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Business travel may never bounce back. Here's how the 28-year-old CEO of luxury luggage brand Rimowa is pivoting his brand to fit customers' everyday needs.
Summary List PlacementTake one look at Alexandre Arnault's Instagram account and you'll see the 28-year-old French businessman is no stranger to travel. In February, he was in Boston speaking at Harvard Business School. In August, he posted snapshots from Italy and Greece. And in September, he was in Cologne, Germany, testing out new products for the 120-year-old luggage company he runs. Arnault is, after all, the CEO of Rimowa, the 120-year-old luggage brand founded in Cologne that in 2016 was acquired by LVMH, the world's largest luxury goods conglomerate. LVMH is run by Arnault's father, Bernard Arnault, who has been running the luxury empire for more than 30 years and has a net worth of $110 billion. Rimowa's suitcases, which are made of aluminum and polycarbonate and can cost upwards of $4,000, are beloved by celebrities from Gwyneth Paltrow to Kanye West and Kim Kardashian. Before the pandemic, luggage was Rimowa's primary product beyond a line of phone cases launched in 2019 and a few other small accessories like luggage tags. But in 2020, the coronavirus pandemic has wreaked havoc on the travel industry, leaving companies within the sector — like Rimowa — scrambling. Arnault recently told Business Insider that when Rimowa salespeople reached out to clients throughout the year, a common response from clients was that they had no plans to travel for the next year and therefore didn't need suitcases. A company spokesperson declined to comment on the year's sales numbers. Still, Arnault thinks pent-up demand means leisure travel will rebound quickly once it's safe to hit the road again. "I look at all my friends and people from my generation and they can't wait to travel again and to go ... experience different things, countries," Arnault told Business Insider on a November phone call from Paris. "... I'm less optimistic for business travel." 'People needed a global pandemic to realize that Zoom existed' The pandemic brought business travel to a standstill in the spring of 2020, according to the Global Business Travel Association. "The impact to the business travel industry – and to the broader economy – cannot be underestimated," executive director and COO Scott Solombrino said in a March report. Many experts are not hopeful for the industry's future. A Wall Street Journal analysis from December 1 found that the pandemic could permanently slash business travel by 36%. Microsoft cofounder Bill Gates predicts that it will decline by more than 50%. And a recent Bank of America analysis estimated that business trips won't rebound until late 2023 or sometime 2024, Business Insider's Taylor Borden reported. But Arnault doesn't think business travel's fate is quite so dire: "I think it'll just be reinvented," he said. In the short term, Arnault says business travel will be slow to recover as businesses that have taken financial hits during the pandemic recuperate. "Companies that are struggling a lot, the first thing they start decreasing in their company is travel expenses," he said. "But that will last for a year or two, I think." In the longer term, he said, companies will likely reevaluate which business travel is essential versus what can be done remotely. "For some reason, I think people needed a global pandemic to realize that Zoom existed," Arnault said. (Video conferencing software company Zoom, founded in 2011, exploded in popularity during the pandemic.) "They finally understood that going to Tokyo for 48 hours for a meeting is probably not necessary 60% of the time." A shift to creating products that fit into everyday life Rather than waiting around hoping for travel to bounce back, Rimowa has been weathering the pandemic by focusing on diversifying its product offerings, Arnault said. "Even before the pandemic, we thought that our products needed to be more part of people's everyday lives rather than just being at the airport or in the hotel room at the destination," Arnault said. Since March, Rimowa has launched an eyewear collection, hard-shell crossbody bags for daily use, and most recently, a range of backpacks, weekenders, and tote bags that will be available in January. Prices for Rimowa's sunglasses start at about $450, significantly less than their suitcases. The hard-shell personal bags, on the other hand, start at about $1,320, slightly more than Rimowa's original cabin suitcase, which retails for $1,130. Rimowa also sells iPhone cases starting at about $95 and travel-themed stickers starting at about $8.
Rimowa hasn't publicly disclosed its annual revenue since 2016 — the year LVMH bought Rimowa — when the luggage brand reported more than $444 million in revenue. But Arnault's company is part of the world's largest and most profitable luxury empire: LVMH's 75 brands range from fashion to wines and spirits. Louis Vuitton, Dom Perignon, and Christian Dior are just a few of its most recognizable "houses." Last year, LVMH's total revenue was nearly $60 billion. At the head of LVMH is Bernard Arnault, Alexandre Arnault's father, who has been chairman since 1989 and currently ranks as the fourth-richest person in the world.
While Rimowa may expand well beyond suitcases, its roots as a travel company will always be an asset, according to Arnault. "What will never slow down is people going from point A to point B," Arnault said. "Maybe it's not between Paris and New York. Maybe it's more between their house and the gym, but they still need to go from point A to point B and have objects to carry things around with them."SEE ALSO: The son of French luxury billionaire Bernard Arnault rejects the word 'luxury': 'I don't think price should really come into the equation' DON'T MISS: The 15 richest people in the fashion industry, ranked Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
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