The Architecture of Experience: Redefining Luxury in Croatian Hospitality

I recently had a conversation with a colleague, a hotel director. She shared with me the challenges she faced with the team she inherited upon assuming her managerial role. Full of ambition and vision, she suggested offering departing guests, part of a large group who had been staying at the hotel for several days, coffee at the reception in the early morning hours since the hotel café bar does not open that early. How did the team respond? "They can get coffee at the gas station." This anecdote not only highlights the evident gap between middle-management and an ambitious leader; it also illuminates the overall paradox of Croatian premium and luxury tourism. While the level of service is quantified with a cup of coffee, the essence remains ungrasped: we don't just charge for rooms, food, or drink; we charge for experiences, emotions, distinctness.

And here we immediately reach the crux of the matter. If we want our industry to compete in global luxury markets, we must abandon a mindset of medicority and begin thinking in terms of outcomes and transformations. It's not just about coffee; it's about what that coffee symbolizes: attention, understanding, mapping the guest's experience journey, and identifying opportunities for improving touchpoints along that journey. When every interaction, no matter how small, becomes an opportunity to create something extraordinary, we cease to be mere service providers. We become architects of extraordinary experiences. And therein, dear colleagues, lies the true luxury.

However, in Croatia, where out of 1.8 million beds, five-star hotels only constitute 0.4% of the total, around 7500 beds, and where I'd generously estimate true luxury to be a mere 0.03%, around 500 beds, the question arises: what luxury tourism can we speak of?

Joseph Pine, considered a leading thinker in the field of experiential economics and luxury economics, posits the following thesis: “You are what you charge for.” Clearly, this goes beyond mere economic transactions. If you charge for physical goods, you're in the goods industry. If you charge for the services provided by your people, then you're in the services industry. But you're only in the transformation industry if you charge for outcomes. This philosophy is crucial for understanding how the concept of luxury is changing in our hyper-connected world.

If we pause and reflect, the concept of charging for outcomes could be profoundly revolutionary, especially in the domain of our luxury tourism offerings. It means we don't just charge for a beautiful room overlooking the sea, a gourmet dinner, or exceptional wellness services. We charge for the feeling, for the transformation the guest experiences when crossing the gateways of our establishment. We charge for (de)intensifying life, for opening worlds, for the very change in the perception of reality. The key is deep engagement that transcends mere interaction with the guest. It's about creating a synergy between the guest, the local community, the natural environment, and the surrounding culture. In the end, what's really needed in transformational tourism is not just the breadth of offerings but the depth of experience. It's no longer about providing luxury in the traditional sense of abundance and cost-prohibitive features alone, but about providing experiences that are capable of transformation. And not just in the context of the individual guest, but also in the context of the community and the world that surrounds us.

It's important to note that this is not some 'woo-woo' new age approach filled with empty phrases. This is a genuine business paradigm that shifts the focus from mere consumption of services to deep, genuine transformation of the individual. And in that sense, it is the ultimate value we can provide, both economically and socially.

In this context, can we say that luxury tourism in Croatia is in the phase of luxury and transformation economics? Clearly not. I recently conducted a comprehensive study of luxury hotels in Tuscany to gain insight into consumption dynamics in this segment, particularly during the peak tourist season in mid-August. Tuscany has 3.7 million inhabitants, which is comparable to Croatia only in that aspect. With 76 five-star deluxe hotels, Tuscany is a world unto itself. Just in Florence, there are 22 genuine luxury hotels with a total of 3,500 beds, which is nearly half of the total number of five-star beds in all of Croatia, or 7 times more genuine luxury accommodation capacities. Florentine prices are astronomical; a look at the overnight rates in the Four Seasons, which vary from approximately 1,500 euros to an incredible 25,000 euros per night, depending on the room type, speaks to the strength of the brand and the position of the destination in the global luxury mosaic. In St Regis, located on one of Florence's most famous squares, prices range from 900 to 2,500 euros. Outside of Florence, at Villa La Massa, a room costs about 1,000 euros. In the luxury hotels of Versilia, prices range from 2,000 to 2,700 euros per night, but rooms are not available. In Rosewood Castiglion del Bosco, recognized as one of the best hotels in the world, an overnight stay for two costs around 2,500 euros, with the possibility that the price jumps to a staggering 21,500 euros if you choose their most luxurious villa.

But it's not just the prices that attract attention. Situated on coastal rocky cliffs or amid picturesque Tuscan hills, these hotels offer not only luxury accommodations but also exclusive experiences, from hot air balloon rentals for a flight over Florence to private dinners and exclusive wine tastings.

These data are not just numbers; they represent vision, dedication, and, of course, deep pockets of those who seek the best that life can offer. However, we must ask ourselves how far Croatia is from even participating at such a level of luxury and hospitality. Obviously, the road is long and challenging, but insights like these can help us better understand what needs to be done to reach these standards.

Why even consider the luxury segment of tourism? Perhaps because estimates show it will grow annually at a global level by about 8.5% over the next 7 years. To keep pace with these trends and needs, we need more colleagues who will promote this way of thinking. Yesterday, I spoke with a colleague who clearly knows hospitality and tourism very, very well. However, even though the two of us move in the same professional circles, for who knows how many times, I concluded that we have diametrically different understandings of this complex and intriguing industry. For him, phrases like "it makes money" or "but it works well" are the ultimate indicators of success. And, to be fair, one cannot deny that these factors are important; but, for me, they are just the beginning of the story. In fact, one could say they are like a key that unlocks the door, behind which lies the real essence.

Considering our current position, it is hard to see how we could become agents of transformation. Our industry is still focused on service provision, sometimes just on the sale of goods, rarely or never on the sale of outcomes. Perhaps the real question is not how to compete with, for example, Tuscany or other global players, but how to redefine what we can and want to be. If Pine is right, and I deeply believe he is, then our path to ultimate luxury does not lie in the number of stars or prices per night. Our path lies in our ability to create, orchestrate, and charge for transformations that will transcend mere transactions and enter the domain of the invaluable. Where we are now, that is more a vision than a reality, but the first step towards transformation is, always, awareness of the need for it.

This article first appeared in the local daily newspapers Glas Istre and Novi list d.d. , in Croatian.