Boutique Hotels

Industry Context 1

Geanina Maria Lungu

 A Look at the Boutique Sector

As we are often told , hospitality customers are an increasingly sophisticated clientele and
there is evidence that these sophisticated customers may be more influenced by a sense
of style and design. It is argued that there is a shift with increasing experience from
functional benefits to emotional ones . This is best seen in the popularity and placing of
the boutique hotels and their individual offers , which compete effectively on a small
scale with the much larger and established brands . ( Hospitality Business Development
by Ahmed Hassanien , Crispin Dale , Alan Clarke, Michael W. W. Herriott )

Boutique hotels are gaining in popularity in recent years and new properties are
appearing the most unlikely places. They are associated with high prices, fashionable
designs and a discerning clientele, yet there is no definition that neatly captures what a
boutique hotel should look like. It can be said that that a boutique hotel guest is a person
with great pretensions and special requests, from secretarial services, consulting,
translation, programming and management of business meetings, to end the day with a
concert or a table in a sophisticated restaurant. In general, they are aged between 30-50
years, with above average income, and seeking authenticity, new experiences, great
attention or, conversely, total discretion.(Appendix 1 )

Especially where boutique hotels are concerned, there is more to a pretty face, when
having a deeper look , you may find wit, personality, humor and sophistication -- details
that can turn idle curiosity into true love. Many boutique hotels have that fashionable
coolness that provokes with astonishing architectural designs and imaginative displays of
art. Is this the future of the hospitality industry? Hip or historic, elegantly contemporary
or uniquely themed, from country retreats to castles to sheer luxury to celebrated designer
hotels, boutique hotels are all unique, in archicterual style, sophisticated interior design or
decorative theme. Built in refurbished historic buildings, generally in central locations,
boutique hotels particularly excel in design, attention to detail and personalized service
that translate into loyalty to a demanding clientele. ( Appendix 2 )

Is it small and intimate ? The most common question related to lifestyle hotels is "Does
size matter?" The average size of a boutique hotel is 80 rooms, but it can have as few as
40 and as many as 200, if not more , such as the Andaz in London’s Liverpool Street
( 267 rooms ), depending on the layout, the "look and feel." Boutiques may have a small
conference room for corporate retreats, but they do not have convention facilities.
Boutiques may provide data ports and in-room fax machines, an off-lobby business
center, and other amenities to make work go more smoothly, but they cannot be confused
with business-oriented hotels.
Famous chains have adopted this style (W by Starwood, Edition by Marriott , and hotel
Indigo from InterContinental Hotels Group ) , offering all of the advantages provided to
any of their other hotels, such as loyalty programmes,standards and the economies of
scale associated with international chains . They have also collaborated with famous
designers such as Bulgari , Missoni and Armani to add a touch of novelty , depending on
the location of the property and its facilities.

On the other hand , 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.( Lucienne Anhar, Consulting &
Valuation Analyst at HVS International) ( Appendix 3 )
As wonderful as they sound, boutique hotels require a tremendous amount of investment
and it is probably not realistic for most small investors to open a boutique hotel on their
own. However, some boutique hotel brands have structures in place for limited
partnerships with investors.
In a limited partnership, an investor’s level of involvement with the hotel’s operations
will be—perhaps unsurprisingly—customized to fit the mutual goals of the investor and
the company. (www.caterersearch.com)

Besides the economic part , the owners must take into account the regulations which may
impact , as well. For instance , when designing the hotel, internationally accepted safety
standards should be adhered to. Furthermore , effective energy conservation measures
should be implemented. The hotel must comply with the regulations stipulated in
"Protection of the Rights of Persons with disabilities" . Hotel should ensure adequate
safety and security of the guests and their belongings. Necessary surveillance measures to
achieve the above must be in place. Talking about stylish hotels, these measures may be
more difficult to put into practice because the theme, ambience and design should not be
affected. (www.legislation.gov.uk)

Despite the current economic climate, luxury and boutique hotels are booming,
prompting many hoteliers, both independent and chained, to up-brand existing properties
or launch new boutique concepts. The market is in the process of rebalancing, forcing
existing high-end operators to innovate to stay ahead of the snowballing competition.
HVS forecasts the boutique sector to double in size by 2013, prompting many hoteliers,
both independent and chained, to up-brand existing properties or launch new boutique
concepts. (Appendix 4 ) (Cristina Balekjian, Lara Sarheim, Boutique Hotels Segment )
The sector faces a major challenge : cities as London may soon become saturated with
boutique hotels . The growth of this type of accommodation is possible at the moment
because few of these hotels currently exist . A decreasing return on guests is forecasted
not only because of overcapacity, but also because of the limit of upscale and young
consumers in the market . A resolution to this problem would be the extension of the
extension of this business in currently undeserved areas , instead of expanding the hotel
itself . ( Appendix 5 ) (Cristina Balekjian, Lara Sarheim, Boutique Hotels Segment )
For all that , both boutique hotels as well as all other hotels have to be constantly
improving , as the guests are always changing their needs, tastes, preferences. Smart
hoteliers must adapt continuously to the trends in order to remain competitive in the
flourishing boutique hotel market.

Word count : 1064

Appendix 1
Appendix 2
Appendix 3
Appendix 4
Appendix 5
Reference:

Ahmed Hassanien , Crispin Dale , Alan Clarke, Michael W. W. Herriott

Hospitality Business Development

http://www.caterersearch.com

Cristina Balekjian, Lara Sarheim, Boutique Hotels Segment

http://www.hvs.com/Content/3171.pdf

Kobrun Vidisdottir , What Exactly is a Boutique Hotel?

http://www.streetdirectory.com/travel_guide/216448/hotels_and_hostels/what_exactly_is
_a_boutique_hotel.html

www.legislation.gov.uk

http://www.linkedin.com/skills/skill/Boutique_Hotels?trk=tyah

Lucienne Anhar - The Definition of Boutique Hotels , HVS International

http://www.hospitalitynet.org/news/4010409.html

O’Connor, Stefani C “Boutique Hotels, A Difficult Segment to Define,”

www.hotelbusiness.com