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  1. Wealth
February 28, 2012

Why London’s Luxury Market is Defying the Recession

By Spear's

Cinderella Story Luxury goods firms and those that aspire to a little luxury are betting billions that upscale consumers are fed up with being fed up. Can snazzy brands smell an upturn that has eluded practitioners of the dismal science? John Arlidge reports

Cinderella Story
Luxury goods firms — and those that aspire to a little luxury — are betting billions that upscale consumers are fed up with being fed up. Can snazzy brands smell an upturn that has eluded practitioners of the dismal science? John Arlidge reports

George Soros warns us that the financial crisis is as serious as the collapse of communism and most of us are working out how to survive in 2012, the world’s luxury goods firms and those that aspire to a little luxury are investing as if the credit crunch were merely a distant memory. Everywhere you look, upscale travel and hospitality companies are betting that even if 2012 isn’t up to much, consumers will begin to spend again a year or so from now.

The recession and new technology are forcing all luxury brands to reconnect with their customers and rethink what they — we — want. Take hotels. Ian Schrager, the most successful hotelier of our age, who has lived through more personal and professional ups and downs than any innkeeper, is launching three new brands single-handed: Edition, a global chain of the hip hotel that he invented, Public, a low(er)-priced style hotel, and soon his own label, Schrager Hotels. An Edition, a Public and a Schrager are all heading to London. ‘New times bring new products. London is a key marketplace,’ Schrager says.  

He’s right. As it continues to defy the global slump (at least at the top of the market), London is emerging as the most interesting and innovative hotel space, with dozens of new openings and new brands. Thompson Hotels, whose upscale, stylish yet earthy urban offering has been wildly successful in the US, has just arrived in Belgravia. The brand is striving to be more British than the British, with Tara Bernerd-designed Union Jack cushions in the lobby and modern English cuisine. Mark Hix is in charge of menus.

The Bulgari Hotel, which opens this Easter in Knightsbridge, is the refined Italian brand’s second urban hotel. Like the other, in Milan, it’s the work of Italian architect Antonio Citterio, best known for his furniture and lamps for B&B Italia. It promises pared-down but still warm luxe, with solid silver chandeliers in the ballroom — a nod to Bulgari’s origins as Roman silversmiths. If the restaurant and bar are half as good as those in Milan, they will be full every night.

The Café Royal will reopen in London this summer. Its new owner, Israel’s Alrov group, has teamed up with architect David Chipperfield to transform the Regent Street landmark into a 160-room hotel, with a new Grill and once-bohemian Domino Room. Also on its way soon is Shangri-La’s first hotel in Britain in the fast-rising Shard building at London Bridge. All this action comes after the recent reopening of the Savoy, the launch of 45 Park Lane, sister hotel to the Dorchester, and the ribbon-cutting at the Corinthia in Whitehall.   
THINGS ARE LOOKING up in the air, too. British Airways and Virgin are ploughing £5 billion in to new planes. BA has ordered twelve new airbus A380 superjumbos and 24 new Boeing 787 ‘Dreamliners’ which are set to arrive at Terminal 5 from next year. This is on top of the airline’s six new Boeing 777-300s and ongoing refurbishment of its fourteen Boeing 767s and eighteen Boeing 777-200s. BA also has a new first class and a new premium economy — World Traveller Plus — cabin, with better seats and better grub. Keith Williams, the airline’s new boss, wants to make BA the Jaguar of the skies — stylish, understated British luxe.

Not to be outdone, Virgin Atlantic has just splashed out on ten new Airbus A330s and sixteen new 787 Dreamliners. The airline is also spending £60 million refitting its Boeing jumbos to make them ‘the best 747s flying’. It’s updating all its cabins, adding new seats, and suites. Passengers will enjoy new, bigger TV screens, new entertainment, text messages, email and mobile phone calls in the air, new mood lighting, new bathrooms, and new food. Virgin hopes all this hew hardware, coupled with its famed software, will put it ahead of the flag-carrier. Gulf-based carriers Emirates, Etihad and Qatar Airways, meanwhile, continue to expand as if aviation had never been healthier (which, for them, it hasn’t).

As if all that weren’t enough, the private club sector is growing like mad. The decision by the co-owners of Soho House, rag-trade-king-turned-restaurateur Richard Caring and Nick Jones, to sell a majority stake to US supermarket billionaire Ron Burkle in a deal valuing the private members’ club chain at about £250 million signals a period of rapid global expansion. Expect to see Soho Houses in the Middle East and across Asia and as far away as Sydney soon.

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A bread roll’s throw away from the original Soho House, Mayfair is shrugging off the recession and its stuffy reputation and creating the most lavish new private members’ clubs that London — or any other city — has ever seen. In a few months’ time, Robin Birley’s new 5 Hertford Street will go head to head with the revamped Arts Club in Dover Street, all the outposts of the Annabel’s group, Morton’s on Berkeley Square, and Alfred’s, the private club run by luxury brand Dunhill. 50 St James is also on the way, under the watchful eye of Anglo-Italian Luca del Bono. Even restaurateurs cannot resist splashing the cash. Russian blini baron Arkady Novikov’s Novikov restaurant on Berkeley Street is the biggest in the capital.  

The total cost of opening 50 St James and 5 Hertford Street and the refurbishment of the Arts Club runs to an eye-watering £100 million. The cost of opening and operating the existing clubs in Mayfair, and their associated outposts and restaurants, is at least as much again. That’s the best part of a quarter of a billion pounds’ worth of doors that remain firmly locked to all but the carefully vetted and selected. To belong to any of these establishments, you have to be invited, approved by the membership committee of each club and then stump up a joining fee, ranging from a few hundred pounds to £2,000, plus annual subs of between £1,000 and £3,000. 
Illustration by Anna-Louise Felstead  

WHY THE GOLD rush in London? For the hotels and airlines, the lure starts with this summer’s Olympic Games and the Queen’s Diamond Jubilee, which they hope will presage better times ahead. For Mayfair’s clubs, the combination of the location, a short ride from South Kensington, Belgravia and Notting Hill, Mayfair’s elegant architecture, the hotels (Claridge’s, the Connaught and the Dorchester), the shopping on Bond Street, the restaurants on Mount Street, the boutique finance houses and the entire district’s sense of privacy and discretion has attracted a new global elite of footloose financiers, entrepreneurs and fashionable people. These new-money nomads already live in their own breakaway state of Richistan, so the idea of places where they can relax in luxurious privacy — especially when the world outside is hurting — is highly attractive.

Are the hoteliers, airline bosses, restaurateurs and club owners gambling big? Of course. And I hope they win big. It’s about time we started having a little fun again, even if we have to wait until next year. 
John Arlidge is Spear’s luxury and travel editor

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