To Extend or Not to Extend that is the Brand Question

         Harrods, an icon in British brands, is one of the top tourists’ attractions in London, after Big Ben and Saint Paul’s Cathedral.  From its humble beginnings, in 1849, as an east London grocery store, with modest prices, to its brand extension, in 1902, of a department store, with a myriad of upscale departments, such as restaurants, women and men’s fashion, a bank, hairdressing, fur salon, piano department, and estate agency.  Moreover, everyone in London knows that the wealthiest consumers shop at Harrods.  Therefore, it is considered a luxury brand in the United Kingdom, with glamorous clientele, from yesteryear, which included Lillie Langtry and Oscar Wilde, to its current clientele, such as Victoria and David Beckham, Madonna, and Gwyneth Paltrow, and many more famous and elite class of consumers.

         Currently, in 2012, Harrods is planning to extend its brand into a series of luxury hotels around the world, with locations including London, New York, Paris, Italy, China, and Kuala Lumpur.  However, is this extension a good move for Harrods, a luxury department store extending as a luxury hotel brand?  Would this extension make sense to consumers, as well as fit the brand’s identity in the minds of consumers?  In addition, would consumers find a relevant relationship between the parent brand and its luxury hotel extension? 

         Harrods is leveraging its strong brand name; a name associated with luxury and status, and is expanding into the “luxury” global hospitality industry.  Therefore, as long as Harrods positions its hotel extension as a luxury brand to keep with its parent brand’s image of luxury and status, this extension may prove to be successful, even though the brand extension is in another brand category.  However, this concept of selling luxury could have outside competition from other luxury hotel brands, therefore, the Harrods brand should sell more than luxury itself, but exactly what it stands for today, a brand of British luxury.  This British luxury would make sense to consumers and would not confuse Harrods, the luxury department store, with Harrods, the luxury hotel chain.  This British luxury position would be relevant for consumers, as well as fit the brands identity. 

        On the contrary, one must question if the parent brand could face possible dilution from this extension because Harrods is famously known as a national landmark, a tourist attraction, which an individual can only see and explore when visiting London, therefore, could this extension hurt the parent brand’s special, unique position in the marketplace?  Why tour the national landmark when one sees Harrods everywhere, thus, the brand may not seem as special as it once was, but a chance the parent brand is willing to take.

           On the other hand, Hooters, a popular restaurant brand, known for its chicken wings and orange short-shorts, along with another area of the female anatomy, opened a hotel and casino in Las Vegas in 2005.  However, the brand extension proved to be unsuccessful and ineffective.  Why would a sex-sells restaurant brand fail at a hotel and casino in Las Vegas, which is widely known as, “sin city,” because of its adult entertainment reputation?  The reason, the Hooters brand strayed away from its target segmentation of men, when it targeted women for its hotel and casino brand extension, the brand’s logic, “Women always make the travel arrangements.”  In the end, their shift in focus was fallible, and the extension failed because men relate more to the Hooters brand, and women do not, hence, the extension made no sense to consumers, nor was it relevant to consumers, nor fit the overall Hooters brand identity.  Therefore, this brand extension can go down in Vegas’ renowned motto of, “What happens in Vegas stays in Vegas!”