Hospitality economy: From hotels to high-end retail

Markus Venzin isn't sure when it happened, exactly, but at some point in recent decades, the culture and practises fostered at the top end of hospitality began to spread into multiple industries that had nothing to do with hotels. It perhaps made sense, then, that Venzin arrived as the new CEO of the world's most renowned hotel school without a background in hospitality.

Venzin, who was raised in Switzerland and lives in Milan, started at EHL Hospitality Business School in Lausanne in 2022, not long after it had undergone an almost USD 300 million facelift that included a new name. Until then, the venerable institution, which faces the French Alps across Lac Leman, had been known more simply as the École Hôtelière de Lausanne.

Venzin, formerly a business professor and startup founder, knew EHL's history, and that it had started in a room of Lausanne's Hôtel Angleterre in 1893 with just 27 students. He knew its reputation for producing impeccably poised general managers and other top staff for grand hotels. But how much things had changed became clear when he looked at the employment records of EHL's graduates.

"I saw that 50 per cent of our students now go into non-hospitality industries," he tells me in a meeting room at EHL's campus, a sprawling high-tech cluster of buildings that feels more Silicon Valley than Swiss Canton de Vaud. "I started to talk with employers, and they told me they liked our students because as businesses they had started to grow a strong hospitality component in what they were doing."

From experience to hospitality economy 

Across finance, private healthcare, and luxury retail, businesses that thought they knew best how to attract and satisfy customers in their own worlds are adopting the approaches to client relations that experts at EHL have refined for more than 130 years. Just buying stuff was already passé; customers had to experience something too. Now they also want to feel like pampered guests.  

As the school responds to this demand, the students who enrol in its four-year degree in international hospitality management have schedules that would only have been partly recognisable to their predecessors. In the first year, they must still learn how to pour Champagne and guide diners through the cheese course at the school's Michelin starred restaurant. But they also gain core business skills in marketing, management, and startup building.

Businesses, meanwhile, are employing EHL's faculty as consultants in their attempts to embody the lessons of modern hospitality. "Many companies see us as the reference of understanding what it takes to serve other people and to create valuable interactions to enhance engagement with clients," says Olivier Verschelde, the head of Hospitality DNA and a senior consultant at EHL.

Verschelde's clients have included Coca Cola, Cargill, Cartier, IWC, Bugatti, L'Oréal, and Lufthansa, as well as dozens of firms in private banking, clinics, and education. Not all EHL's clients are household names. Last year, it began working with Saint Bella, a market leader in the luxury end of the Chinese tradition of postpartum hotels, in which new mothers are encouraged to take bed rest for weeks after labour.

A member of the EHL consulting team became a guest in a Saint Bella suite as part of a gap analysis of the customer journey, which then helped to inform an overhaul of staff training and operations at the company. Consultancy can also involve interviews and focus groups and recommendations on raising standards not just in customer service but the product itself. "We can package all this in what we call the bible of hospitality as well as a bespoke training programme," Verschelde says.

Hospitality in high-end retail

The hospitality economy is perhaps most evident in high-end retail, where designer brands know that luxury shoppers still want to visit bricks-and-mortar stores but are looking for new ways to feel part of something more than just a shiny shop.

After a lengthy closure of its flagship Paris store, Dior reopened it in 2022 to include a restaurant and an apartment, along with gardens, valet parking and original artworks.

In London, the Rixo clothing brand, which targets a younger demographic, revealed a flagship on the fabled King's Road that includes a bar and a cafe where shoppers can pause for a cocktail or matcha latte. The store hosts panel events and there are plans for supper clubs - all with a view to sewing a sense of community, belonging and emotion into its relationship with customers. 

Last year, a report by Business of Fashion, a media company, confirmed rising demand for this kind of hosted experience. Luxury shoppers in Canada and the US were surveyed and 58 per cent said that dining options were vital in attracting them to a store, while 31 per cent cited entertainment as the biggest draw, and 27 per cent mentioned green spaces.

EHL worked with one leading jewellery brand to transform its flagship in a major European city. On the face of it, queues that regularly formed outside the store, which had a capacity limit, looked like they might be good for business. But the store found that its highest-spending clients were put off by them. So EHL helped the brand create a bar and lounge with a concierge and an appointments policy instead.

Meanwhile Venzin says some luxury watch companies are moving away from retail to sell more subtly at events and in the homes of their most valued customers.

Private banking can also be a fertile ground for a hospitality experience: "One of the differentiating factors is often how you treat clients and how you make them feel in the process," Venzin says. "And private banks have the firepower to provide these kinds of experiences." Matthias Forster, Head Sales Development & Pricing Europe at LGT Private Banking, agrees: "As a private bank, we aim to create an environment that is the basis for building trusted relationships, and truly value-adding advice. In this vein, we do observe the development to a "hospitality economy" too - to us, this is a logical part of an evolution of our client experience."

From hospitality school to global business school

EHL has already seen a further shift in the career goals of graduates, as the number looking at jobs outside of hospitality rises to more like 60 per cent. More than a hotel school, it has become a global business school with a tradition based on the highest levels of hospitality. Many of its students still dream of becoming the general manager of an Aman resort or a Parisian palace hotel. But most now have their eyes on other paths.

I met one final-year student from the UK who had been drawn to EHL by a childhood fascination with the workings of luxury hotels. But she now wanted to get into real estate finance. "The definition of hospitality is looking after people, and I can't name a business that doesn't require that," she said.