Snapshot: Luxury boutique - can it ever make money or is it an ego game?

Piers Brown By Piers Brown
Uploaded 14 February 2016

The inaugural Gulf and Indian Ocean Hotel Investment Summit took place at the Viceroy Yas Island Abu Dhabi.

Promoted as a hotel investment event run by investors and designed for investors, the inaugural Gulf and Indian Ocean Hotel Investment Summit took place Feb 8-9, 2016 with around 200 delegates at the stunning Viceroy Yas Island, Abu Dhabi. Hosted by Simon Allison, chairman of HOFTEL, the hotel owners alliance,  Boutique Hotel News, and sister brand Serviced Apartment News were both supporting partners of the conference - a welcome addition to the hotel investor landscape spanning the region.

With a variety of engaging main sessions including a focus on Indian Ocean Markets and deals across the region, the challenges to owners profits and a good mix of break out sessions we were drawn to the Luxury boutique session - can it ever make you money or is it just an ego game? The short session was led by Marc Dardenne, CEO Patina Hotels and Resorts; Guy Heywood, COO Commune Hotels and Resorts; and Nick Turner, managing director, Bespoke Hotels International.

The inevitable 'what is a boutique hotel?' discussion we hear at so many events ensued with Dardenne's thoughts pointing towards an "ultra luxury lifestyle" differentiated by experiences and local culture. Location still being important, Dardenne felt that high development costs were affecting today's market, and there was an inevitable trade off between the two. Staying with costs, the conversation moved on to personnel - notoriously the biggest cost affecting a hotel's performance.

Heywood, who used to represent the Aman Resorts' acknowledged as the original pioneer of the 'individual guest 'experience', suggested that as a boutique hotelier, "the more 'boutique' and functioning the property, the more labour intensive it generally is."

Turner with over $1 billion USD under management at Bespoke Hotels International echoed those thoughts, highlighting the opportunity for boutique hoteliers in the Middle East and Africa, "mature hotel markets like Dubai need balance - are legacy brands over? no, but there's definitely a change of landscape occurring. A successful boutique concept, offers the space to drive a premium within the market" highlighting the authenticity and community approach of Hotel Gotham in Manchester, United Kingdom. "We've been open around one year, and operate at 92 per cent occupancy charging a £50 premium to the best five star hotel in the area" said Turner.   

Dardenne agreed saying, "there's opportunity over the big guys and one generally finds more owner involvement and passion, offering the flexibility to engage and 'give back' to the local community culture. Returns (financial) are not high, and a plc business model is not one that will work."

Heywood suggested that the big hotel brands were '"eating into the space", with brand standards not being imposed on owners as much as they used to be, and more in line with owners desires.

"Hospitality is simply the business of making people happy" said Heywood, "there's space for everything, with new ideas and concepts creating demand. Hoteliers do tend to over complicate but the question is, how does a boutique hotelier keep reinventing? it's getting harder, that's why guests receive the same experience in more corporate big hotels" he concluded. 

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