NEW YORK— Despite reported declines in some sectors of the hotel market here, it seems the boutique-lodging segment is going strong. According to research conducted by PricewaterhouseCoopers, boutique hotels in New York City have once again established a premium over other hotels with regard to average daily rate, and are quickly gaining back occupancy they had lost from the aftermath of Sept. 11. “There were concerns after Sept. 11 that boutiques could be seen as an extravagance, and as a result at the end of 2001 their performance cooled,” said Sean Hennessey, director, hospitality & leisure industry practice, PwC. “But in 2002 they re-established themselves,” he said. “And we see that trend continuing in 2003.” Recent data from PwC shows boutique hotels on par with the rest of the industry in terms of occupancy— hovering in the low 70% range. However, boutiques are reportedly getting nearly $40 more in ADR on average than typical Manhattan hotels, according to the new data. Average daily rate at the end of 2002 was nearing the $220 mark for boutique hotels. A small cross section of the boutique sector conducted by HOTEL BUSINESS® supported the theory that these properties are performing well. Stephen Brandman, COO of Thompson Hotels, which owns and operates 60 Thompson, noted that property is nearly sold out on a consistent basis. “We had a phenomenal 2002 and are having an even stronger 2003,” he said. Others such as Hotel 41 and The Roger Williams, operated by Boutique Hotel Group and Tishman Hotel Corp., respectively, also reported solid business. One reason these properties are doing so well, according to Hennessey, is that customers today really appreciate a smaller scale experience. However, the latest research from PwC shows developers are not as comfortable going with a boutique hotel project, as some of the boutique hotels planned for New York have been scrapped or turned into branded hotel deals. “There’s a certain sense of security that goes with a branded hotel project these days as it relates to developers and lenders, even though it doesn’t correlate to the performance of those hotels versus boutiques,” he said.
