Boutiques and branding were a big focus

Carlo Wolff

HNN contributor

MIAMI BEACH, Florida—Boutiques and branding were a big focus during the Lifestyle/Boutique Hotel Development Conference last week.

The conference set independent against chain; lifestyle (which canny hotel veteran Richard Kessler suggested was lower-scale than 3- and 4-star boutiques) against boutique; owner-operator against franchisor. The networking was non-stop, but there was no news of deals, let alone a new brand. Sponsored by Lodging Hospitality magazine in association with HVS Hospitality Management, the event drew some 200, approximately 25 fewer than its 2009 debut.

Improving conditions

Panelists during the “Lifestyle/Boutique Leaders Speak Out” session agreed 2010 is turning out far better than 2009; financing for renovation, conversion and acquisition is starting to free up (but not for new-build); and gateway cities—except for Miami, which experienced a supply increase of nearly 16% since 2008—are beginning to reclaim some of the business they lost in the recession.

During the panel, Kessler, chairman and CEO of The Kessler Collection said he expects to end 2010 with 71% occupancy, up 8% from 2009. While rate is still a problem and banquet sales are down, he predicted revenue per available room increases in the double digits in 2011.

Focus on branding

Seven of Kessler’s 10 properties are affiliated with Marriott International’s new Autograph collection, boosting reservations. Kessler said independents entering into such “soft brand franchises” must deal hard to keep their identities, hold onto their websites, control their design and maintain their personality.

“It’s a tricky decision,” he said. “We have to be careful that our marketplace doesn’t see us as a Marriott-branded property.”

Morgans Hotel Group customers buy their “jeans in a small boutique in Soho,” CEO Fred Kleisner said.

“If they see those jeans in Neiman Marcus, they will burn them.” Boutiques have gone mainstream, he suggested, moving from kinky to legitimate.

He added, “Our top corporate customer happens to be Microsoft.”

Janis Cannon, VP of global brand management at InterContinental Hotels Group and leader of Hotel Indigo, was in the hot seat, defending Indigo against the charge that chains couldn’t create boutiques because “chain” and “unique” can’t coexist.

Cannon said Indigos, while sharing design and operations hallmarks, reflect their locale. Indigos run from 44 to 210 rooms and don’t have the operational problems of a larger hotel, she said, adding Indigo has largely outgrown secondary and tertiary markets and plans to focus on gateway cities like Boston, Los Angeles, and Washington, D.C.

Kleisner wants Morgans in D.C. and Chicago. And Raul Leal, president of the imminent new brand Virgin Hotels, is looking for the “right boxes” in various gateway cities starting in the United States and having “constructive” conversations with lenders.

Desires Hotel (http://www.desireshotels.com/) CEO Richard Millard, like Leal, suggested “human capital” is key and training crucial because the U.S. “is not perceived as the leader in the industry.”

Branding a boutique

Economies of scale and brand equity were stressed during the “Should You Brand a Boutique” breakout panel.

Stephen Brandman, co-owner of Thompson Hotels, emphasized the one-on-one relationship Thompson enters into with its owners, some of whom have “emotional interests in the building.”

The larger the number of properties, the more likely a chain infrastructure would help, said Steve Miller, VP of development for Wyndham Hotel Group. “If you hire a brand to manage, the brand comes with the management.”

He and Kevin Lewis, president of extended-stay brands for Choice Hotels International, suggested if a boutique property is in a good location, has iconic status and does bang-up business, chain affiliation isn’t the right way to go.