Brand Extension Takes Diversification to a New Level with Travel

Brand extension is the use of an established brand name in new product categories. The main reason a company does this is to leverage the brand equity they have already built up in their core products and services. In other words, by extending their brand, companies hope to tap into consumers' positive associations with their existing products and services and transfer them to the new product.

There are many examples of brand extensions in the travel and vacation sector. Two of the best-known examples are Armani Hotels and Virgin Holidays.

Virgin Group diversified into travel early in its growth

Virgin Records was founded in 1971 by Richard Branson, Simon Draper, and Nik Powell. At the time, it was Britain's first independent record label. The company's early years were marked by a string of successful releases by artists such as the Sex Pistols, Culture Club, and Mike Oldfield.

Branson was overjoyed with the success and popularity of Virgin Records, which operated recording studios and high street stores, but was keen to lend the street cred of the chain to other products. This brand stretching resulted in numerous forays into other industries, the most successful of which was Virgin Atlantic Airways.

Virgin Atlantic Airways was founded in 1984. The airline started operations with just one aeroplane, leased from British Airways. It was a move that threatened British Airways' virtual monopoly on flights out of the UK at the time. Virgin Atlantic Ltd, comprising Virgin Atlantic, Virgin Holidays, and Virgin Atlantic Cargo, has total assets over £1.8 billion, with pre-pandemic revenues of £2.9 billion in 2018/2019.

Along the way, the Virgin Group divested itself of Virgin Records, choosing to concentrate on its travel sector. If Branson and his investors had never opted to diversify into the travel sector, it would have been a multi-billion pound mistake.

Armani opened luxury hotels in prime locations.

As a more recent example of brand extension in travel, take the brand Armani.

Giorgio Armani is an Italian fashion designer and founder of the eponymous fashion label. He is one of the most successful designers in the world, with his brand worth an estimated $8 billion.

Armani, traditionally known for its high-end fashion labels, leveraged the brand equity by moving into the luxury hotel sector. The first Armani Hotel opened in Dubai in 2010 and was quickly followed by hotels in Milan and London.

The Armani name is synonymous with luxury, and this is something that the company has been able to transfer to its hotel business successfully. Staying in an Armani Hotel is a truly luxurious experience and one that comes with a high price tag. However, for many people, the Armani name is worth the premium.

Why do brand extensions into travel make sense?

There are many reasons why brand extensions into the travel sector make perfect sense. The first is that many brands already have a strong identity and presence in the minds of consumers. This is known as brand equity.

For example, when you think of Virgin, you might think of the company's red logo, it's association with music, or its reputation for being a maverick in the business world. For Armani, it's luxury items or hotel stays for the world elite.

Travel is an emotive purchase. People don't just buy flights or hotel rooms; they buy experiences. They buy memories. And they are often willing to pay a premium for these experiences. For this reason, as companies develop their brand strategy and affirm their brand identity, they should consider where their brand equity can take them.

More and more companies are becoming switched on to the benefits and potential profits of extending into the travel sector. Your Brand Travel provides a simple solution to companies that have wish to make rapid headway in their safe brand extension, ensuring that the right contacts are in place to help your brands travel aspirations come to life.