NEW YORK—It’s been more than three decades since Bill Kimpton launched his eponymous hotel collection, pioneering what would become the industry’s boutique segment, bolstered in later years by the likes of Ian Schrager, Barry Sternlicht and Chip Conley. And like timeshare before it, the term boutique has taken on a mixed meaning in terms of hotel size, amenities, service delivery and design, with owners and developers more often than not describing their projects—particularly for lenders—with the all-encompassing segment descriptor, lifestyle.
Additionally, the segment definition has become further skewed with the entry into the playing field of global lodging chains better recognized by consumers for cookie-cutter brands than cutting-edge hotels. Throw in a variety of independent properties that trade on the boutique label, and the segment adds one more aspect to the hodge-podge.
And herein lies the beauty of boutique from the developer/owner perspective—it provides a wide range of opportunity. It can have a brand affiliation, be independent, come to fruition via ground-up construction or be an adaptive reuse of a historic/commercial property past its prime that’s reinvented and repositioned as a hotel. And unlike the name implies, boutique properties no longer have to be small to fit into the category; they can have hundreds of rooms. What hotels do need to have to enter into the expanding segment is style, some roster of unique features, services or amenities that sets them apart and easily confers that sense of exclusivity upon guests by association
Interestingly, the boutique segment has been seeing somewhat of a resurgence, perhaps because it’s been difficult to build big-box hotels or markets have become brand saturated. And there’s yet one more twist: Just as clothes from the 1980s recently became popular again, and the cool of early 1960s design is everywhere thanks to Mad Men, the television series, the boutique segment is being “discovered” by a new generation of emerging hoteliers and developers who see it as something new.
Case in point: Bijal Panwala, a disc jockey and the owner of the soon-to-open, 76-room, boutique Hotel BPM in Brooklyn, NY, told HOTEL BUSINESS®, “I feel boutiques are kind of a new thing that people are discovering. I know, even for myself, I really never heard of boutique hotels in the past 10 years, so I really think it’s kind of a new thing for people. And depending on the brand, I think a lot of them are doing pretty well at fitting what the boutique image is. Boutique standards have been a unique experience, higher end, more luxury and more personal, and I think that’s something that we’ll really achieve with this hotel.” Panwala noted Hotel BPM will stream music throughout the public spaces 24/7 (see story, page 7).
Very often, the elitist guest attitude of “lifestylers” who seek out diverse boutique hotels allows owners the ability to charge a premium or utilize odd spaces to an advantage, e.g., creating rooftop “lounges.” It’s a combination that is providing a strong lure for boutique-development veterans and newcomers alike, and is pushing segment growth.
Robert Mandelbaum, director of research information services for PKF Hospitality Research, indicated the segment, as of early April, showed estimated increases in fundamentals for 2011 over 2010.
Based on a sampling of 152 hotels with an average of 152 rooms, occupancy advanced from 71.5% to 74.5%, with average daily rate increasing from $203.52 to $211.46. RevPAR moved up from $145.51 to $157.59 while total RevPAR in the period is estimated to have increased from $79,645 to $84,424. Profit per available room is estimated to have jumped from $17,491 to $20,884.
“Most boutique properties reside in the upper-tier chain-scales (luxury, upper-upscale, upscale) and our forecasts for occupancy in these chain-scales exceeds 70% for the next few years,” said Mandelbaum. “With occupancy levels that high, we are starting to see managers be more aggressive with their pricing. We are forecasting the strongest gains in ADR to occur in these upper-tier chain-scales.”
According to data from SVP Bobby Bowers at STR, supply growth in the segment increased 4.9% in 2011 over 2010, moving the number of rooms from 30,254,670 to 31,731,443, outpacing demand, which had a 10% change in the same period
Whether under a chain umbrella, independent or “born” boutique, hotels in this segment have the onus of staying “of the moment” much more so than traditional lodging facilities, and efforts are consistently being made to be au courant.
Food and beverage, for example, is intrinsically tied to the segment experience. Toward this, Kimpton Hotels and Restaurants recently decided to layer its culinary expertise over its group meetings business, with banquet menus crafted to offer creative and healthful options that promote the concepts of relaxation, energy and longevity.
Design also is a key element associated with boutique hotels, and when it launched its lifestyle entry into the segment several years ago, franchisor IHG was determined its Hotel Indigo brand would be anything but cookie-cutter. It’s a strategy that continues and no two Indigos are alike. For instance, in California, the Hotel Indigo Santa Barbara, owned by Santa Barbara Beach House Hotel, LP, and managed by Courtland-Dan Management Group, Inc., opened in February following a multimillion-renovation. Thirteen of the hotel’s 41 guestrooms feature private outdoor gardens, and interior design by Level 3 Design Group of Los Angeles included a plant-filled living wall, green space and energy-efficient elements such as European-style bathrooms with collapsible glass-wall showers. According to General Manager Kay Morter, the hotel also belongs to the Car-Free Alliance and offers a special discount for guests who stay at the hotel car-free. “The hotel offers hip, affordable accommodations for style-minded clientele and is also pet-friendly,” she added.
So what’s ahead for the industry’s “wild child”? PKFC’s Mandelbaum said, “Based on previous analyses we have conducted, boutique hotels tend to suffer more during recessions, yet flourish during prosperous periods. Given that we are entering a period of prosperity for the industry, this bodes well for the boutique segment.”
