The Definition of Boutique Hotels - Written By: Lucienne Anhar - HVS International
Since the beginning of the 21st century, the lodging industry has become increasingly over-supplied with big monopolies of hotel brands. These brands, predominantly based in North America, succeed in selling consistency across the nation and, for some, around the world. These lodging facilities publicize the meaning of "hotel" through the truly traditional definition: a lodging accommodation for travelers.
Boutique hotels are believed to have been invented in the early 1980s. Two of the first boutique hotels in the world opened their doors to the public in 1981: The Blakes Hotel in South Kensington, London (designed by celebrity stylist Anouska Hempel) and the Bedford in Union Square, San Francisco (the first in a series of 34 boutique hotels currently operated under the flag of one of the most eminent players in the boutique hotel world today, the Kimpton Group). In 1984, Ian Schrager opened his first boutique hotel in Murray Hill in New York City: the Morgans Hotel, designed by French stylist Andrée Putnam.
The definition of a boutique hotel varies, especially among the hotel industry's primary players. However, the majority of boutique hotel operators, creators, and owners can all agree on the following primary features of boutique hotels:
- Architecture and designStyle, distinction, warmth, and intimacy are key words in the architecture and design of boutique hotels, which seem to attract a niche of customers looking for a special and differentiated property able to fulfill their individual needs. Boutique hotels are not boxed into standards; the definition and expression of a theme is a crucial path to success.Many boutique hotels introduce different themes in each guestroom, making every single stay unique, even for their repeat guests. For example, the Library Hotel in New York City offers a different theme (from romance to music) in every guestroom. Many hotel owners are revitalizing older hotels, repositioning them as boutique properties. While true modernism and newly born design generally become "hip" in no time, it is usually those properties that succeed in combining historic details with chic elegance that outlast the fads.
- ServiceThe question that blurs the meaning of boutique hotels is, "Does size matter?" Most boutique hotel "celebrities" insist that it does, and that boutique hotels are properties that do not exceed 150 rooms. They believe that what distinguishes boutique hotels from standardized hotels is the connection that hotel guests experience with members of the hotel staff. Most of these hotels impose the acknowledgment of guest names by all hotel staff members, an experience that is clearly difficult to achieve in a large-scale hotel.Nevertheless, Ian Schrager, founder and president of Ian Schrager Hotels, which currently comprises approximately 3,000 guestrooms in nine properties, is among those who do not believe in this commonly accepted facet of the typical boutique hotel. With creative people as his target market, he defines "boutique" as an approach and attitude, with no regard to hotel size. Personalized service does not appear to be important at Schrager properties, especially in his "biggies," such as the Paramount Hotel (594 rooms) and the Henry Hudson Hotel (821) rooms. Instead, Schrager hotels place the emphasis on entertaining their guests by creating a theatrical atmosphere that attracts all senses: through architecture, design, colors, lighting, art, and music.
- Target MarketBoutique hotels generally target customers who are in their early 20s to mid-50s, with mid- to upper-income averages.
Although no standard definition of boutique hotels has been agreed upon, and the sizes of these types of hotels vary considerably, most boutique hotels do share some common characteristics. As with any other hospitality product, the success stories of boutique properties begin with fundamentals such as location, product quality, market demand, a clearly defined marketing approach, and effective distribution/reservations coverage. In light of these factors, boutique hotel creators detach their creations into two branches:
- Boutique hotels in city destinationsIn city destinations, location still ranks number one on guests' priority lists. Good locations for boutique hotels are not determined only by manner of convenience, but also by the "trendiness" and "chic-ness" of their respective neighborhoods. Accordingly, most existing city boutique hotels are located in vivacious cities such as New York, London, San Francisco, and Miami. Ian Schrager, for example, claims to only open his hotels in cities with enough depth — i.e., big fashion and media capitals. Nevertheless, more and more companies are targeting less cosmopolitan cities that are believed to have strong potential for boutique hotels: cities with vibrant economies and high-end residential areas, but bland, characterless hotel inventories.Both the style and the design of city boutique hotels are unlike the traditional resort boutique hotels. Cooler notes, modernism, and the interpretation of the 21st Century — at times matched with historical components and art — are considered modish, and are found in most successful city boutique hotels. Technology strongly relates to these factors, whether it is technology that enhances the ambience and promotes emotional contact between the guests and the hard attributes of the building (such as lighting and music), or technology that is provided for the convenience of hotel guests (such as in-room DVD players, flat-screen television sets, cordless phones, and computers with high-speed Internet access and the latest monitor genres).Entertainment in boutique hotels is an important dynamic in creating a lively, chic and trendy mind-set. However, in the boutique hotel concept, entertainment is not limited to events such as live music and performances; the idea of a boutique hotel is entertainment in its own nature: a hip restaurant, lounge, and bar; an exceptional theme; and visually spectacular decorations.
- Boutique hotels in resort destinationsBoutique hotels in resort destinations are exotic, small, and intimate. These boutique hotels give their guests a chance to explore the local feel without sacrificing luxury.Although location is just as important in resort destinations as it is in city destinations, the word "trendy" has a different designation in this matter; if location should be central in the case of city boutique hotels, trendy resort boutique hotels are generally well-hidden, tucked away in deserted corners of the islands or the mountains. The more difficult it is to reach the destination by means of common transportation, the more fashionable the location is considered.Successful boutique resort hotels unite traditional architecture with the comfort and luxury of modernism, without losing the personality of the local community. Each boutique hotel must develop its own recognizable flavor, with sumptuousness and excellence as the only similarities among boutique resort hotels. In boutique resort destinations, service is generally more important than it is in boutique city destinations. Exotic amenities take the role of technology in city destinations; in fact, boutique resort hotels actually promote the non-existence of electronics and communication devices in guestrooms as a competitive advantage. Traditional spas, rose petal baths, private individual plunge pools, honeymoon packages, and art and painting sessions are just a few examples of boutique amenities offered in resort destinations.
Most guests stay in boutique hotels because it is fashionable to do so, not because of the facilities the hotels offer. In this regard, boutique hotels are being marketed in a manner that is similar to many other goods, where the experience and the image are sold, rather than the product itself. Marketing an independent boutique hotel can be difficult, as there are generally financial restrictions and other resource restrictions. The main issue in marketing a boutique hotel or resort involves "sending a message" to the target market. Story development is more important than ever, which relates back to the special nature of the experience or location, or the history behind the creation of the hotel. The unique and easily related story must then be delivered through effective and affordable channels such as direct mail or direct sales, allied group marketing, affinity group travel planners, and public relations through press.
Boutique hotels bring certain benefits in terms of operations and profitability. Besides strong customer demand, the economics are favorable for operators. For example, boutique owners do not have to pay a franchise fee to become part of a larger chain. The hotel can survive and succeed without such costly amenities as restaurants and ballrooms/meeting spaces; however, these amenities, when styled in a boutique manner, can bring significant additional profitability to the hotel's rooms revenue. Once established, boutique hotels also tend to have a higher percentage of repeat business compared to the industry in general, which may reflect a smaller degree of volatility when going through difficult economic times. Nevertheless, smart boutique hotels must continue to adapt to the incessantly changing needs, tastes, preferences, and fashions in order to remain competitive in the flourishing boutique hotel market.
Lucienne Anhar, Consulting & Valuation Analyst at HVS International.