Boutique Hotels: There's a whole new way of doing it

By Jeffrey Catrett Dean, Kendall College Les Roches School of Hospitality Management | October 28, 2008

When they arrived in the 1980's then became popular in the 1990's, the new boutique hotels were referred to by many mainstream hoteliers as "hotel terrorists", suggesting they were mere niche players willing to go to the brink to disrupt accepted lodging norms but incapable of inflicting anything more than minor damage and annoyance to the grounded establishment. Economies of scale and loyalty programs, it was thought, would easily deflect any real threat from the boutiques, leaving them to a narrow niche among the avant garde.

But avant garde, of course, refers to the "advance guard", and today, boutique hotels are no longer just for the innovators and early adopters. Today, boutique hotels have captured the imagination of a very substantial portion of the travelling public with everything from edgy theme properties to cosy getaways.

Boutiques were designed originally by Baby Boomers for Boomers, but it was Generation X, flush with freshly earned dot-com money, that embraced these hotels as a generational statement. When Barry Sternlicht brought his "W" concept to the scene and when Kimpton expanded outward from its home base, boutique went from Ian Schrager underground to mainstream. If boutiques were once limited to New York City and then to the bed and breakfast towns of San Francisco and London, they may now be found in capitals and even secondary cities around the globe. Following Starwood's lead, companies from Hyatt to the Intercontinental Hotel Group have rushed to unveil relaxed hotels focusing on design, well-being and casual chic. This year, the world was treated to one of the most unlikely collaborations imaginable when two men from the opposite ends of the cultural spectrum - Ian Schrager and Bill Marriott - signed an agreement to develop and launch boutiques carrying the Marriott flag. What a far cry from the original boutique formula that spat in the eye of the established box hotels with a focus on design, PR, smaller than average rooms, off-beat locations with lower ground costs, favorable real estate conditions, as well as local market knowledge and supplier relationships that could take advantage of the diseconomies of scale of the big companies.

As these big companies race to incorporate a boutique concept into their portfolio of offerings, they may, however, be missing the point about the change that is occurring within the industry. The full-line producers like Marriott, Intercontinental, Starwood, Hilton and Hyatt may be thinking that they simply need to have one or more product offerings with features appropriate to Generation X or the emerging Generation Y, preventing competitors from nicheing away market-share or new entrants from gaining a foothold. What may be escaping the attention of many of these companies is that the boutique revolution very likely means a whole new way of doing business in the hospitality field.

Enhanced design integrity, updating of offerings to reflect current themes in wellness and personal luxury, improved personalized service, and adaptation of products to reflect generational tastes are all elemental changes which must be adopted across the industry regardless of hotel type by the companies that intend to be players of the future. The increasing sophistication of the general consumer can be seen in the culinary shows that dot the television landscape, the availability of fine wines even in remote locations, the improving design integrity of automobiles, and the expansion of the luxury goods field and is affecting the hotel industry accordingly. Total Quality Management practices and mass customization have meant that standards and SOP's are no longer the way of doing business for the most progressive companies in all industries, and yesterday's boring no-bad-surprises hotel room is inadequate for today's travelled customer. Local sensitivity both to the local community's needs and economy and to travellers' desires for authentic local experiences is increasingly demanded as companies adopt global and multi-domestic expansion strategies. Fanciful theme elements that first captured attention in Las Vegas and in Disney theme parks and that now typify the Dubai building boom are beginning to be incorporated into hotel offerings in more traditional locations. Today's sophisticated concept restaurants provide an idea of what tomorrow's hotels will be. All of these fundamental changes will affect all hotel types across the spectrum of hotels just as these changes have been reflected in the product offerings of retail stores from Target to Crate and Barrel to Fifth Avenue boutiques.

The less evident but greater change brought by the boutiques may be much more threatening to existing mainstream companies than are these fundamental elements. If retail or other service industries are an indication, then the boutiques represent the reinvention of the traditional hotel industry which may be moving from maturity into decline. In this case, the rapidly consolidating standardized hotelery may find that its aging core products are becoming albatrosses as new companies come to the fore.

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Sales & Marketing: Opinions Matter

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