Boutique hoteliers say it's location, location and Uber

Piers Brown By Piers Brown
Uploaded 20 June 2018

At last week's NYU hotel investment conference I wanted to see at least one hotel company launch a co-working, co-living hybrid, or something non-traditional.

Hilton's much lauded new poshtel concept described by Chris Nassetta as a 'hostel on steroids' perhaps, or better yet a hybrid with palpable heart and soul. Neither happened, maybe because hotel performance continues on an upward trajectory and there seems to be growing optimism tied to RevPAR/demand reacceleration, which could lead to another leg of the current cycle, so why bother?

With this backdrop, the 'Continuing Relevance of Boutique Hotels' breakout session featured the effervescent Glenn Haussman, president, No Vacancy News as moderator with Mike Deitemeyer, president and CEO, Interstate Hotels and Resorts; Amy Hulbert VP, boutique and upscale brands, Best Western Hotels and Resorts; Hitesh Patel, chairman, AAHOA; Jay Stein, CEO, Dream Hotel Group, and Todd Wynne-Parry, EVP, global acquisitions and development, Two Roads Hospitality.

After several decades, boutique hotels continue to resonate with developers, travelers and investors alike. Are we seeing the very first wave of these specialized lodgings approach the end of its life cycle or are these properties' economic lives renewable? What is the secret to longevity in this space and how can something that started out being so quirky still work today for buyers, developers, managers, financiers and guests?

Overtourism

Deitemeyer started the conversation by highlighting that some cities, like Amsterdam, where Interstate Europe operates boutique and lifestyle hotels, are having to deal with 'overtourism' and opportunistic hoteliers are contributing to the evolution of hospitality as a result. "Amsterdam offers opportunities for reconditioning properties, and there are so many stories, amazing architecture for guests to experience that are much more informed and sophisticated in their needs and wants."

Boutique and lifestyle hotel brands continue to be launched to meet guest preferences

Best Western's portfolio had been lacking boutique and lifestyle hotel brands until the successful launch of Vib in urban locations. "Hotel developers in secondary markets outside cities liked the Vib concept so much, we launched the Glo brand which caters for this market. Lots of our developments are based around adaptive re-use and have been 60 per cent new construction" said Hulbert.

Location, Location and Uber

Staying on the topic, Stein said Unscripted - Dream's lifestyle hotel brand, was great for secondary markets. "Irrespective of big cities v small cities, the key is to have a connection - an emotional connection, it doesn't matter where."

"It used to be location, location, location. It's now location, location, Uber - guests can find you a lot more easily," said Wynne-Parry.

Why are boutique and lifestyle hotels out-performing the market?

"There has been 9% more boutique hotels opened (than other hotel classes), within the AAHOA members and they continue to outperform the market, with less operating cost and higher ROI. Our 2nd, 3rd and 4th generation of developers are increasingly looking for more soft, boutique hotel brands that offer something different for the same money, no franchise fees. They are doing more research and asking themselves 'is it the right brand, do they need brands?' The developer fee structure is lowering and there's lots of young people coming into the market" said Patel

Haussman dwelt on the importance of people and service moving the conversation onto staff recruitment and training for boutique hotels.

"We have a different approach to training," said Deitemeier, "boutique hoteliers need to recruit a different mindset of staff. The staff profile of a Holiday Inn v 70 room boutique hotel is totally different. You need to understand your interview process, ask soft questions and try to understand how they think. Expectations are different - sending the guests to the local Chilli's restaurant is not necessarily what they are looking for."

Hulbert agreed - "Do everything differently - take the puzzle apart, some owners are not experienced and require a management company. Be very engaging during the recruitment process, be active with lots of walking around hotel," she said.

Wynne-Parry highlighted how revenue management and social media are driving the use of technology which remains in focus in terms of its contribution to customer acquisition, customer experience, operational efficiency and loyalty.

The loyalty dilemma and guest engagement

The question of loyalty and guest engagement remained high within the boutique hotelier's mindset, agreed panellists.

Patel encouraged boutique hotel owners to focus on how guests are using their hotel. "Guest loyalty today is less redemption for points - more for gift cards. Consider creating an in-house program that offers benefits at your hotel only. Consider who's making out on your loyalty program - the brand, the owner and the guest."

"We have the Dream black card which allows guests to the front of lines, to cool bars and rooftops, that's what makes them excited," said Stein. "We have recently launched 'Keyed in' which gives guests a free margurita, and 20% off the rack rate. We sell the card for US$1,000  - whether we get some sales is not important. It doesn't cost a lot of money to implement and the perceived value is high."

"Apple does not have a loyalty program, and playing around and having a good time is not points based," said Wynn Parry. "Where's my cool hotel? - loyalty will be where my group goes," he added, reflecting the Two Roads Hospitality guest mindset.

Deitemeyer agreed - "Do we need loyalty (cookie cutter) - no? Personalisation is the way to go, get the ear of the guest, get their authority to engage and the ability to interact."

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