On August 8, 2023, Beyond Meat, the company that makes plant-based meat alternatives, tanked. Reporting its second quarter performance, Beyond Meat missed analysts’ expectations. Beyond Meat’s revenue for second quarter was down 30.5% compared to the same quarter in 2022. Many analysts have lost enthusiasm for Beyond Meat with four analyst groups listing Beyond Meat as “Sell” and four listing Beyond Meat as “Hold.”

The poor performance is not a surprise. Almost a year ago, in September 2022, The Wall Street Journal ran an opinion piece “Beyond Meat is Beyond Hope”. The author stated that Beyond Meat’s problem is that there are just too few people who will eat its products. The writer pointed out that the pool of vegetarians and vegans is too small for profitability. Only 5% of Americans say they are vegetarian while 3% identify as vegan. 

However, as The Guardian pointed out, the non-dairy milk category is booming. At the time, The guardian wrote: “Dairy alternatives now make up 15% of the market and are worth $2.5 billion. A third of Americans drink some kind of non-dairy milk weekly.” The prospective people are out there: just give them relevant, differentiated reasons to buy.

There is a lot of Monday morning quarterbacking stating that plant-base food is a fad. On the other hand, there is a significant lobby believing that plant-based protein is a more sustainable, more innovative food system with a lot of growth potential.

Underlying Beyond Meat’s laggard performance is this: Beyond Meat has a trust deficit. Customers and prospective customers are concerned about how the product is made. Beyond Meat products are perceived to be too processed. And, for vegans, vegetarians and organic eaters, processed is a dirty word. Trust is an essential element for a brand.

There are many reasons why Beyond Meat has a trust deficit. Beyond Meat did not appear to build a compelling, relevant, differentiated brand.  Rather, Beyond Meat always seemed to be a company with innovations. Beyond Meat never seemed to communicate its benefits to customers and prospective customers. Beyond Meat products have been and still are priced at a premium to animal proteins. And, these are just a few reasons.

Now, Beyond Meat wants customers and prospective customers to perceive Beyond Meat plant-based products as trustworthy. Beyond Meat wants people to believe that Beyond Meat products are OK to eat; not processed, but created. Beyond Meat is running a communications campaign to address its trustworthiness as a food stuff. But, again, at the moment, there is no discussion of the total brand experience; no addressing of Beyond Meat’s functional, emotional and personal social benefits.

Beyond Meat has a mission. Founder and CEO Ethan Brown stated this at the earning call:

 “As we look to the future, we remain steadfast in our belief that plant-based meat, and Beyond Meat specifically, will play an important part of the global response to a climate crisis that appears to be rapidly intensifying, while also delivering health benefits to the individual consumer.”

Beyond Meat’s mission is laudable. However there are complications. A research study cited in The Guardian shows that even when people learn that huge reductions in meat consumption are essential for climate-change avoidance, people are reluctant to change behaviors when the environment is “the sole beneficiary”. Self-interest overcomes altruism. A different study from Purdue University shows that even when confronted with information about meat’s carbon footprint, people still prefer meat over plant-based alternatives

A food analyst at Mintel, a global market research company, said, “Awareness of the impact of meat on climate change is expected to underpin long-term demand, although products featuring more natural vegetable and vegetarian proteins, such as chickpeas and lentils, were likely to lead growth as consumers sought more transparency and reassurance about the origins of ingredients in vegan ready meals.”

According to the press, Beyond Meat has a marketing campaign with the title, There’s Goodness Here.” This Beyond Meat campaign aims to “demystify” the way in which Beyond Meat’s products are created. For example, did you know that The American Heart Association certified Beyond Meat’s Beyond Steak as a heart-healthy food? Did you know that Beyond Meat’s products are labeled 35% less saturated fat?

One online source describes the ad campaign as follows:

“In the first phase of the campaign, consumers visit Munich, North Dakota to meet a 5th generation farmer and father who grows fava beans for Beyond Meat’s plant-based heart-healthy steak, which was recently certified by the American Heart Association for meeting its exacting nutrition requirements. Fava beans, which naturally enrich the soil with nitrogen, can enable healthier fields without the use of harmful and expensive fertilizers. This benefits farmers, consumers and our big beautiful planet. In addition to fava beans, Beyond Meat sources clean, simple, non-GMO plant-based ingredients like peas, rice and wheat. This farmer’s story and others like it underpin the goodness that is the beginning of Beyond Meat’s product journey which uses wholesome plant-based ingredients and a simple and clean process to create nutritious food options that are also environmentally friendly and kind to animals.”

This idea of taking people behind the scenes is good. It is one of the critical steps necessary to build trust. Openness Is an Opportunity 

Transparency is a key to trust. Transparency requires truth. Truth is not the same as trust. Truth is a fact,; trust is a feeling. To build your brand into a trustmark, you need both truth and trust. To be worthy of a customer’s trust, people need to see the truth and not just read about the truth. By taking customers behind the scenes, Beyond Meat is telling customers, “We have nothing to hide.” “See for yourself.”

In our fast-information-access, knowledge-sharing world, transparency is important. Increased emphasis on transparency affects trustworthiness. It is only a matter of time before the public discovers the facts about any issue. There are no secrets. There is nowhere to hide. Beyond Meat has discovered that people actually do read the labels. And, what the Beyond Meat labels indicate is more process and less made-by-nature.

By relying on a family farm to deliver a message, Beyond Meat is opting for a more convincing messenger. It is easy to rely on traditional advertising to tell someone what a brand stands for. It is more convincing when others tell the story on the brand’s behalf. And it is even more convincing when people can learn the truth for themselves. 

However, there are other essential steps to build trust. Beyond Meat must not simply hang its hat on openness. Beyond Meat must invest in the following trust-building efforts.

You Are What You Do 

Beyond Meat must display trust before Beyond Meat can declare it. Customers must consider Beyond Meat worthy of trust before they commit to trusting it. Saying, “trust me” does not track with today’s customers. 

Beyond Meat must provide iconic tangible, visible evidence that what Beyond Meat claims can be trusted. Iconic products or services are tangible demonstrations of the truth of Beyond Meat’s claim. Labels matter. Looks matter. 

Part of its new campaign is a demonstration of Beyond Meat’s tangible evidence of its “goodness.” Beyond Meat will need more than advertising to showcase its evidence.

Trust is the confidence that a brand will live up to expectations. This means that the promised expectation of the brand can be relied upon. 

Lead the Debate; Do Not Hide from It 

Staying silent when there are big issues at stake is not a signal of leadership. Silence means agreement, and trust is too important for silence. Leaders stand up for what they believe in. 

Beyond Meat stayed silent on the issue of “processing” even when the cattle industry came after Beyond Meat with very easy-to-grasp messages. Getting ahead of the issues is critical. Beyond Meat failed to do so.

For example, years ago, Domino’s could have taken a defensive position when customers complained about the quality and taste of their pizza. Instead, the brand agreed that its offerings were below par and told us so in national television advertising. 

If you are in the food business and you are selling food people think is questionable, fix it. Going on the defensive is the wrong approach. For a brand to be taken seriously, a defensive posture implies that you have something to hide. When you are silent or when you hide, others can create the truths about you. Others, such as the cattle industry, will recast your profile. A brand will have a reputation. The only question is who will have the strongest voice in managing that reputation. It is not in a brand’s interests to let outsiders trample on a brand’s truths. 

Rather than hide from an issue, lead the debate. Take positive action. Tell your story. When you tell your story you win. When you are silent, you lose. Trust leadership is more than just standing out. It requires speaking out. In revitalizing a brand, it is necessary to speak up for your brand if you want your brand to stand out. 

Trustworthy Messages Must Come from a Trustworthy Source 

How you say things is as important as what you say, especially in a world where conversations occur online digitally and through blogs, apps and with a limited number of characters. 

Just as peer testimony is more trustworthy than corporate testimony, the voice of the customer is more trusted than a corporate voice. So, it is helpful that Beyond Meat is showing customers and farmers.

Beyond Meat will also rely on health organizations to deliver the “goodness” message. In a polarized society this may be an iffy approach. True, Beyond Meat’s products are recognized by the American Heart Association, which certified Beyond Steak as a heart-healthy food. Additionally, Beyond Meat will rely on a clinical study from Stanford University (The American Journal of Clinical Nutrition). The study looked at the benefits of replacing animal-based meat with Beyond Meat’s plant-based meat over an 8-week period.  Results showed improvement in key health metrics when participants replaced animal-based meat with Based on the positive outcomes of the study, Beyond Meat created the Plant-Based Diet Initiative at the Stanford University School of Medicine. Beyond Meat also has an agreement with the American Cancer Society to advance research on plant-based meat and cancer prevention.

Providing trustworthy information is critical. The challenge is to become a trustworthy source of information that is helpful, convenient, understandable, and valuable to your customers. Become an open source of information that is understandable, accessible, timely, and trustworthy. 

Beyond Meat has a trust deficit. This trust deficit was self-created. At Beyond Meat, there seemed to be a sense that people would overlook the product-generation because the idea of plant-based meats was so enticing. Consumers are not like that anymore. “Trust me, this is good for you and sustainable” is not a viable message.

Beyond Meat must build trust. Brands live and breathe with trust. Without trust, brands have little value. If trust in the brand is high, then the brand has great value. But, if trust in the brand is low, then the brand has little value. If there is zero trust, there is zero value, as zero times anything is zero. Brand value leads to enduring profitable growth.

Customers’ needs may alter. Markets may change. New products challenge the status quo. No matter how a brand-business landscape morphs, there are some evergreen brand-business marketing principles that must never be forgotten.

One principle is this: keep the brand-business core strong. A brand-business’ core must be continually re-energized, protected and strengthened. It is the brand-business core that will profitably finance a turnaround, keep a brand-business growing and provide a platform for the future. Ignore what core customers love about your brand-business at your peril.

This is the current situation at Allbirds, the sustainable shoe enterprise. According to The Wall Street Journal, Allbirds, once a Silicon Valley statement footwear brand-business, has “lost its way.” Allbirds lost its way by looking beyond its core base; by coveting others at the expense of Allbirds lovers.

Core customers already know what is great about a brand. When a brand-business expands beyond its core group, the brand risks losing its core group. When this happens, the goal must be to restore and repair core customers’ relationship to the brand-business. It is imperative to reinforce what core customers like about the brand. Encourage core customers to frequent the brand more often.

This is exactly what did not happen at Allbirds. And, now, recognizing the problem, Allbirds is making strategic changes to re-excite its core customer base. This is good. But, how Allbirds goes about its changes needs to be reviewed.

Stop the Bleeding

Allbirds first step is stopping the bleeding by trimming shoe and clothing options, opening fewer stores and creating more compelling footwear. This is a strategic necessity.

More Loyal, More Profitable Customers

Yet, nowhere does the Allbirds strategy say that it will aim at core customer frequency.

Here is a fact: it is easier to get a customer who already uses your brand to come a little more often than it is to attract a new customer who does not use your brand at all. When a brand-business is in trouble, the brand-business’ objective must be to stop the shrinking of the customer base and to increase purchase frequency. A small increase in frequency can make a huge difference to brand health. Coveting customers you do not have is not a pathway to profitability. Furthermore, a focus on tactics and products that might seduce specious segments becomes a major and financial distraction.

Allbirds needs to convince its core customers to buy at least one more time a year. And, perhaps if possible, have these core customers buy just one more item each time they are purchase ready. For example, Allbirds has seasonal footwear as well as athletic footwear
Etsy, the craft website changed its strategy in 2017. Etsy recognized the need to increase frequency among core customers. Etsy stated, “… we disclosed that about half of our buyers only buy once a year on Etsy. And, we really believe there’s an opportunity to bring those buyers, our existing buyers, back to buy more things on Etsy. So making it so that our existing buyers come back more than once, I think, is a big opportunity. Because half of them only come back once.”

There are reams of data showing the value of a core customer. Seminal research from Frederick Reichheld on the lifetime value of a loyal core customer essentially showed that as brand loyalty increases, the likelihood of defection decreases. Mr. Reichheld concluded that reducing defections by 5% could increase profits by 25% and more. Other research indicates that loyal core customers are 8 times as valuable as those who just consider the brand-business.

The reverse is true as well. Losing a small percentage of core customers will account for a disproportionate amount of lost income.

There are data confirming that it costs 3-4 times as much to attract a new customer as it does to keep a customer loyal. And, now that there are so many digital, online options for media, researchers show that these attraction costs may be as high as 6 times more for non-core customers. Focusing on core customers, strengthening their core brand beliefs is an excellent way to build brand loyalty.

Of course, brands must manage attract new customers while creating more brand loyalty among its core customer base. But, when a brand is in trouble, the first priority is to stop the hemorrhaging of the customer base.

Know Your Core Customers

One of Allbirds’ founders told The Wall Street Journal that core customers tend to buy Allbirds’ products because of price, stylishness and comfort. These attributes are features, potentially, functional benefits at best. But, what about the brand-business’ emotional and social rewards? Focusing on features and functional benefits alone does not help in understanding the customer.

Repeatedly, The Wall Street Journal reports an Allbirds focus on the age of the core customer and the age of the desired new customers. Is there a real understanding of the core customer and like-minded others that does not depend on age? Viewing the audience by age alone is dangerous.

Based on the original promise and mission of the brand-business, age was not a factor: personal values and rewards were key drivers. Sure, values and rewards shift as one ages, but not for everyone. And, many younger customers share or adopt values with those who are older.

Love your core customers if you expect them to love you. Ultimately, the brand-business’ aim must be more customers, more often, more brand loyal, more revenues and more profitable. When a brand has lost its way, the first focus must be to shore up the core customer base. In other words, adore the core or your brand is done for.

Recently, new Twitter CEO, Linda Vaccarino, told the world that Twitter would be “making history.” CEO Vaccarino faces many challenges. Current business press describe Twitter’s challenges on a daily basis. One of Twitter’s most pressing challenges is its stultifying trust deficit. Twitter’s trust decay is said to be the result of Mr. Musk’s Twitter changes since his purchase of the social networking site. Here are just some of the issues highlighted by business writers and observers.

• Advertisers are still “spooked:” by Elon Musk’s “laissez faire attitude about free speech and content moderation.” 
• Elon Musk stated by March of 2023, Twitter’s ad dollars showed a slump of 50%-60%, depending on the specific press report. 
• Fidelity Investments “cut its private valuation” of Twitter by one third. 
• Mark Reed, CEO of WPP Plc, the world’s largest advertising organization, continued to advise clients that in regards to running ads on Twitter, clients should “proceed with caution.” 
• Some big advertisers still stay away from Twitter as Mr. Musk eliminated the “guardrails” protecting Twitter from rampant “misinformation and toxic content.” 
• New Twitter CEO, Linda Vaccarino, has as her first task to “stop the bleeding” of ad dollars. 
• CEO Vaccarino told sales teams that “hand-to-hand combat would be on the agenda in order to “persuade” advertisers to return.
• CEO Vaccarino’s job just became more difficult as owner Musk’s limits on user activity “… further erode” advertiser trust in Twitter. Said one industry director, “The advertiser trust deficit that Linda Vaccarino needs to reverse just got even bigger. And, it cannot be reversed based on her industry credibility.”
• Fortune magazine reported results from a May 2023Pew Research Center study revealing that 60% of U.S. users had “taken a break” from the platform over the past year.
• CEO Vaccarino defended Mr. Musk’s caps on allowable-number-of-posts-read by stating, “When you have a mission like Twitter you need to make big moves to keep strengthening the platform. This work is meaningful and ongoing.”
• However, CEO Vaccarino’s statement and other Twitter statements appear to not be working. Fortune magazine reports that users “…continue to slam the company’s latest unpopular move.”
• And, according to Bloomberg BusinessWeek on July 6, 2023, Meta’s Threads, its Twitter fighter, signed up 30 million users in its first 24 hours, 10 millions of these signed up in Threads’ first 7 hours, and there are currently 70 million sign-ups.  
• The Wall Street Journal points out, Threads’ ability to entice advertisers is the real prize for Meta… and the real problem for Twitter. Facebook generates $115 billion in ad revenues while prior to Mr. Musk’s purchase and the loss of advertisers, Twitter generated $4.7 billion in advertising. Apparently, since its inception, advertisers have flocked to Threads. One reason is its Instagram base allowing advertisers to identify specific customers.

Amid its trust deficit situation, the now competitive market, and, hopefully, to galvanize Twitter’s employees, CEO Vaccarino articulated Twitter’s new mission and Brand-Business Promise. Ms. Vaccarino said, “Twitter is on a mission to become the world’s most accurate, real-time information source and a global town square for communication.” As for Twitter’s Brand-Business Promise, Ms. Vaccarino said, “…to drive civilization forward through the unfiltered exchange of information and open dialogue about the things that matter most to us.”

Two things. First, “unfiltered” exchanges are exactly what spook advertisers. Second, nowhere in the mission or promise do we read the word trust. Twitter wants to be accurate; Twitter wants to be an information source; Twitter wants to be a global town square for communication; and Twitter wants to be a positive change-agent for civilization. But, Twitter (and perhaps, Twitter’s users?) does not seem to care about being trustworthy.

This is problematic. To create positive, strong advertiser relationships, Twitter must become trustworthy. Trust is an essential asset in building and maintaining long-term relationships. Without trust, nothing else matters. Trust is indispensable when building a powerful brand-business.

To combat both internal and external trust deficits, CEO Linda Vaccarino must become Twitter’s Chief Trust Officer. Be the most trusted brand-business in every market in which you compete. Trust cannot be delegated. Trust is the CEO’s responsibility. Trust begins at the top. The CEO creates an enterprise and a culture.

Trust must be on the Twitter agenda. A powerful brand is more than a trademark; a powerful brand is a trustmark. For trust to develop, a brand-business must deliver its promise in a quality manner (consistently delivering against stakeholder expectations). 

With a new CEO, Twitter has an opportunity to become a trusted social medium in a world where institutional trust is in severe decline. CEO Vaccarino, in her role as Chief Trust Officer, should create a Trust Agenda that includes these four Trust building components.

1. Be a credible source
2. Have an excellent reputation 
3. Be a pillar of integrity
4. Have a responsibility ethic

Be a credible source

• Twitter must become a credible source. Credibility means that what you say and do are plausible. Twitter must create believers. Is Twitter perceived as predictable, reliable and of quality? This means that users are satisfied. It means that users prefer the brand-business to alternatives. Fortune magazine reports that users are using Twitter less. Credibility means that Twitter must provide superior complaint resolution. And, must provide correct information.

• CEO Vaccarino stated that Twitter would focus on becoming “the world’s most accurate, real-time information source.” At the same time, she indicated that Twitter would be “unfiltered.” This paradox promise of accuracy and unfiltered might work if Twitter were deemed credible. But, nowhere in the mission and promise is the idea that what you read on Twitter will be credible. If Twitter is not credible, then its information can be deemed not true and, then, not trusted.

• Being a credible source means all stakeholders have confidence that Twitter provides true information. This is critical as communications from highly credible sources are more persuasive and more likely to be believed. 

• A credible brand acts as a “quality” cue lessening client- and customer-perceived risk during decision-making. Credibility makes decision-making easier because the customer trusts the authority of the enterprise. 

Have an excellent reputation

• Having an excellent reputation may be a tough challenge for Twitter. One of the troubling issues for clients has been the mercurial behavior of its owner. As pointed out in the business press, it is the “cavalier attitude” of Mr. Musk towards content that has sent shivers down advertisers spines. Having an excellent reputation means continually behaving in the same quality manner during each and every interaction. Reputation is a competitive advantage. 

• Additionally, according to Bloomberg BusinessWeek, Mr. Musk has not been as transparent as he says he is when it comes to opening data to academics. Openness is critical for trust.

• Reputation signals what a brand-business previously accomplished: its track record for quality, leadership, innovation and leadership. Think of reputation as a representation of the brand-business’ past behaviors and results. Twitter has a reputable past. But, there is a disconnect between Twitter’s past accomplishments and its recent actions. 

• Reputation describes a brand-business’ ability to deliver valued outcomes to multiple stakeholders. 

• Twitter does not create its reputation. Reputation is not something a brand-business determines.  Reputation is based on stakeholders’ perceptions. Reputation is the collective accumulation of stakeholder perceptions over time. 
• Do not think that reputation is a theoretical construct. An excellent reputation facilitates client and customer decision-making. Reputation can increase business performance. For Twitter, this means helping to sell ad space at increased margin. 
• It is not enough to say that advertisers have returned. Have advertisers returned with the same financial willingness? Are their budgets comparable to pre-Musk-ownership levels?

Be a pillar of integrity

• CEO Vaccarino’s statements do not appear to cast Twitter as a pillar of integrity. And, maybe, Twitter does not want this role. The take-away is that in order for Twitter to be a transformed global town square, users and advertisers will be allowed to say and show what they wish… unfiltered.

• Being a pillar of integrity means that all actions and behaviors, internally and externally, have the best interests of stakeholders at heart. Being a pillar of integrity means that stakeholders and others perceive Twitter as impartial and open-minded (Twitter is clearly focused on these two characteristics), but also perceived as respectable, just and unthreatening. Trust can help Twitter maximize these contradictory needs.

• Integrity refers to a brand-business’s core values and purpose. Integrity derives from the brand-business’ guiding principles; the brand-business’ reason for being. Based on the limited information publicly available, it is difficult to know if any of Twitter’s underlying principles focus on integrity. Such principles should be basic truths and checkable claims.

• As a pillar of integrity, a brand-business understands the value of its relationships with all its stakeholders. This value is more than monetary. Stakeholder value means generating a client and customer base that is larger, using more often, more profitable and more loyal. 

• Integrity is seen through the eyes of all stakeholders. Does Twitter share values with its stakeholders? Does Twitter have stakeholder best interests at heart? Is Twitter accountable for its actions? Is Twitter perceived to be executing with ethical behaviors? Does Twitter have confidence in its employees? Who are the audiences for Twitter?

Have a responsibility ethic

• Having a responsibility ethic means that as a global citizen or global forum, Twitter must behave positively on behalf of people, communities, nations and the planet. When Twitter states it wishes to be “the world’s most accurate real-time information source and global town square for communication,” Twitter must take some responsibility for what it does and what ensues. Complete freedom is anarchy. This is why we have laws. Having laws does not crimp freedom. Laws save freedom from anarchic destruction… or as Twitter’s mission of “unfiltered” appears to be advocating, participatory anarchism.
• Responsibility can influence brand preference. Data show that a brand-business’ social reputation influences purchase decisions. Customers and clients are drawn to brand-businesses that “do good. These same groups are not averse to boycotting or publicly berating those perceived to be “not responsible.” 
• CEO Vaccarino’s rejoining the Tech Coalition is a good first step. A pan-industry group, the Tech Coalition is dedicated to child safety. Owner Musk had pulled out of the coalition in March in order to save the $40,000 membership fee.

Chief Trust Officer is not a function. It is a fundamental leadership responsibility. The role of the Chief Trust Officer is more than a title. It is an indispensable trust-building task of major cultural significance inside and outside the enterprise.

As Chief Trust Officer, CEO Vaccarino must create and implement a trust agenda. A trust agenda provides direction for how the enterprise will build trust across geography, people, local communities, nations and time. A trust agenda’s goal is to create and reinforce trustworthy stakeholder relationships, which are the basis for high quality revenue growth.

The hotel industry uses a segmentation designed by consultancy STR that is all about price, service and amenities. This segmentation uses language that most humans would find bizarre when thinking about their hotel stay. No matter how many consultants provide insight to hotel groups, the default is always price, service and amenities. The STR hotel segmentations basically looks like this: Economy, Mid-Scale, Upper Mid-Scale, Upscale, Upper Upscale and Luxury.

But, now, possibly, as intriguingly described in Bloomberg BusinessWeek, Ian Schrager, entrepreneur, hotelier and co-founder of famed Studio 54, has decided to defy the conventional hotel segmentation approach in describing his vision for his new hotel idea. Mr. Schrager wants to create hotels that are luxury but without the services and amenities. Mr. Schrager wants to create hotels with luxurious experiences that do not depend on multiple on-site staffers and niceties.

In other words, M. Schrager is looking at the hotel from the guest’s standpoint, appealing to their emotional and social rewards associated with experiences rather than the owners’ views as to “… how little can I offer for the room fees I am charging?”

According to Mr. Schrager, the idea for expanding and enhancing his already established lower Manhattan Public hotel is based on his observation that “… luxury has a new and different meaning today. Luxury right now is having freedom – freedom from hassles to make everything easy, freedom of time, freedom to devote your personal tie to the things that matter to you.” Mr. Schrager envisions a chain of these hotels.

This new luxury concept turns the standard STR segmentation on its head. Forget the linear track from Economy to Luxury. In this new world, Economy and Luxury are merged: a luxurious lifestyle feel of bold and cool delivered minimal staff and lack of goodies. Mr. Schrager compares his new Public concept to his legendary (notorious) Studio 54. The aura of luxury is delivered socially – a mixture of celebrities and locals of all ages– rather than by “white glove services that are over two hundred to three hundred years old.” 

The new Public will be a new “genre.” At its core is a “soul of luxury” packaged into a lifestyle hotel configured with less expensive, limited services. How is this such an explosive thought? Here are the standard STR definitions of hotel segments (see STR online definitions):

Economy hotels: Tend to have a mix of mostly K-type (king-size) rooms, offer only a self-serve breakfast and usually lack function space and recreational facilities.

Midscale hotels: Usually have a mix of mostly K-type (king-size) rooms, offer self-serve breakfast only. They may have limited function spaces (if so I typically is about less than 1 seat per key) and offer fitness room and/or swimming pool.

Upper Midscale hotels: Typically have a mix of mostly K-type (king-size) rooms, may offer full service or fast casual model F&B facilities. They offer a function spaces (about less than 2 seats per key), fitness room and may have a pool.

Upscale hotels: Typically have a mix of mostly K-type (king-size) rooms. May offer full service or fast casual model F&B facilities. They offer a function spaces (about less than 3 seats per key), fitness room and swimming pool.

Upper Upscale hotels: Typically have a mix of mostly K-type (king-size) rooms and Club level rooms, they will offer at least 1 full service 3 meal restaurant plus one bar or lounge. They offer a function spaces and business center (a minimum than 3 seats per key), fitness room and swimming pool and they might have a spa.

Luxury hotels: Typically have a mix of mostly K-type (king-size) rooms and Club level rooms. Typically, they have two or more restaurant plus one or two bar/lounges. They offer a function spaces and business center (a minimum than 3 seats per key), fitness room and swimming pool and spa facilities.

As you can see from the definitions of the hotel segments, the merging of Economy and Luxury is antithetical to hotel owners.

Of course, there is a financial benefit to an economy luxury hotel. Margins are better at economy style hotels. Luxury hotels have much more overhead what with staff, bathrobes, slippers, towels, restaurants and spas. Since Mr. Schrager does not franchise his hotels, he is quite conscious of margins, according to Bloomberg BusinessWeek.

But, just imagine the merging of both ends of the hotel segmentation. Imagine a segmentation that includes the guest’s emotional and social desires. Mr. Schrager believes that the first iPhone exuded these same qualities of desire, luxury, simplicity, “design and utility.” When you first opened the iPhone box it was a “wow” moment.

If Mr. Schrage pulls off this new concept in hospitality, and there is no reason to doubt his success, the standard approach to hotel segmentation may forever be altered. No potential guest discusses their hotel stay using language like Upper Upscale or Upper Mid-Scale. The hotel industry would be able to create properties designed to satisfy guests’ functional, emotional and social benefits while reflecting guests’ personal values.