Luxury Unfiltered: How brand value misalignment creates billion-dollar losses for luxury hotels

May 14, 2025

Daniel Langer is the founder and CEO of consulting firm Équité

Luxury hospitality is a world where every detail matters.

While I am up in the air, en route to Taipei to deliver a luxury hospitality masterclass at the Mandarin Oriental, I find myself reflecting on the state of the industry. Some of the sector’s most damaging forces are the ones we don’t see and that are often overlooked.

As practically every day, at least one new luxury property opens globally, the industry seems unstoppable in its growth ambition. However, more hotels also mean hyper-competition, not just for guests but also for qualified staff.

Boutique hotel models and broken brand standards
Since the pandemic, staff and talent shortages have become systemic. The challenge is further amplified as practically all new luxury properties, while in most cases part of a global brand, have independent owners.

These owners are not always complying with brand standards, and often they are either not willing or able to invest enough in property upkeep, staff quality and training. To make matters worse, many brands don’t create clear enough brand guidelines, or what I often call the brand story.

I have seen countless brand manuals that, while looking impressive at first glance, don’t offer clear enough guidance for staff members on how to deliver a distinct brand experience. If there is no differentiated and ownable brand story, then the brand experience will be interchangeable – the famous sea of sameness.

Across the industry, brands invest vast sums to design the perfect real estate. However, due to the forces mentioned before, many fall short in one of the most critical aspects of delivering true luxury: the alignment between what their front-line staff delivers and their brand promise.

This misalignment goes far beyond a service issue. It’s a silent, systemic problem that erodes trust, loyalty and profitability.

It’s what I call the invisible luxury tax. I have the privilege to stay in luxury hotels all over the world almost every week, and practically no brand is able to deliver a consistent, branded “wow” experience across different properties.

Some brands are better than others, but when just one single experience at a property falls short, it can cost brands lifelong loyalty.

Ticking time bomb
Luxury is built on emotion and trust, and if a guest books a hotel because he or she trusts the brand promise and the delivery falls short, why should the guest trust the brand next time?

In a recent large luxury client study that included the hospitality sector that I co-developed, the results were mind-blowing: it takes less than two experiences below expectations for a luxury hospitality client to break a loyal client relationship with a brand.

As brands expand rapidly and the client experience becomes less consistent and predictable with growing scale, many hospitality brands sit on a ticking bomb. When that emotional expectation isn’t met, the fallout is immediate.

A single moment of apathy, a robotic interaction or feeling devalued because a staff member does not show empathy or proactiveness will shatter the brand perception, often forever.

One misstep can reveal a disconnect between what the brand claims to be and how it is experienced. In today’s environment, where trust is becoming one of the scarcest currencies, such disconnects are damaging.

The real danger lies in the erosion of credibility. Luxury guests don’t return because of discounts or loyalty points – they return because they feel valued.

When a staff member fails to reflect the spirit of the brand, the emotional connection breaks. Once that connection is lost, it’s incredibly difficult to repair.

The guest might not complain. They might even smile. But they will quietly choose another brand next time, and often never come back.

While this misalignment can be hard to measure, its impact is enormous. Guests may not articulate why something felt off, but they know when the magic is missing.

When enough of these moments accumulate, brands begin to lose something far more valuable than a single booking: their pricing power. In luxury, the willingness to pay reflects the perceived value.

When value is questioned, even subtly, the brand’s ability to command a premium begins to erode.

This is where the invisible tax becomes a billion-dollar issue. Not through dramatic failure, but through the quiet fade of brand desirability over time.

I have been sitting in on countless discussions with luxury clients and professionals about their worst personal luxury experiences. Especially over the past two years, experiences with hospitality are mentioned almost every single time.

This is more than a subtle warning sign, but not every brand suffers from this. There are rare examples where alignment between brand story and staff behavior is so seamless that it becomes part of the mythology.

Very few hospitality brands have mastered the art of emotional consistency. But they are the exception in an industry that promises the exceptional.

The invisible luxury tax and brutally honest brand audits
The good news is that this invisible tax can be reversed. It begins with a hard look at how well defined and differentiated the brand stories are.

Brutally honest brand audits are mission-critical. Then it is important to assess how deeply a brand’s values are embedded into the everyday behaviors of its team.

Not as slogans on a wall, but as instincts in every guest interaction. True luxury happens when the brand and its people are one.

Anything less may look like luxury on the surface. However, underneath, it’s just another cost waiting to be paid.

The best brands understand that in luxury, people are the product. If those behind the brand don’t know or believe in what it stands for, the guest never will.

Of course, hospitality brands attempt to compensate for this gap with training. But too often, the training focuses on processes, not purpose.

Scripts replace sincerity. Checklists replace curiosity.

What’s needed is not just better instruction, but deeper inspiration. Staff must be brought into the brand’s emotional world, and, as I see all the time during my masterclasses, they need to understand the psychology of luxury.

They must understand not just what the guest expects, but why it matters and how their own presence, passion and energy are essential to delivering that expectation.

Luxury Unfiltered is a weekly column by Daniel Langer. He is the CEO of Équité, a global luxury strategy and creative brand activation firm, where he is the advisor to some of the most iconic luxury brands. He is recognized as a global top-five luxury key opinion leader. He serves as the executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at New York University, New York. Dr. Langer has authored best-selling books on luxury management in English and Chinese and is a respected global keynote speaker.

Dr. Langer conducts masterclass management training on various luxury topics around the world. As a luxury expert featured on Bloomberg TV, Financial Times, The New York Times, Forbes, The Economist and others, Mr. Langer holds an MBA and a Ph.D. in luxury management and has received education from Harvard Business School. Follow him on LinkedIn and Instagram, and listen to his Future of Luxury Podcast.

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