Top 10 Reasons Why You Should Develop a Boutique Independent Hotel

BY SAMUEL TROTTER 

Trying to decide whether or not to go independent or with a brand?  Here are the top 10 reasons why you should reconsider that tired old brand and make your mark on the world….

1. Franchise fees: An independent property won’t be paying franchise fees. How much does this cost? According to the HVS 2013 Franchise Fee Guide, up to 17.2% of room revenue. Not profits, room revenues. This is big money. How much business will the brand actually bring? In fact, Marriott’s own “boutique” hotel is outperforming all of its other brands on RevPAR except the Ritz Carlton (Source: HVS – Marriott Brands Performance Update).  
2. Use of technology: Now there is a better line of communication between you and your guest thanks to vanishing travel agents, online search engines and websites dedicated to helping consumers find their next place to stay. The mass marketing of brands may not be necessary for your property. Tripadvisor.com is the largest travel website with over *40 million unique visitors per month. You property willbe found. *Source: comScore Media Metrix, Worldwide, August 2010
3. Incentives are equalizing: With Stash Rewards, consumers are no longer tied to one brand to accrue points.
4. Old or historic properties: They lend themselves better to boutique hotels where uniqueness is celebrated, odd floor layouts embraced. Adhering to a brand’s standard here could be costly and difficult in itself.
5. Targeted niche markets: Boutique Hotels are reflective of today’s celebration of individuality.
6. E-commerce: Online travel agencies such as Orbitz and Expedia have replaced travel agents, your website can replace them. Our group has been able to reduce our reliance on online travel agencies to as little as 15%, having the property take in as much as 85% of the total business in house. This greatly reduces expenses and adds directly to the bottom line.
7. Higher rates: In many markets boutique concepts are able to command better rates than branded properties with similar amenities and room sizes simply because the consumers they cater to want to “experience something different.” Real Estate Weekly’s article, Boutique Hotels Reaching New Height writes, “at the national level, boutique space reflects an occupancy premium of approximately 13%. The boutique sector also exhibits strong growth in RevPAR. In 2012, 2013, and 2014 RevPAR is trending at 6.3%, 7.4%, and 8.8%, respectively, exceeding national averages, for the sector at large, in the last two years. The demand in growth for boutique rooms is predicted to exceed the growth for traditional hotel rooms and the growth in demand for boutique hotel rooms will continue to exceed the growth in supply through 2015 with RevPAR premiums continuing through 2017.”  This is why the big brands are all developing boutique brands. Source: The Rush to Boutique by Jane Levere of The New York Times
8. Boutiques are growing by as much as 10% in the next 10-15 years. They will go from making up 3% to up to 6% of all hotels in the United States. Source: The Rush toBoutique by Jane Levere of The New York Times
9. Happier neighbors: In our experience, boutique hotels have been better embraced by their neighborhoods than their branded counterparts. They tend to blend in with the community, offer high quality dining and bring up local real estate values.  
10. Proud ownership: Boutique hotels are a reflection of their owners. Nothing can replace making your own mark. 

Boutique hotels reaching new heights

By REW Staff

ANDREW POSIL

By Andrew Posil, Massey Knakal Realty Services

While the national and New York metro lodging markets boast strong metrics, boutique hotels, as a subset, are outperforming their branded brethren.

Despite the relatively new product’s outstanding performance, defining and classifying what constitutes a boutique hotel remains a challenge.

Since Ian Shrager and Steven Rubell in 1984 first opened the doors to Midtown Manhattan’s Morgans, the original boutique hotel, it became clear that this new approach to lodging would become a hit. Initially, Morgans’ design and attention to detail offered guests a distinct and stylish, yet also functional experience that could be found nowhere else.

Morgans pulsed with a “who’s who” of pop culture which drove notoriety and inspired competing hoteliers to push the envelope of the hotel experience.

Despite the early excitement, the Morgans’ experience and effect far surpassed what could have been anticipated or predicted for today’s hotel market.

According to Lodging Econometrics, there are 151 hotel projects in the New York development pipeline today totaling 26,244 rooms. Of those, 73 projects are currently under construction for a total of 13,318 rooms.

While there are just three luxury branded hotels, totaling 688 rooms, being developed, there are 18 boutique independents underway totaling 3,042 rooms.

The increasing success of New York’s boutique hotels is one of the factors driving developers to choose the boutique option more frequently than in any other market in the country.

In a recent survey by PKF Hospitality Research, the superior performance of the boutique class is evident.

At the national level, boutique space reflects an occupancy premium of approximately 13%. The boutique sector also exhibits strong growth in RevPAR. In 2012, 2013, and 2014 RevPAR is trending at 6.3%, 7.4%, and 8.8%, respectively, exceeding national averages, for the sector at large, in the last two years.

The demand in growth for boutique rooms is predicted to exceed the growth for traditional hotel rooms and the growth in demand for boutique hotel rooms will continue to exceed the growth in supply through 2015 with RevPAR premiums continuing through 2017.

Boutiques offer owners another distinct advantage. While comparable in payroll expenses and income from room rental and food and beverage, boutiques spend, on average, $7,564 in marketing per available room each year compared to $8,620 for branded hotels. This savings largely results from the avoidance of marketing fees levied by national brands for access to their reservation platforms.

Common wisdom points to two features that define a boutique hotel. First, boutique hotels are traditionally independently operated which permits greater creativity and less standardization. Second, they are generally small in size facilitating more personal service.

However, on closer inspection, it is clear that there are many exceptions to these generally accepted principles.

The founding tenant of the boutique hotel is that it must be independently operated — not flagged by a national brand. However, this rule has been dispelled in two meaningful ways.

First, pioneering boutique hoteliers have grown organically to become nationally recognized brands. For example, Bill Kimpton, founder of Kimpton Hotels, through proprietary investment and third party management, enlarged his portfolio from a single hotel in 1981 to over 60 hotels today, gaining wide brand name recognition in the process.

Ace Hotel on West 29th Street

Other boutiques, such as the Ace Hotel, or the Joie de Vivre, have grown into recognizable brands with multiple locations.

The other challenge to the notion that boutiques must be independently operated is the emergence of national hotel brands developing their own boutique labels.

Marriot has partnered with the original boutique hotelier, Ian Shrager, to develop Edition where, despite the involvement of Marriott, Shrager’s boutique-touch created an independent feel.

While Edition is in its early stages, the flag is open for business in Istanbul and London with eight more hotels planned for delivery in gateway cities around the world including New York in 2015. Likewise, Andaz by Hyatt, is another boutique concept developed and operated by a leading mainstream hotel group. Starwood has grown the W, perhaps the most mainstream of boutique hotels, to 68 locations globally.

The second commonly held belief, that a boutique hotel must be a small size, is easily dispelled. The Dream Downtown in the Meatpacking District offers 315 guest rooms. The Royalton in Midtown Manhattan offers 282 guest rooms. Both hotels are considerably larger than typical boutique hotels, and both have unique, and utterly cool ambiance that create unforgettable guest experiences. Large boutique hotels feel intimate despite their size.

So, what seems to matter when classifying a hotel as boutique more than the number of rooms or the number of flags, is the overall experience which the hotel offers for its guests – it must be distinctive, memorable, and most of all, pleasurable.

While the definition of boutique may remain nebulous, it is clear that, just as it was at its inception, the customer’s desired experience will drive the product in new and exciting directions.

Laura Ashley's Boutique Hotel

Laura Ashley heads to the Lake District for second boutique hotel opening

by George Sell 

The Belsfield is Laura Ashley's second UK boutique hotel

UK: Interiors and fashion retailer Laura Ashley opened its second boutique hotel, in Bowness-on-Windermere, Cumbria.

The 62 bedroom property, called Belsfield Lake District, will be operated by the Corus Hotel Group. Originally built in 1845 it is located on the shores of Lake Windermere in the south of the Lake District National Park.

It has recently undergone a £3.5 million refurbishment which includes interiors by the Laura Ashley interior design service team using the brand's homeware collections. It also features a heated indoor swimming pool, sauna and gym.

In July last year, Laura Ashley opened its first boutique hotel, Laura Ashley The Manor , in Elstree, Hertfordshire.

TripAdvisors's New Program Launch will bring in Small Hotels

TripAdvisor’s New Program Launch Will Bring In Small Hotels Like Never Before

Dennis Schaal, Skift

@denschaal

Booking.com, with its 354,000 hotels, has the largest collection of properties among booking sites, but TripAdvisor has launched a new program, TripConnect, that may enable it to attract a swath of small hotels, B&Bs and inns that even Booking.com hasn’t reached.

With TripConnect, independent hotels that are subscribers to TripAdvisor’s Business Listings and who work with one or several of 300-500 participating Internet booking engines, including Sabre Hospitality, Pegasus Solutions’ Open Hospitality, TravelClick’s iHotelier, will be able to enroll and use a self-service TripAdvisor auction platform modeled after Google AdWords, Facebook and LinkedIn to place their bids and participate in TripAdvisor’s hotel metasearch, with the ability to change their bids every 24 hours.

Independent hotels won’t have the money that large online travel agencies and hotel chains will bring to TripAdvisor’s hotel metasearch, but perhaps the smaller properties will get a little more flexibility than the larger players by using the auction platform.

The independent hotels can use the auction platform to set a daily cap or maximum budget, and they can view a forecast number of clicks and click-through rates based on their bids, which might range from $2.20 on a desktop to $0.70 on mobile, depending on the market, position or other circumstances, for example.

The rollout of TripConnect is a big deal for TripAdvisor, the independent hotels, and competitors because it has the potential to bring on board a huge number of independent and smaller properties that have been mostly shut out of hotel metasearch.

Kayak works with some of these Internet booking engines to woo the participation of some independent hotels, but TripAdvisor appears to be doing it on a much larger scale.

“We have never been able to adequately address the needs of the long-tail provider,” TripAdvisor CEO Stephen Kaufer tells Skift. “Can I participate in your Check Rates or your meta offering? The answer was no, you can’t.”

Read MoreThe 6-Year Evolution of Visit Houston’s Mixed Media Ad Campaign

“In the matter of a few short months, we think that most properties will be able to connect and have their best pricing and availability appear next to all the big guys,” Kaufer says. “That opens the door to additional relationships, from TripAdvisor’s perspective, to additional relationships with hundreds of thousands of hoteliers and lodging providers.”

There are 50,000 hotels worldwide that currently subscribe to TripAdvisor’s Business Listings, and many more that work with Internet booking engines may sign on so they can participate in TripAdvisor metasearch.

Programs of this type are something that B&Bs, inns and independent hotels have sought for years to enable direct bookings.

Whether it is airlines, hotels, car rental companies, cruise lines, global distribution systems or online travel agencies, the travel industry grapples with the hangover of trying to make things work optimally when they have to drag legacy systems, in technology or otherwise, along for the ride.

People at HotelTonight, for example, will tell you how much easier it was to build a same-day hotel booking app from scratch a couple of years ago than it was for Priceline to construct a copycat app that is saddled with requiring users to go through dozens of more clicks than the HotelTonight app to book a room because Priceline needed to tie-in with existing, legacy systems.

Enter TripAdvisor, which today began rolling out the new global platform, TripConnect, that will enable independent hotels, B&Bs and inns to participate and compete in TripAdvisor’s new hotel metasearch, officially called Hotel Price Comparison, for the first time.

TripConnect will give these smaller, independent hotels something that Expedia, Booking.com, Travelocity, Marriott, Hilton, and InterContinental don’t have when participating in TripAdvisor hotel metasearch — a self-service cost-per-click advertising plaform.

It’s a dirty little secret in metasearch that most of the major players don’t offer their OTA and hotel customers auction platforms, such as Google AdWords, when they want to bid for positions.

For example, the OTAs and hotel chains using TripAdvisor for hotel metasearch can change their bids every 24 hours, but they must do so through their human account managers.

Jean-Charles Lacoste, TripAdvisor’s vice president of direct-connect solutions who heads up the rollout of TripConnect, points out that there are advantages of using account managers for hotel chains with hundreds or thousands of properties because of the complexities of the proposition.

Others would say, however, that the lack of a self-service auction platform for these big players is in part, at least, a legacy issue that brings some inefficiencies.

Will they be able to outbid the big chains? Perhaps tactically in some markets or at times for some properties where the competition isn’t that important to the larger hotels.

But, Lacoste points out that the independent hotels and B&Bs will have an advantage at some junctures when they show availability, and the larger hotels are “sold out.”

There is also demand in its own right for smaller hotels for travelers who want to avoid the big chains and that whole experience, Lacoste says.

“It’s a unique way we can use technology to level the travel accommodation landscape, placing small and independent properties on an equal footing with large hotels and online travel agencies,” Lacoste says.

That may be a bit of an overstatement. The playing field won’t be level, but at least TripAdvisor’s auction platform, a new product largely unencumbered by legacy issues, will give independent hotels and B&Bs an advantageous new weapon.

And, many of TripAdvisor’s account managers likely aren’t happy about the whole thing.

Small Hotels Advisor with Ian Schrager

SMALL HOTELS ADVISOR


IHIF - Hotel Investment Forum - Berlin, Germany


Boutique Hotel pioneer Ian Schrager was honoured with IHIF Hotel Investment Forum lifetime achievement award in Berlin, Germany. After receiving his award Ian Schrager said that; Boutique hotels are the future of the hotel business. His vision has been widely associated with the global concepts such as Boutique Hotel. Boutique Guru also creator of EDITION Hotels Brand with Marriott International. We had an occasion to have a photo together at Hotel Intercontinental Berlin, Germany.

Hilton follows suit with Curio lifestyle hotel collection launch

by Piers Brown / 03 June 2014 / 0 Comments

SLS Las Vegas - part of Hilton's Curio Collection

Curio, Hilton's 11th addition to the Hilton Worldwide brand portfolio, is combining individual hotels that wouldn't normally fit into the Hilton brands such as Embassy Suites, Waldorf or Conrad.

"These are rare, statement hotels that have their own following. There has been huge demand for these types of properties" said Chris Nassetta, Chief Executive ahead of the brand launch. 

Launching under the 'a delight to discover, impossible to forget' banner the brand is targeting four and five star luxury boutique and lifestyle resort properties to join the collection. The brand will use it's scale and scope and the Hilton Honours loyalty program which has around 40 million members to drive occupancy in addition to other distribution channels. Fees for owners to tap into program benefits and the Hilton reservation system are so far undisclosed. The SLS Las Vegas is the biggest name attached to the collection, with deals in Doha and Dubai expected imminently. There are already comparisons being made with Marriott's Autograph Collection brand which successfully pioneered big brand support for individual and independent hotels, whilst Hilton licked its wounds following the espionage lawsuit and the removal of Hilton's then Denizen boutique hotel brand -  a successful legal action brought by Starwood Hotels and Resorts, which included a two year boutique hotel non-compete brand 'ban' which expired last year. Curio is just one of two lifestyle brands being launched by Hilton - the next is a unnamed brand expected to target tech-savvy travellers.

www.curiocollection.com

IHIF 2014 conference review - Boutique Hotel News in Berlin

by George Sell / 07 March 2014 / 1 Comment

Delegates networking at IHIF2014

African dancers and musicians at the Rezidor party

Taleb Rifai, secretary-general of UNWTO and David Scowsill, president and CEO of WTTC

Ian Schrager receives his lifetime achievement award

The event, held at the InterContinental Berlin, attracted close to 2,000 delegates from 73 countries.

David Fenton, senior economist at RBS set the scene on day one with a presentation on the economic landscape. He told the audience that the developed economies of the UK, USA, Japan and the Euro Zone are in a better economic place now compared with a year ago.

Moving to the industry landscape, Michael Fishbin, global and Americas hospitality leader at Ernst and Young said the last year has seen an increase in US private equity backing hotel development in Europe, both from established players and new entrants. The feeling in the investment community is that US prices are "full" but there is value to be found in European markets such as Ireland and Spain, he added, pointing pout that growing customer demand from Millennials and Chinese travellers was fuelling this process.

HVS London chairman Russell Kett then chaired a session called Investors Respond. In a theme that was to be echoed throughout the conference, Jim Risoleo, executive VP at  Host Hotels said: "In certain European markets there will be numerous opportunities to buy assets at significantly below replacement value. Spain will be a strong market in 2014. Host hotels is also very bullish over the Brazilian market."

Majid Mangalji, president of Westmont Hospitality Group added that the UK and Ireland "are ahead of the curve in terms of transaction volume".

The evening of day one saw a spectacular African-themed party thrown by Rezidor at the Radisson Blu Berlin, the facade of which had been colourfully lit with an African pattern. Delegates were bussed across form the InterContinental and enjoyed copious food and drink while being entertained by African musicians and dancers.

Back at the conference for day two, Taleb Rifai, secretary-general of the World Tourism Organization (UNWTO) and David Scowsill, president and CEO of the World Travel & Tourism Council (WTTC) gave an enlightening talk in to the travel and tourism sector, with Rifai describing the hotel sector as "the backbone of the tourism industry".

The session opened with the statistic that a billion people crossed international borders in 2012, a figure is projected to increase to 1.8 billion in 2030 (representing three to 3.3 per cent annual growth in the tourism year on year until 2030). Travel and tourism employs 276 million people globally, or 1 in 11 of the global workforce, and contributes $USD 6.8 trillion - nine per cent of the global economy.

Scowsill said the tourism industry is growing at about one per cent ahead of the general economy, but warned that the industry doesn't do a good job of promoting itself to young people as a good environment to work in.

Next came "The World According to the Global CEOs", moderated by Michael Hirst, a consultant with CBRE Hotels. The session was marked by the unusually forthright and entertaining statements of the new chairman and CEO of Accor, Sébastien Bazin.

Echoing an earlier theme, Jim Abrahamson, president and CEO of Interstate Hotels & Resorts, said that the recovery in the UK market is now reaching well in to the provincial markets, and tipped boutique brands to be one of the key sector growth areas in 2014.

Boutique hotel pioneer Ian Schrager, was then honoured with the IHIF lifetime achievement award. In a video clip preceding the award, Marriott CEO Arne Sorenson said: "The boutique hotel sector, which Ian invented, is the most copied space in the industry."

After receiving his award, Schrager said of his creative processes: "Market research and focus groups are irrelevant to me. I tap in to the collective unconsciousness. It's alchemy, something ethereal."

He also spoke of his collaboration with Marriott on the Edition brand: "There are more similarities between the people at Marriott and myself than dissimilarities. We are both driven by excellence, we are both incredibly competitive and want to be the best."

Claiming that lifestyle hotels are the future of the business, Schrager also revealed plans to launch a sister brand to his Public hotels at a lower price point. "I want to bring real style and design to that price point," he said.

A breakout session devoted to lifestyle hotels was entitled "Differentiating for profit". Peter Norman, SVP real estate and development at Hyatt said the company consumer research revealed that customers didn't want the Hyatt name on the Andaz brand. He described Andaz Amsterdam as "very local"  - its design is based on the crosses which are the emblem of Amsterdam; and revealed that future Andaz target destinations include Barcelona and Madrid - "cities where we don't have a major presence".

Billy Skelli-Cohen, director of hotel acquisitions and development at Deerbrook Group (the owner of the forthcoming Mondrain Sea Containers in London) described the relationship between an owner and an operator as "tricky - a dysfunctional marriage."

Kevin Montano, SVP Edition global development, Marriott International, said: "The renovation of a historic building was the biggest challenge of the London Edition," and revealed that both hotel occupancy and rate and F&B are performing better than expected. "F&B is feeding occupancy, which is something we didn't expect," he said, adding: "You need to ensure your F&B outlets are widely used by the local community. They drive the F&B and attract hotel guests. If your guests come out of the lift and see an empty bar or restaurant, they will go out the door and you have lost them to the city."

At a session about innovation, subtitled "Can hotels keep up with the home experience?" Markus Lehnert, VP of international hotel development at Marriott, said: "We should move away from offering guests technology that they don't need. The hotel should be a facilitator for guests to use their own technology," adding: "The people in a hotel can also create a wow factor - a super smile in a budget hotel can do the trick as well as super service at a luxury hotel."

During the same session, Frank Wolfe, CEO of Hospitality Financial and Technology Professionals, said: "The simpler things are the better - the essentials are great high speed internet and sensible plug placement. As a road warrior, if a hotel doesn't have good wifi they are stealing family time from me as I will have to work in my downtime."

The prevailing atmosphere at the conference was certainly one of confidence and optimism, and there was a real sense around the event that deals are being done, and the short- to medium-term future of the industry is looking bright.

The IHIF 2015 will take place from the 2-4th March 2015.  Visitwww.berlinconference.com for more details.