5 trends in the boutique business
07 APRIL 2015 7:52 AM
With a new definition for boutique hotels as the backdrop, a panel of experts re-evaluated the space from top to bottom.
ATLANTA—The boutique and lifestyle hotel segments has been called many things, among them fluid, slippery and difficult to define.
But with new definitions providing clarity, a panel of experts at the 27th annual Hunter Hotel Conference called for a reset to re-evaluate the space from top to bottom.
- Boutique: Unique in style, design-centric, either independent or affiliated with a smaller brand system, with 40 to 300 guestrooms.
- Lifestyle brands: Prescribed franchised products that are adapted to reflect current trends.
Here are five key takeaways from a breakout session titled “Owning and operating boutique & lifestyle hotels”:
1. Guests want what they want
While boutique guests can vary as greatly as the hotels offered in the segment, they do share some characteristics, said Heather Balsley, senior VP, Americas brand management, InterContinental Hotels Group.
“For the most, part they’re looking for a distinct and curated experience, and something that is uniquely local to that market,” she said.
Craig Greenberg, president of 21c Museum Hotels, said “unique” often is expressed through design.
“People are looking for unique experiences,” he said. “They’re looking for good design … whether it’s a big brand or unbranded. Nobody wants to stay in an ugly, crappy hotel room anymore. … If all brands and all hotels don’t start focusing on these things, I think long term they’re going to have challenges.”
Correlating “boutique” with “millennial” is incorrect, Greenberg added. Along the same lines, a boutique guest need not be cool or hip.
“Our hotels are real, contemporary art museums. Almost all of the people who stay with us are not art people. They’re regular business travelers like every one of us in this room who is coming through our market and wants something different in their stay,” he said.
2. Location less important
Boutique and lifestyle hotels can thrive outside of city centers, panelists agreed. But they must be in active, vibrant areas and leverage the best of their local surroundings.
“The term authenticity is correlated to this segment. I don’t think you can do a true boutique hotel in any city without taking in the components of your surroundings,” explained Michael W. Tall, president and COO of Charlestowne Hotels. “That’s what has led this part of the industry, this boutique side of the industry. It speaks to your location. It provides you the ability to provide experiences that you couldn’t otherwise get.”
Guests want to be near activity, near cool restaurants or arts, culture and shopping, panelists agreed.
Likewise, hotels need thriving surroundings to gain notice from local residents—particularly if food and beverage is an important part of the concept, Greenberg said.
“Your travelers need to find you, but also your locals need to find you. Locals need to be a big part of your hotel, both in your food and beverage and using your public space,” said Jean Smith, VP of lifestyle hotels at McKibbon Hotel Management.
The best location can be rendered moot without the right owner and operator on board, Balsley said.
“What we learned (launching Hotel Indigo) is that even in the best location, without the right ownership and commitment and understanding of what it takes to deliver not just the unique design but unique service culture … you’re not going to be successful,” Balsley said.
3. Togetherness and technology matter
Rooftop bars are table stakes these days, Tall said. The best boutique hotels differentiate through design, service and a number of other key unique selling points.
Technology is one of them, Smith said. Yes, some of the major brands are ramping up innovation. (See the recent slate of entrants announcing keyless room entry.) But boutique hotels often are positioned to do it better.
Advances such as keyless entry give guests control, Smith explained, but should not detract from personal experiences. When done right, technology should make the guest experience even better as it allows hoteliers to offer more choice, control and personalized stays.
Greenberg stressed the importance of vibrant communal spaces.
“One thing that boutique hotels did, and I don’t know if it was the Ace Hotel in New York or Portland before that, but this notion of the communal lobby as a gathering space was something that definitely was pioneered by other boutique hotels before us,” he said.
Balsley admitted it’s something the larger chains have jumped on, saying it is “now on the forefront of every mainstream brand.”
But that’s not all.
“If there’s something that maybe hasn’t yet been picked up that I think soon will be … it’s the one or two small touches in the experience that makes a guest smile, laugh, gives them a memorable moment,” she added. “It’s not a huge thing. It is the leopard print robe in the Kimpton room. … It’s those little things that make a big difference that actually don’t cost a lot.”
4. Distribution is now democratized
Hotel distribution used to be the big brands’ game. The Internet has democratized the process, panelists said.
But that doesn’t mean all use it the way they should, Tall said.
“It’s how you utilize the distribution system and who your partners are to ensure your reservation costs are as low as they can be,” he said.
Tall said distribution is more effective when done without the constraints of brand oversight.
“We don’t rely on the brands to do that. We can move instantaneously to move rates. We understand where our margins are. We can open channels, shut down channels. We’re not locked into national contracts,” he said.
Not all independent, boutique hotel operators are as successful, Greenberg said.
“There’s a big difference, even within this niche in the industry,” he said. “There are some independent hotels that are heavily, heavily reliant on (online travel agencies). At the other extreme there are some like ours. We have four hotels; we’re very small. Our OTA reliance is in the single digits.”
5. Lenders have bought in
Lenders used to run for the hills when an investor sought debt financing for an independent hotel, Tall said. That’s not the case anymore.
“There’s a lot of education that has to be done with that still, but I think they’re seeing a tremendous upside. There’s a risk/reward. There absolutely is. But there’s a tremendous upside.
“Long story short, it’s come a long way,” he said of lenders’ perceptions of the boutique space.