RULE Nº1: BEING EXPENSIVE IS NO LONGER ENOUGH
Luxury has raised prices, standards and expectations. The question is whether the client feels that value has grown at the same pace.
There is a guest reaction that I find far more revealing than a bad review.
It isn’t a complaint. Nor does it point to any specific fault.
It’s simply:
“It was very nice.”
At first glance, there doesn’t seem to be any problem.
The room was immaculate. The architecture, extraordinary. The restaurant lived up to expectations. The spa worked perfectly. The service was attentive and professional. Everything happened as it should in a hotel of that calibre.
And yet, after a few days, that same guest struggles to explain exactly what made the experience special.
They liked it.
But they could have had something similar at other excellent hotels.
I believe that’s where one of the most interesting problems in luxury today begins.
We are not facing a quality crisis. There have probably never been so many well-designed projects, so many well-trained professionals, or so much capacity to deliver top-tier experiences.
The problem lies elsewhere.
We have learned to produce excellence. Now we have to demonstrate why that excellence deserves what we’re charging for it.
We’ve raised prices. What has happened to value?
There’s a figure worth paying attention to.
According to The State of Luxury 2025, produced by McKinsey & Company together with The Business of Fashion, over 80% of growth in personal luxury goods between 2019 and 2023 came from price increases, while volume growth was considerably more limited.
The report itself warns that this strategy is starting to hit its limits and that a portion of consumers are beginning to question brands’ value proposition more intensely.
This figure belongs to the personal luxury goods market, not the hotel industry.
But the question it raises strikes me as equally relevant to hospitality.
When a room goes from 900 to 1,300 euros, the guest understands perfectly well that the price has gone up.
What isn’t always so obvious is where that extra 400 euros went.
Of course, part of it may lie in the physical product: a refurbishment, better materials, more space, an investment in technology, or a more ambitious gastronomic offering.
But there comes a point where adding another layer of marble, another amenity, or a pricier bottle in the room doesn’t necessarily increase perceived value in the same proportion.
Because the luxury guest isn’t just buying a room.
They’re buying time.
Privacy.
Ease.
Access.
Attention.
A particular relationship with the place.
The feeling that someone has already thought through things they won’t have to deal with themselves.
And, in the best cases, they’re buying something even harder to quantify: the impression of having lived a few days that couldn’t have unfolded in exactly the same way anywhere else.
That, to me, is the conversation that matters.
Not how much it costs to produce more luxury.
But what makes the client feel more value.
Price still says things. But it can no longer say everything.
A high price remains an extremely powerful code.
It generates expectation. It can suggest exclusivity, scarcity, quality or access. In certain contexts, it’s even part of the brand’s own appeal.
But price has a limit.
It can tell the client they should expect something extraordinary.
It cannot make the extraordinary happen.
Nor can it, on its own, create a relationship with the brand.
This matters even more at a time when, according to McKinsey, a growing share of luxury consumers’ discretionary spending is directed towards experiences such as travel and wellness, rather than exclusively towards goods.
That shift changes the competitive landscape.
The client doesn’t necessarily think in categories the way companies do.
They don’t say: “this budget belongs to hotels and this other one to fashion.”
They might decide not to buy an object and take a trip instead.
Choose a villa over a suite.
Invest in a private experience.
Spend more on wellness.
Spend more time with their family.
Or simply not spend at all.
This means a luxury hotel is no longer competing solely with the hotels it considers comparable.
It’s competing for something rather more difficult:
being a valuable use of the time and money of someone who has plenty of alternatives.
Technology will raise the baseline even further
There’s another reason this discussion will become more important.
Artificial intelligence is rapidly making its way into hospitality.
EHL Hospitality Business School highlights, in its Hospitality Outlook 2026, applications linked to predictive analytics, dynamic pricing, room allocation, predictive maintenance and housekeeping optimisation, among other areas.
Used well, technology can vastly improve operations.
It can reduce friction, anticipate needs, enable personalisation, and free up teams from repetitive tasks so they can spend more time on what requires judgement, sensitivity or human interaction.
All of that represents a huge opportunity.
But it also has a consequence that particularly interests me from a strategic standpoint.
Many capabilities that seem sophisticated to us today will stop being so once they become widely available.
Remembering preferences will become easier.
Anticipating certain behaviours will become easier.
Personalising communications will become easier.
Optimising an operation will become easier.
Resolving certain frictions before they arise will become easier.
And that’s a good thing.
But once a capability spreads across an entire category, it stops being sufficient reason to choose one particular brand.
It becomes infrastructure.
Electricity was a competitive advantage until it wasn’t.
So was the internet.
We’ll probably see something similar with many artificial intelligence applications.
That’s why I don’t think the big question will be who has more technology.
It will be who manages to use it without turning the experience into something predictable, mechanical or indistinguishable.
A hotel is not experienced as the sum of its departments
This is one of the points we most easily forget from inside organisations.
We can talk about design, operations, revenue, F&B, marketing, technology, wellness or service.
The guest doesn’t experience any of that separately.
They experience a stay.
And a stay is made up of seemingly small things.
How they were welcomed.
What happened when they arrived early.
Whether someone knew when to start a conversation and when to end it.
The dinner recommendation they were given.
How an issue was resolved.
Whether, at any point, they felt they had to manage the hotel themselves.
The way they were seen off.
Some of those things cost a great deal of money.
Others cost very little.
But all of them play a part in the perception of value.
That’s why I think it’s risky to assume that raising the level of the physical product necessarily raises the experience by the same measure.
A client doesn’t audit our investments.
They don’t know how much the refurbishment cost, or the technology system, or the new training programme.
They only know how they felt while they were there.
And they decide, consciously or unconsciously, whether that justified the price.
The problem isn’t charging a lot
This is worth clarifying.
I don’t think luxury should apologise for having high prices.
Price is part of its economic logic and, in many cases, part of its very nature.
Behind a great property lie enormous investments: location, architecture, restoration, design, talent, maintenance, gastronomy, privacy, staffing ratios, distribution, technology, and an extremely complex operation the guest barely sees.
Charging a lot isn’t the problem.
The problem arises when the price rises faster than the perception of whatever justifies it.
And that gap is dangerous because it doesn’t always produce an immediate complaint.
The client may pay.
They may leave satisfied.
They may even leave a good review.
And still decide not to come back.
That decision is far harder to detect than a complaint.
We’re also competing against our clients’ fondest memories
EHL talks about the growth of an experience economy in which people seek experiences capable of generating emotional connection.
I think this enormously widens the competitive scope of luxury hospitality.
A guest’s memory isn’t organised like an industry report.
It doesn’t neatly separate “hotel”, “restaurant”, “travel”, “culture” and “family.”
It remembers moments.
An extraordinary meal.
A house where they spent a summer.
A conversation.
A small hotel that perhaps wasn’t even the most expensive.
A night in a place they’ll probably never return to.
A person who did something unexpected for them.
A place where nobody knew who they were.
Or precisely the opposite: a place where someone knew who they were without needing to show off how much they knew.
That’s the level of comparison.
When someone pays a significant amount for an experience, they’re not comparing us only to another similarly priced room.
They’re comparing us to everything in their life they’ve considered valuable.
And that changes the rules considerably.
Perhaps we’ve spent too much time asking what more we can add
In luxury there’s an understandable tendency to keep adding.
More services.
More options.
More amenities.
More technology.
More experiences.
More personalisation.
More spaces.
But there comes a point where “more” doesn’t necessarily equal “better.”
And it certainly doesn’t always equal “more valuable.”
Perhaps we need to start paying more attention to other questions.
Which part of the experience truly deserves the client’s time?
What are we solving that they deeply value?
What do we do that simplifies their stay rather than complicating it?
Which element of our offering would still hold value if we stripped away everything we’ve added purely because the competition offers it too?
And there’s another question I find particularly useful:
if we raised the price by 20% tomorrow, what would the guest need to feel for it to still make sense?
I don’t mean what we would need to add.
I mean what they would need to perceive.
The difference matters.
Luxury cannot become an endless race of accumulation
For a long time, part of the market has responded to rising expectations by piling on layers of product and service.
Up to a point, that was logical.
But that strategy has economic limits, and experiential ones too.
Not everything that costs money creates value.
Not everything that impresses generates desire.
And not everything the client appreciates needs to be visible.
Sometimes, true luxury lies precisely in what disappears.
Not waiting.
Not repeating information.
Not thinking about logistics.
Not having to ask twice.
Not feeling watched.
Not having to constantly adapt to the hotel.
Being able to change your mind.
Having space.
Getting time back.
Perhaps some of the most valuable forms of luxury in the years ahead won’t consist of offering more things, but of removing whatever stands between the client and the experience they came for.
And so we arrive at a question of leadership
Glion Institute of Higher Education is developing applied research around luxury hospitality and the service industries.
EHL analyses the impact of artificial intelligence, the evolution of guest expectations, and the growth of the experience economy.
McKinsey is documenting significant shifts in luxury consumer behaviour and their perception of value.
These are different analyses.
My conclusion, however, is this:
price will remain a tool of luxury, but it can no longer substitute for a clear value proposition.
Companies operating at the top of the market will need to be much more precise about what they’re charging for and, above all, what the client is actually receiving.
Not only in terms of product.
But also of time, attention, access, peace of mind, emotion and memory.
Because price is seen immediately.
Value isn’t.
Value has to be felt.
And perhaps that is the first of the new rules of luxury:
Being expensive can raise expectations.
But only perceived value makes the price make sense.
Sheila Hernández García
La Arquitecta del Lujo
I analyse the megatrends transforming luxury and translate them into strategy, experience and new codes for hospitality.
