After the Boutique Boom

By Nelson Migdal Shareholder & Co-Chair Hospitality Practice, Greenberg Traurig LLP | May 20, 2012

This article addresses the pros and cons of the aftermath of the boutique boom and what lessons might be learned as we move through the current paralysis of the credit markets and the daily operational struggle to both preserve rate and maintain occupancy.

To be honest, the many varieties of "boutique" hotels has worked to render any common or standard definition of a boutique hotel illusionary. Think for a moment of any of the well known national operating companies and any one or more of their "brands". You can probably be fairly certain that whatever brand you have just conjured up will be comparable to other offerings within the brand family, and deliver a comparable guest experience regardless of where the hotel is located. Purely to provide an example or two, without offending anyone, if you pictured a Starwood "W" Hotel, and it was at all factually accurate, that "W" could be almost anywhere and you would have a similar guest experience everywhere. The same is probably true if you imagined a Courtyard by Marriott or a Hilton Embassy Suites, as well as a Four Seasons, Hard Rock Hotel, Ritz Carlton or a full service Hyatt Hotel. That is the point of having a brand after all, that the guest can replicate a good experience by staying with that brand no matter where the hotel is located. There can be no brand loyalty in the absence of brand consistency. The challenges of being a national or international brand will continue to include the operational imperative to be consistent. Consistency in the boutique space will include hiring and training and each place where a hotel guest interacts with hotel staff.

Think for a moment now of any satisfactory guest experience at a hotel you would consider a boutique hotel. Unless that boutique hotel was part of what some may consider a chain of boutique hotels, which are few in number, and may include the "W" to some, that prior guest experience is not necessarily predictive of your next boutique hotel experience. There is simply no assurance that one boutique hotel will feel and behave like another boutique hotel or perform like another boutique hotel. There might develop a loyalty to a particular hotel in a particular city or market, but that does not translate across this particular segment of the business.

Despite the absence of branding and despite the absence of even a clear understanding of what a boutique hotel is or should be, there has certainly been a resurgence of interest in the boutique hotel. What is this phenomenon all about?

Because so many guests consult the internet as one of their primary sources of data, it is interesting to note the following internet definition of a boutique hotel. "Small unique hotels that are distinguished by their level of personalized service and individual styles." We now know that boutique hotels are generally small. All we need now is to consistently understand the general number of hotel rooms available in a small hotel. Wikipedia tells the world that boutique hotels are "intimate, usually luxurious or quirky hotel environments", and that the number of guest rooms often falls between "3 to 100 guest rooms", but that "some city-centre boutique hotels may have several hundred."

This data, without more, is illuminating. On the one hand, the ideal boutique hotel guest is probably looking for an experience that is highly personalized, within a unique physical environment, and operating on a level that is undisputed to be luxury. On the other hand, it is extraordinarily challenging to be able to deliver such an experience within an operating environment of over 100 hotel rooms. The case can probably be made that once the hotel is over 40 or 50 rooms it is no longer "small" and it is difficult for the hotel staff to recognize the guest by name, identify, catalogue and retrieve guest preferences, and generally be that intimate, personal, unique place that a boutique hotel might be expected to be. At 100 or 200 hotel rooms, the hotel can offer certain lifestyle experiences, and provide some personalized guest accommodations and amenities, but is it really a boutique hotel? This is perhaps one of the negative aspects of the recent boutique hotel boom. It is difficult to manage guest expectations, and the guest may arrive at the hotel with a set of expectations for a boutique experience that may not be achievable, in a larger asset. So many hotels bear labels such as "boutique", "hip", "lifestyle" or "design" hotels that, from the perspective of the hotel operator, the operator and its staff can only approximate what it thinks the guest expects of the operator and the staff. Realistically speaking, it is difficult to separate success from failure when all we can do is guess at what success might look like. There are very real hurdles to scale when the task is to deliver a unique and personal experience to 200 guests. Today, with occupancy levels at 50% or less in many markets this might all work out, but that is certainly not the plan!

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Coming up in June 2019...

Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.