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Hospitality

The U.S. trend of retailers and other brands opening hotels is expected to expand overseas

U.S.-based West Elm is among the pioneers of consumer product and service companies that have taken their brands into the hotel industry.

Some well-known retailers, restaurants and even health clubs are extending their brands into the lodging industry, opening boutique hotels that showcase the lifestyle they sell.

These crossover hotels are growing in number in the United States, and the trend is expected to expand into Europe in the coming years as the industry looks for ways to differentiate new properties from existing ones, a study by CBRE Group Inc. says.

"We see further strong investor interest in the hotel sector in 2018, coupled with clear operator focus on service levels, innovation, and concept differentiation," says the report.

Furniture retailer West Elm is among the pioneers. It has previously furnished properties for other hotel brands, including the Four Points by Sheraton, but now has six of its own hotel locations in cities such as Detroit and Portland. High-end gym club Equinox plans to open its first hotel in 2019 in New York. Fashion house Armani (Dubai, Milan) and jeweller Bulgari (five locations already with one set to open in Shanghai in 2018 and Moscow in 2020) have also rolled out the welcome mat to guests.

The trend gives brands new growth areas and the hotel industry some star power as it responds to the competition from such home-sharing companies as Airbnb.

Canadians are about to get their first major taste of the phenomenon. Nobu, the Japanese restaurant chain by celebrity chef Nobu Matsuhisa, with more than 30 locations around the world, turned to opening hotels in 2013 and Nobu Toronto, developed by the Madison Group, will be the brand's first integrated effort, combining Nobu residences, a hotel and restaurant. Construction is expected to begin in the summer of 2018.

Eight similar Nobu projects are in the works around the world.

Nobu Toronto will house 660 condo suites in twin 45-storey towers in the city's Entertainment District, while the 15,000-square-foot, two-level restaurant will be the focal point of the whole establishment – influencing everything else about the building, including the décor.

While Equinox has two gym locations in Canada – in Toronto's Yorkville neighbourhood and in downtown Vancouver – it does not have plans to bring its hotel chain to Canada as of yet. Similarly, Brooklyn, N.Y.-born West Elm, which has four shops in Canada, has no immediate plans to expand its hotel portfolio into Canada.

An earlier version of this story incorrectly indicated Nobu Toronto is expected to open this summer. Construction begins this summer.