Management companies devote full divisions to boutiques
Management companies devote full divisions to boutiques
26 FEBRUARY 2020 1:09 PM

Management companies such as Davidson Hotels & Resorts and Aimbridge Hospitality are pioneers in launching boutique and lifestyle operation verticals, which provide a competitive edge in an evolving segment, according to sources.

REPORT FROM THE U.S.—Some management companies well-known in the brand space have had success in creating subdivisions specifically tailored to boutique and lifestyle hotels.

In 2015, Aimbridge Hospitality acquired Evolution Hospitality, which became the luxury and lifestyle operating division of Aimbridge. Will Loughran, COO of Evolution, said via email the next-generation traveler prefers choice, but not the predictability of any one brand.

“This added to the importance with having dedicated operating teams that live and breathe within this space,” he said. “We are seeing an increase in consumer expectations for unique, immersive experiences, locally-sourced food and beverage and best-in-class service.”

In 2016, Davidson Hotels & Resorts launched its lifestyle operation Pivot Hotels & Resorts, knowing the landscape was evolving, said Patricia Davis, *Davidson's SVP of marketing and communications.

Davidson really felt that it would be important to get involved in that space in a unique way,” she said.

At the time, the management approach taken with Evolution and Pivot was fairly novel.

“I really feel like we were among the first,” Davis said. “Certainly there are lifestyle operators out there but we were among the first to really say ‘we’re going to create an operating vertical that is different than what we have been doing.’”

To create Pivot, Davidson reached out to its longtime partners to understand what they would be looking for in a lifestyle operator, she said.

Pivot began with Davis, one other person and San Francisco’s Hotel Zephyr. Now, almost five years later, Pivot is a fully fleshed out lifestyle operating vertical with a portfolio of 18 hotels and six in the development pipeline, she said.

Having support from a bigger entity
Evolution is lucky in a sense that it has support from both its parent company Aimbridge as well as the Intrigue platform, launched in 2017, which originated with Interstate Hotels and Resorts, Loughran said.

Aimbridge acquired Interstate in 2019, creating the largest third-party hotel management company in the world. Together, the combined portfolio between Aimbridge and Interstate is more than 1,400 hotels.

Evolution is a vital differentiator for Aimbridge, offering owners significant advantages, Loughran said. The Intrigue platform brings expertise in guest experience, programming and F&B in the lifestyle segment, he said.

“The end benefit is that we have a tailored and unique model for the lifestyle segment while being able to lean into the parent company for synergies through procurement, accounting and brand support,” he added.

Davidson is the mothership of Pivot, Davis said, and there is plenty of crossover between the two. For example, Pivot emulated a lot of best practices from Davidson and morphed them to fit a lifestyle operation, she said.

The two also share several resources such as marketing, legal, accounting and information technology, which enables Pivot to provide scale to its ownership partners, she said.

“Where we can supply a service that doesn’t have to be completely tailored to a lifestyle application for a brand application, we seek out ways to do that. Pivot has really been able to leverage those same resources as Davidson,” she said.

Managing a boutique hotel is different from managing a branded hotel.

The main difference, Davis said, is that the branded environment is “more prescriptive” than most lifestyle environments. However, she said the branded hotels are moving toward the experiential touchpoints that boutiques cultivate.

“In some areas there are similarities, but where the two paths really deviate certainly is on the independent side, where there isn’t a brand necessarily dictating all the rules and regulations,” she said. “In an independent/lifestyle hotel, it really is up to the operator.”

Will more follow suit?
Davis said the industry might soon see more management companies like Davidson launch their own lifestyle verticals as the space becomes more competitive.

“People are generally expecting a different experience from their hotel partners and from their experiences within a hotel,” she said. “I do think that requires a special skill set, and so I do expect other management companies to, maybe if they don’t develop an entire operating vertical, I think they would probably expand their resources to include people who have that expertise.”

Loughran said other management companies have dedicated team members to create a lifestyle vertical, but noted “it is hard for others to catch up or find viable outsourcing that will enable them to be successful.”

Challenges in boutique management
From a marketing standpoint, creating points of differentiation remains a challenge within the boutique management space, Davis said.

“There are a lot of hotels out there, and communicating what your (offerings are) that are different or that suits the needs and desires of the guest is really a challenge, particularly as the lifestyle experience pervades the space,” she said.

To help create differentiation, Pivot focuses on programming at each property, she said. As operators, she said it’s key to stay in tune with clientele to be able to deliver the right experiences. Programs include community partnerships, cooking classes and activities such as sandcastle building, she said.

Loughran said repositioning or converting hotels into the lifestyle space can require heavier lifting than might be expected.

“Expectations are high, but so are conversion expenses. In some instances, when saving comes into play, it might be at the expense of some of those finishing programming touches that are so important,” he said.

He said for many of Evolution’s hotels, finding mid-week business is also a challenge. With demand softening, developing defensive strategies to support mid-week business is critical, he said.

Additionally, the industry is facing a slowed-growth environment. He said owners look at a management company to understand the consumers and provide solutions across the full range of product categories.

“Evolution is our answer, and frankly the best answer for lifestyle. Engaging a soft brand is a great defensive move for a hotel owner if faced with an uncertainty or concern,” he added.

Growth goals
Evolution currently has a portfolio of 80 hotels and a “rapidly growing pipeline,” Loughran said. He did not pinpoint a top-end goal for growth, noting it’s more important to focus on being an industry leader in the space.

Evolution works with owners and hotels across a broad spectrum, he said. The owner, though, must believe in the hotel and be willing to invest in the product and experience, he said.

“This can be the individual owner or a professionally managed (real estate investment trust). These hotels may have more emphasis on training and development so we can put career paths and retention in front of those associates that would like to stay and operate in this space,” he said.

Davis said Pivot is excited to work with assets that can deliver something different.

“What is the criteria for falling into Pivot?” she asked. “The first is it a hard-branded asset or not? If the answer is no, then it probably is going to go to Pivot (and not Davidson). But really, it also depends on the level of lifestyle application.”

Markets where Pivot currently is developing include:

  • Omaha, Nebraska;
  • Dallas;
  • Hollywood, California;
  • Salt Lake City;
  • Atlanta; and
  • St. Pete, Florida.

*Correction, 26 February 2020: This story has been updated to correct Patricia Davis' title. 

No Comments

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.