just doing research right now.”

Correction: An earlier version of this story misspelled Tyler Aldridge’s name. We regret the error. 

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