Boutique Hotels and the Demand for Historic Properties

By John Tess President & CEO, Heritage Consulting Group | July 15, 2018

Boutique hotels have gone from a small niche idea to a major part of the hotel market in the span of a few decades. What started perhaps as a curiosity has grown to over 125 different companies calling themselves boutique hotel operators as of 2017, including boutique sub-brands of many major players in the industry. 

Not surprising, where the term "boutique hotel" came from is a matter of historical discussion. The first hotels of this type were created in the early 1980's at a time when the urban hotel industry was marked by large central city properties and an emphasis on standardization.  Integral to the development dynamics was the growth of historic preservation, the returned interest in historic downtowns and the creative opportunities to adapt old buildings to new uses, often using federal and state incentives.

Regardless of the "first," the idea behind it was the same. If large hotels of the era were big and generic like a department store, then this new type of hotel would be small and unique, like a boutique apparel store. Ian Schrager, founder of Morgans Hotel Group, once characterized the concept: "We were a boutique. We had a specific attitude. We had something to say. We had real focus. It wasn't about size. It was about narrowness of focus."

Where Did Boutique Hotels Come From?

In 2017, Deanna Ting, Senior Hospitality Editor at Skift.com, interviewed a number of industry leaders on the beginnings of the boutique hotel movement.  In the United States, this product  can be traced back to two specific hotels both opening in the early 1980's. 

On the west coast, Bill Kimpton opened the Bedford Hotel in San Francisco in 1981. Before starting in the hotel industry, Kimpton had been an investment banker. In his travels throughout Western Europe, "he loved staying in little hotels where mom and the kids are at the check-in and there's dad in the kitchen, flipping up a storm, and everybody is giving you a hug and you feel like you were at home" says Steve Pinetti, Co-Founder and Senior Vice President of Kimpton Hotels & Restaurants.  In 1980 Kimpton and Pinetti sat down together to see if they could create a viable product based on what Kimpton was seeing in Europe. After some quick back of the napkin analysis, they landed on the sweet spot in the market that Kimpton Hotels, and other boutique hoteliers, have been successful with ever since. Again, according to Pinetti: "the sweet spot was to be as nice as a luxury hotel, but not as expensive, and to be much, much smaller than a convention hotel that only caters to individual businessmen and women, with maybe only a couple of small meeting rooms. Then certainly much nicer than a tour and travel hotel." Finally, instead of an outlet or coffee shop in the hotel, they decided to have a freestanding, chef-inspired restaurant as an added attraction.

To execute the idea, Kimpton acquired the Art Deco 1929 Maurice Hotel at 761 Post Street in San Francisco.  Located a few blocks west of Union Square, like many classic early 20th century hotels – once large but now small – the Maurice had fallen into disrepair and had been adapted into apartments.  Kimpton recognized the opportunity and charm to create the Hotel Bedford.  With 144 rooms, the Bedford featured historic character balanced with a bold, then contemporary style in blues and lavender.  The hotel also included "The Wedgewood Lounge", serving local brews and displaying fine china from the collection of Lord Wedgewood.  Balancing with style was financial practicality, keeping per-room construction costs at one-third of new construction.  Within five years, Kimpton opened five addition "boutique" hotels in San Francisco while branching out to the cities by the end of the decade.  Today the Kimpton Group Hotels and Restaurants is part of the IHG family and operate 66 hotels with 12,500 rooms in 35 cities.

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Coming up in March 2019...

Human Resources: An Era of Transition

Traditionally, the human resource department administers five key areas within a hotel operation - compliance, compensation and benefits, organizational dynamics, selection and retention, and training and development. However, HR professionals are also presently involved in culture-building activities, as well as implementing new employee on-boarding practices and engagement initiatives. As a result, HR professionals have been elevated to senior leadership status, creating value and profit within their organization. Still, they continue to face some intractable issues, including a shrinking talent pool and the need to recruit top-notch employees who are empowered to provide outstanding customer service. In order to attract top-tier talent, one option is to take advantage of recruitment opportunities offered through colleges and universities, especially if they have a hospitality major. This pool of prospective employees is likely to be better educated and more enthusiastic than walk-in hires. Also, once hired, there could be additional training and development opportunities that stem from an association with a college or university. Continuing education courses, business conferences, seminars and online instruction - all can be a valuable source of employee development opportunities. In addition to meeting recruitment demands in the present, HR professionals must also be forward-thinking, anticipating the skills that will be needed in the future to meet guest expectations. One such skill that is becoming increasingly valued is “resilience”, the ability to “go with the flow” and not become overwhelmed by the disruptive influences  of change and reinvention. In an era of transition—new technologies, expanding markets, consolidation of brands and businesses, and modifications in people's values and lifestyles - the capacity to remain flexible, nimble and resilient is a valuable skill to possess. The March Hotel Business Review will examine some of the strategies that HR professionals are employing to ensure that their hotel operations continue to thrive.