Branding Luxury in the UAE

From the traditional to the modern, the 155-year-old Louis Vuitton brand – part of the largest luxury-goods maker LVMH network – continues to evolve and expand across the globe. Last month in Dubai, the company launched one of its “global” stores in Dubai Mall. The brand’s first entrance into the Middle East market was in 1983 when it opened in Kuwait City. Since then, the organization has expanded to countries throughout the developing world, and plans on opening stores in Lebanon and Mongolia in the beginning of 2010.

Not only is the new store in Dubai the third Louis Vuitton location in the city—following BurJuman and Mall of the Emirates—but the 7,000 sq ft shop is also the first to feature the brand’s entire range of products.

It’s a courageous move given the fact that many companies are struggling to stay afloat in an environment of reduced consumer spending. According to recent study by Millward Brown, Louis Vuitton is the world's 29th most valuable brand and is estimated to be worth $19.3 billion (Dh71.23bn). In the words of Damien Vernet, General Manager of Louis Vuitton for Middle East and India, “[Our brand] is about mixing the old and the new, the traditional with innovation, sticking to the roots…while at the same time reinventing it for different generations.”

Sounds a lot like the UAE, doesn’t it?

The survey group ACNielsen says that the UAE ranks among the top five countries across the globe for buying luxury accessories and fashion. From $200 bottles of water to custom-made Gucci seatbelts (seriously!), the lesson for marketers is that as long as consumers value your brand, they’re going to find a way to live up to that expectation, even in time of a recession.

So what are the biggest names in luxury today? According to the ACNielsen study, which interviewed 23,500 consumers across the globe, Giorgio Armani was the overwhelming victor (next in line were Dior, Chanel, and Gucci).

For the UAE market, especially Dubai, luxury hotels will face the biggest challenges in 2010. With occupancy rate dwindling below 50% several times this year, five-star hotels will be the next wave of products in need of a serious face-lift. Brands like Atlantis have been a notable exception in the market, recording over 90% capacity rates throughout the 2009 summer (traditionally the low season for holiday goers).

Short of building a giant acquarium, what else can the hospitality industry do? Maybe the solution is to blend luxury brands with hotel chains, like the Palazzo Versace in Culture Village, or the Armani Dubai located in Burj Dubai?

Only time will tell the future of branding luxury in the UAE, but keep an eye open, even if your pockets are still hurting from the recession. That Louis Vuitton Hotel & Spa may be closer than you think…