Major Players Want Piece Of Boutique Hotel Business

NEW YORK— The boutique hotel concept has been around for over a decade, but is now more popular than ever. Even mainstream hotel companies are vying for a piece of its booming business. And why not? Boutique hotels command a higher RevPAR than chain hotels (without the marketing support and dollars a chain hotel relies on). With barely enough elbow room currently in the segment, several major players including Millennium & Copthorne, Marriott International, and Le Meridien Hotel Group, just announced they will throw their hats into the ring as well. Each revealed plans to create a new, or revise an existing, brand to compete in this hot hotel segment. But as these and other major chains crowd into the boutique arena, the concept— which traditionally had been very unconventional, is becomming watered down. Will the profitability of this segment soon follow as a result? Just last week, Le Meridien Hotel Group unfurled a corporate plan to investment of up to $1.2 billion to create a boutique-style brand within the luxury lodging chain. The new concept dubbed Art + Tech at Le Méridien, will create sophisticated, “cutting-edge” rooms said chief executive Juergen Bartels. Late last month, Marriott International said it intends to make changes to its Renaissance hotel brand by tweaking its “soul” and updating its look to be more “individualistic and distinctive.” While executives at the company went out of their way to point out that the Renaissance chain would not become “trendy,” they did indicate the brand’s new properties in Miami and New Orleans would be “full-service hotels with a lot of boutique aspirations.” As for Millennium & Copthorne, news of their “M” boutique hotel chain hit the industry earlier this year, with a launch date set for the end of 2001. However, reports later indicated that the company was thinking of renaming its hip hotel chain because “M” was too close to Starwood Hotels & Resorts’ W Hotels. Starwood is one company that got in fairly early on the boutique segment with its W Hotels chain. Since it launched W three years ago it has found great success with the chic brand and now has 15 W Hotels open. Since Starwood was one of the first “major” lodging companies to penetrate this segment, it has, for the last several years, been able to enjoy the financial benefits “boutique” brings to the profit equation. No one knows for sure if profitability will shrink as supply skyrockets. But if you are looking into entering the boutique segment— be careful. Make sure you are doing it for the right reasons. The concept is demanding and complex; the target market is finicky and savvy. Don’t expect to add the word “boutique” to your product and hit the proverbial jackpot. There is a lot more to the concept than that. Look at the innovators— those who have become synonymous with the words “boutique hotel,” such as Ian Schrager [Hotels], Chris Blackwell [Island Outpost], and Chip Conley [Joie de Vivre Hospitality]. Boutique hotels are more than stylish. They are unique and usually somewhat reflective of their location. There shouldn’t be another hotel like it in the immediate geographic area if it is truly a boutique hotel. If you do it right, it should be out-of-the-ordinary. After all, most boutique hotels depend on word-of-mouth for survival, and providing a remarkable guest experience will ensure people keep talking about your property— which will keep the profits flowing, even in a crowded marketplace.