Luxury home goods retailer RH (formerly Restoration Hardware) is making a $105 million equity investment in a real estate development project that is building an ecosystem of properties in Aspen, Colorado. The project will include retail store experiences, hospitality offerings, restaurants, residential developments and workforce housing.
Some of the more notable developments the retailer has planned include a guesthouse in Aspen’s historic Crystal Palace and the company’s first bathhouse and spa. The company is also looking to build out four to five-bedroom homes located at the Boomerang Lodge and six-bedroom homes on the Red Mountain.
The company’s move to make investments in Aspen will not only help RH target an affluent customer demographic, but will also play a strategic role in building the company’s profile on the global stage.
“We believe Aspen represents a singular opportunity to elevate the RH brand by exposing the world of RH to the world’s most affluent and discerning customers in a single, walkable market,” said CEO Gary Friedman. “Additionally, we believe the education RH will gain from a real estate development and ownership perspective will be immeasurable as the brand builds its global ecosystem of products, places, services, and spaces.”
RH’s move to dabble in the hospitality business is not anything new. In 2019, RH made an investment to open its first guesthouse located in the Meatpacking District of New York City. The company is also no stranger to restaurant ownership. It currently owns various establishments, restaurants, wine bars and cafes in various cities across the country, including New York City, Yountville, California, West Palm Beach, Florida and Columbus, Ohio.
RH’s move to go beyond offering the traditional retail experience follows a trend that has gained prominence since the start of the COVID-19 pandemic as consumers are drawn more toward interesting and innovative experiences.
In 2019, Crate and Barrel launched a full-service restaurant within its store locations called The Table at Crate. Meanwhile, Pirch, a company that specializes in kitchen, bath and outdoor products, has taken the experience concept to a whole new level by allowing customers in its New York City store to fully test out their products by taking a shower or cooking a meal.
While other brands like West Elm, Shinola and Muji have collaborated with hotels to create co-branded experiential experiences, RH is going a different route. The company is looking to create a fully RH branded experience.
“Our guesthouse model is going to be unlike some of the other people that are doing branded hotels,” said Friedman.
“We’re going to control the whole thing.”
“It doesn’t matter if it’s a Guesthouse. It doesn’t matter if it’s a restaurant. It doesn’t matter if it’s a residence deal. We might have a partner from a development point of view, but we will control it. We want to own it. We want it to be ours. We want to be great at it. And it’s hard to be great when you’re kind of licensing out parts of your business. No one’s going to care as much as you. No one’s going to love it as much as you.”
The company’s decision to make such a hefty investment comes at a time when consumers have found themselves spending more at time home due to the coronavirus pandemic and are eager to travel and explore once the lockdowns and social distancing mandates get lifted this year.
The luxury brand witnessed a 24.6 percent increase in net revenue to $844 million in its more recent quarterly report, while its operating profits increased to $111.2 million.