Boutique hotels first appeared in 1981 with Anouska Hempel’s Blakes Hotel in London, Ian Schrager’s Morgans Hotel in New York and Kimpton Hotel & Restaurant Group’s first operated property, the Bedford Hotel in San Francisco.
Since the 1980s, boutique hotels have registered a continuous expansion on the wave of the rapid advancement of a new generation of design-conscious and technology-savvy customers increasingly seeking a unique experience instead of a cookie-cutter hotel room.
Using psychographics as opposed to demographics, hotels have shifted from a standardised to a personality-based offer. As an example, California-based Joie de Vivre Hotels’ personality is crafted around the reader-base of a specialist magazine, such as Rolling Stone for the Phoenix Hotel and The New Yorker for Rex Hotel, both of which are in San Francisco.
The concept of boutique hotels has evolved with the entrance of chains’ brands such as Edition by Marriott International; W, Aloft and Element by Starwood Hotels & Resorts Worldwide; Indigo by InterContinental Hotels Group; and Andaz by Hyatt Hotels Corporation. Mostly associated with the term “lifestyle,” these hotels provide the same unique experience as boutique hotels but tend to be larger and more formulaic.
Initially the hotel industry was dominated by private owner-operators (with the notable exception of Starwood’s W Hotels). Flexibility in site selection and construction, higher margins than similarly priced luxury hotels, and celebrities’ and media’s halo effect on average daily rates represent the main advantages of owning boutique hotels which, on the other side, have limited economies of scale, costly property updates and high affiliation fees.
Since the 2007-2009 recession, independent hotels have been more open to joining a larger entity to gain access to a larger customer base through global reservation systems and marketing campaigns. Established hotel operators have used their “conversion” brands to grow and capture high entry-barrier sites despite restricted debt and stifled new developments.
With independent hotels and international hotel chains aside, the sector has become extremely competitive and the following five key trends have developed:
1. Outsourced F&B facilities
Partnerships and outsourced food-and-beverage facilities to acclaimed chefs and bartenders generate high revenues, free advertising and additional guests encouraged by chefs’ or bartenders’ reputation. Some good examples are Dos Palillos, run by world-famous El Bulli’s former chef Albert Raurich within the restored 19-century gothic tenement Casa Camper in Barcelona and the globally acclaimed Beijing-focused Mr. Chow within the W Hotel in Miami South Beach.
2. Private clubs
Membership programs and guests-only areas within the hotel replicate most private members clubs’ privacy and exclusivity. As an example, the guests-only recognition program clubNYLO by Texas-based NYLO Hotels offers its guests retreats at check in, special rates, exclusive mailings and advance notice of special events. In London, Soho House has seen significant success from this concept.
Boutique hotels are particularly suited to conversions of historic or interesting buildings. Malmaison Hotels Group, for example, focuses on converting existing buildings of architectural interest and character to food-and-wine focused high quality boutique hotels, like the converted prison Malmaison Oxford.
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Boutique hotels can capitalize on the environmentally sensitive customers in a variety of ways from serving local, seasonal food to allowing guests to control their energy usage. Element by Starwood represents a great example of eco-consciousness mixed with a multisensory experience.
5. Affordable luxury
Brands like Citizen M, Yotel, Standard by André Balazs, Aloft by Starwood, Ace Hotels and the new Z Hotels brand represent the next generation of boutique hotels delivering vibrant design and an energetic guest experience at an affordable price for highly self-sufficient travellers. Some of these companies such as Citizen M, Yotel and Qbic have expanded through off-site modular methods of construction, which are faster and more controllable than traditional construction methods and guarantee a high level of comfort, technology and trendy atmosphere at a very competitive rate.
Significant boutique hotels in the United Kingdom include Malmaison and Hotel du Vin, both owned by property group Marylebone Warwick Balfour; Firmdale Hotels, whose new Dorset Square Hotel in Marylebone is scheduled to open next January; Eton Hotels Group; ABode Hotels; Myhotels; and D&D London, which will open its second London property, South Place Hotel, in January 2013. Campbell Gray Hotels, which established the one Aldwych, is looking for a new London project.
London boutique hotels have experienced a steady growth since 2004 even throughout the recession. According to STR Global, the sister company of HotelNewsNow.com, occupancy increased from 2004 to 2007, growing from 74% in 2004 to almost 80% in 2007, when the increased supply slowed demand growth.
In 2008 the segment saw a drop back to 2005 levels, but in 2009 and 2010 occupancy level rose to 75% and 77%, respectively. Revenue per available room for London's boutique hotels in 2009 and 2010 was £150 (US$239) and £170 (US$271) respectively, compared with a RevPAR of £105 (US$168) and £112 (US$179) for the city's hotels overall. By 2013, London’s boutique hotel sector is expected to double in size with more than 2,500 additional rooms, making the category the fastest growing sector in London.
The competition dictated by the dual presence of both independently-run boutique hotels and chain-operated lifestyle hotels has pushed hoteliers towards finding innovative ways to appeal to guests and create the most memorable experiences.
The boutique sector will continue to grow in the future, mainly in the form of both lifestyle hotels owned and/or operated by chain hotels to penetrate markets with high entry-barriers, like London and New York, and cheap chic hotels for the experiential travellers on the go.
Maria-Pia Intini is a consultant at Colliers International Hotels in London. Colliers International Hotel provides dedicated hotel and resort property expertise to accelerate the success of our clients around the globe. Colliers International has over 45 people specialising in hotels and resorts based in the UK alone. The team of international experts in London work alongside colleagues around the world to provide a network of hotels teams covering Europe, the Middle East and Africa, the Americas, Asia and Australia and the Pacific. Colliers International has more than 480 offices in 61 countries around the world.
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