Hotel developers see appeal of boutique hotels

Amy Horsfield By Amy Horsfield
02 January 2019 | Updated 02 January 2019

US: Hotel developers are continuing to pursue a newfound interest in boutique hotels.

In her article in Forbes magazine, Frances Kiradijian, founder and CEO of Boutique and Lifestyle Leaders Association, cites numbers from a recent report CBRE Hotels Americas Research that found boutique hotels comprised 3.2 percent of the total U.S. lodging supply in 2017 and 17.8 percent of the rooms in development as of June 2018 are in boutique projects.

Kiradijian  said: "Last year, the 1,281 properties considered boutique and lifestyle hotels in the U.S. achieved an aggregated occupancy of 70.5 percent and an ADR of $208.52, beating the overall U.S. lodging industry by nearly six percentage points."

She states how companies are launching brands aimed at boutiques, like Kinley, the brand launched by Vision Hospitality Group under CEO Mitch Patel in November. She also lists boutique properties purchased by large brands that include Hyatt Hotels Corp.'s purchase of Two Roads Hospitality with its Thompson Hotels and Destination Hotels groups for $480 million last month.

However, Kiradijian says that while the appeal of boutique hotels to owners is their unique experiential atmosphere, that approach may be difficult to incorporate into the business model of a large corporation despite the marketing benefits they offer, such as large loyalty rewards programs.

Kiradijian said: "By joining the larger groups, these independent hotels are forced to buy into the larger companies' 'brand standards' and other rules, regulations and long-term agreements. Will these hotel owners continue to enjoy the tradeoff of independence for a little exposure to loyalty members and corporate groups, or will many of them find that their properties may not be properly housed in the right brand or don't belong within a larger group at all? Only time will tell."

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