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1675-1 Boutique Hotel a .. 0 boutique hotel Fad or phenomenon? When is a boutique hotel not a boutique hotel?With special research by Locum consultant •.; Destination looks beyond the hotel market's fragmentation to coin an alternative description for this, — -- - its healthiest sector. . A helpful definition? 1. Everyone seems to disagree on the subject of boutique hotels:on what is and what is not;on where they are to be found and where -..e 'k` " not;on their best pricing policy and the true economics;nn their fashion status or long-term promise.In particular,on what to call the market sector. On two issues,most commentators agree.So called boutique hotels look in better commercial shape than traditional chain hotels. _laMk Irak . .:.w (And it all started,as so many trends do,in London.Twenty years ago, _ __ lin a South Kensington side street,Anouska Hempel made her name, ..;. ""^ more famously than ever she had as an actress,with, kc'''.It had 11 h -` about 50 rooms,some of them as small as broom cupboards,a mag dauntingly cool bar,and the blackest hole of a restaurant that any one ever overpriced in this often overpriced city.And if you were a `'f^, rock and roll figure or an actor under SO,you stayed at Blake's if you were anyone. p Around this time,Tom Wolfe had written a little regarded essay in Rolling Stone magazine,entitled'tun Chic'.(Ibis piece was greatly Where the'funky chic'of so-called boutique hotels really started: overshadowed by its predecessor,'Radical Chic',which satirised New Blake's,Roland Gardens,London SW7 York's fiber-liberal elite as it entertained Black Panthers in the Bernsteins palatial home,but in its way it described a more important and lasting phenomenon.)I unky chic was a disease that spread,Wolfe asserted grandiloquently,from Chelsea's famous Club Dell Arethusa around the world,via Paris to California's troubadour and Whisky-a Go Go(where E Iton John was really launched).If Wolfe had stayed his hand,he would have seen his disease find its Boutique n a small shop or department of a fullest flowering in New York's Studio 54,the now notorious base store, selling (esp.fashionable) clothes or camp for assorted cokeheads,entertainment entrepreneurs,and its notable founders,Steve Rubel!and Ian Schrager. accessories, [french] In a similar way,the funky chic of so-called boutique hotels spread Oxford English Dictionary from Blake's(via Paris'Motel in Rue des Beaux Arts with its Oscar 34 IIMMP Boutique hotels vs total US and all other luxury hotel Average annual change in performance ratios 1095.2 10- a` gic Total US 8 7.5 aiquehoteie 6 TMi ■ Allteo/w dourly hotek 45 g 4_ ]3 z *w,. .1- Occupancy Room rate RevPAR Supply Demand "Strangely enough, (for ' boutique hotels) demand seems to increase as supply rises and it falls when the rate of growth in new properties slows down." Mark Lomanno,President, Smith Travel Research Wilde pedigree),to achieve fame and fortune on America's West unique atmosphere:It goes on,inevitably,to cover the boutique Coast at LA's Mondrian,and in New York's definitive first statement, hotel as'micro-city_as fantasy environment_.as a lifestyle._as lvlorgans(est.1984,prop.I Schrager).Life imitating art,hospitality the ultimate merge(sic)of design and fashion'More helpfully,Mark imitating rock and roll. Lomanno,the President of Smith Travel Research,produces valuable American commentators find it easier to define the boutique economic analysis of the market sector defined as follows: hotel and classify it as a market sector than do its British exponents. 'On December 31 2000,there were 163 properties containing Olga Polito(profiled later in this issue)accepts that her Hotel more than 38,000 rooms in the STR database that met the Iresanton might be described as such but doubts whether the somewhat rough definition of boutique hotels.Included in our boutique's most quoted progenitor actually creates boutique hotels. sample were W Hotels,Kimpton Hotels,Ian Schrager Hotels,and any 'Schrager's not really boutique.Individual,different,but not independent properties with an adr more than$150 and 150 to 400 boutique as far as I'm concerned.Boutique means small,quite small rooms.Since a particular group of hotels can only be identified in room irky in a cotta y'Would she describe,along with our database by size,price level,location,and chain affiliation or some commentators,Hotel du Vin as a boutique?'No.I'd call it a independent ownership,a better definition of boutique hotels can be good chain:Its founder,Robin Ilutson,is not so sure either.'I don't derived from the information on the internet: know what it(boutique)means,actually.I don't know what we call ourselves but boutique is closer than most things,though it's not • Appeal to leisure and business travellers,particularly women. brilliant(There is a suspicion that Hutson had a better description of • Although sonic are small(Blake's Hotel has only 51 units), this hotel sector in his original company name,hut more of that several have more than 400 rooms.Most are between 150 and anon.) 200 rooms. So if soi-disant boutique hoteliers find the description less than • All stress homelike atmosphere,highly personalised service, optimal,why use it?For three reasons.Because it provides some and distinctive style with generous amenities including easy common currency and thus permits debate.Second,because it is access to the internet widely used in the US,the world's biggest hospitality market.Third, • For the more sophisticated traveller,they are the"right"place because,as a result,market data has been collated and analysed on to stay: the basis of a defined US hotel market sector. On the basis of this definition,I ornanno calculates that boutique hotels in the US have significantly outperformed other luxury hotels The US track record on all dimensions except supply over the five years to end-2000. (See fable 1).Most important,on yield(what the industry calls Arclulecture NUFV(better busincus through design..:)predictably RevPAR)the boutique hotel index climbed from 233 in 1995 to 281 defines the boutique hotel from a design standpoint:'Boutique hotel in 2000,whilst the yield index for other luxury-priced hotels grew has become shorthand for a hotel with a high-concept design and only from 181 to 185.Over the same period,boutique hotels'dollar br.aM I,••:IA r.'Irn , 35 r share rose more than 18 per cent in relation to all luxury-priced hotels. No wonder that last year Milton opened its first'lifestyle'hotel at the Trafalgar and Le Meridien announced global plaits to open 5,000 'Art and tech'bedrooms,each with electronically controlled beds and plasma televisions.They are playing catch-up with Starwood Hotels'W mini-chain,whose success is at the heart of Smith Travel %Ai Research numbers.Whether or not the other major chains will truly understand the key to success in the boutique hotel sector is a moot point.Somehow,W has leapt the cultural chasm which separates its - informal,atmosphere and lobby bmf from its gmnde dame parent, the Westin chain.Can the others? If they,too,understand that this sector's growth is about attitude, and if,therefore,they embrace culturol change,then perhaps they can succeed.(they might be well advised to spin off separate, virtually independent divisions to achieve their goals,however.) Is the boutique a designer phenomenon? The risk chains face is in equating the boutique hotel with the designer hotel.Leading-edge design is often a characteristic of this (W at 39th Street and Park Avenue,pictured) new and healthy hotel baby,but it is not by any means the whole I like the vibe. This feels more story.Lumping'design'and'boutique'together misses the point.This sector actually reflects all the fragmentation tendencies of like a real bar' consumer markets especially those for premium-priced goods- (On W and other imitators) the world over.The reason for the sector's growth is the reason for its fragmentation:individuality.This individuality-of guest.of 'It drives me crazy that I've come up proprietor,of site,of staff,of hotel atmosphere-is reflected in with this idea and people are trying design,but it may well not be driven by design. It is an easy elision,an easy error to make,confusing the role of to make billions off of it.' design.Olga PoHui may well be right to judge Schrager's hotels as too big to be boutiques,and Schrager himself clearly loathes the Both from Ian Schrager,hotel proprietor(but description'hip'which many use for boutique hotels,but the camp not of W) followers see Schrager as the leader of the boutique movement,the analysts base their sector definitions on his hotels,and observers just point at the Royalton,Sanderson and Hudson,connected as they are by Philippe Starck,and'eureka'becomes'design: Schrager has a more interesting point to make about his hotels:'I like the word subversive.The idea is to do something contrary, something that violates the status quo,and as long as it is well- executed it works.If it's not well executed,then it's just trendy: to quantify the role of design,listen to Schrager's General Manager at the Sanderson.He has been quoted as saying,We are in the entertainment business',and,watching his barmen play the exhibitionists on both sides of the counter,you take his point. Beyond entertainment,the design plays a role in justifying high rack rates but only so far.'I can only sell the design once.Everything behind has to work for somebody to come back a second time.The place needs a personality,the staff need to have a personality,the design element can pay if you do everything else right:Some might think Schrager hotels extreme and certainly most of the Sanderson's guests come from media,fashion and film industries but,like the slightly more modest St Martins Lane,they also come from more traditional worlds like banking and pharmaceuticals.The key to the guest profile seems to be that,like the hotel itself,the guest is an individual and,suit or no,an individual that can spell attitude. 36 :.. if ; -.' ! f 7� sem• A 'I build my hotels to �• � �. put people in the !es;r • - spotlight, it is all about • .. `-,..R ■"' exhibitionism.' Ian Schrager,owner Yo Sushi restaurant and the Far[astern tradition,also adopted by W, London: the world's most 'complete' of one point of contact for the individual guest's needs.Hence the 'oasis of calm'definition applied by every other travel writer. hotel market myhotel's General Manager,Christopher Oates,puts it thus:'This is 'mf,which to each individual means*yours'Inscrutable for some, Beyond Schrager's hotels and within a more accessible price range but you know what he means. come properties that seem to justify the boutique description more Andy Thrasyvoulou has made a lot of myhotel's spiritual character • accurately:the Covent Garden in Monmouth Street,myhotel in in the past but has been(well)advised not to allow this to dominate Bloomsbury,the Pelham in South Kensington,the Franklin in Egerton myhotel's projection.In fact,the branding techniques which he Gardens,the Portobello in Notting Hill,and the Charlotte Street,also practices provide lessons that most of the hotel industry could where you would expect it to be.These hotels all feel more usefully study.mystory,as he puts it,is an exemplary brandstory, boutique-ish by virtue of their size as well as their informality and reflected yet again in myhotel's latest product development- pricing.(Think[iSO or thereabouts per night,as opposed to at least myplace-an 80-square-metre penthouse comprising apartment and another[100 per night in Schrager's hotels,or Conran's Great studio,where we find'a fusion of spirituality and technology:Here Eastern or the Ongs'bequests,the Metropolitan or Halkin.)Each of you can choose to have a butler,choice of room aroma,personal these establishments shares design flair,townhouse chic,and less chef,beauty treatments,cosmetic mini bar,fitness equipment,even than-Establishment ambience,but they are all different,all musical instruments.(As the outstanding myhotel press people say: individual.The typical example of this atypicality is the one that has myplace'is certain to he particularly popular with the many bands had the most press coverage:myhotel,lower case et al. and celebrities that already frequent myhotel').Just fill in'the This Bloomsbury hotel has defined its own niche,far away from unique rnypreferences form...so successful in making myhotel the glitz of nearby Berners Street.this is a place which'moves at the guests feel so welcome'and you are all set for'an individually tailor- pace which suits each individual guest',in the words of its owner, made experience that is completely in tune with your needs: Andy Thrasyvoulou.A place that epitomises that questionable Soon,myhotel will face the challenge confronting all successful description'lifestyle hotel'but takes it a stage further;whereas independents:how to replicate success in new sites,how to stay other lifestyle hotels might offer areas for stress relief and individual as you multiply.Ihrasyvoulou is ready,with sites,branding relaxation,myhotel is dedicated to this in its entirety.Hence the and an individual's passion,but the London hospitality economy original Feng Shui expertise from William Spears(one wonders how since September 11th has caused him and his backers to take a Conran and Partners worked their designs around that...).Hence the breather. of am r,..TrR.•rffR, 37 r .UK examples of the US-defined boutique hotel market The Sanderson Hotel Hotel Tresanton myhotel Bloomsbury Hotel du Vin 50 Demers Street St Mawes 11-13 Bayley Street The Sugar House London W1 Cornwall London WC1 Narrow Lewins Mead Owner: Ian Schrager Owner: Olga Polizzi CBE Owner: Andrew Owner: Robin Hutson, Hotels Inc. Thrasyvoulou Gerard Basset Designer: Olga Polizzi CBE (plus directors) Designer: Philippe Starck Designer: Conran Design Designer: Mr Li Mrs R (Re-)Opened: June 1998 Partnership Hutson Opened: September 2000 Rooms: 26 Opened: March 1999 Rooms: 150 Entry price: Rooms: 76 Opened:* November 1999 Entry price: (340 In season (250 Entry price: (170 Rooms: 40 Out of season (150 Entry price: (109 • 3rd of 4 now open Sources:Michelin Red Guide 2002; Locum Destination Consulting rate of growth in new properties slows dovin.As you might expect it A new financial picture is not the same picture for luxury-priced hotels overall. In other words,this is a new sector that does not obey all the old This is the first major downturn here in a decade,with Foot and rules.Secondary locations work and supply-driven growth is still Mouth,US recession and international terrorism all conspiring to available.What is more,technology is allowing premium rates with depress hospitality revenue.Yet,whereas many an overpriced less intensive service and lighter payrolls.In the context of cold London restaurant and many a traditional,luxury hotel has been macro-economic blasts,the market may feel chillier than it did but emptied,it is likely that the accessible,so-called boutique sector will this sector remains attractive.Beyond overall market factors,the have weathered the storm better than others.Outside London, chief risks lie in expansion and the strain this places on occupancy levels and revenues at Hutson's Hotels du Vm and entrepreneurs and the ethos of individuality;in renewal,because if Polizzi s Tresanton demonstrate graphically how robust this hotel this type of hotel stands still,it loses appeal;and in the value on type really is. offer,as some are tempted to stretch beyond their accessible, Their performance questions the traditional bankers'view that 'volume prestige'price points. this is a big city phenomenon.Rich Rohrbach,a senior vice president of Credit Lyonnais,cites the usual criteria for backing ventures in this sector:provable or defensible cash flow,strong management, In search of individuality good location,upper price points.He adds that'a lot of times the level of commitment and brain cells devoted to that particular asset The more that Establishment hotel chains see their market shares is higher because it's a smaller company and they have more energy shrink,the more they will try to replicate the successes of the so- poured into it:However,he restates traditional location logic:'You called boutique sector.And the more they will try to achieve this might not want to do it Detroit.They're more a New York,Chicago, through design and product details,rather than true individuality, Sari Francisco thing:How about Winchester,Tunbridge Wells,Bristol, personality and culture. Birmingham,Leeds or St Mawes,Mr Rohrbach? As ever,the independent sector shows the way for the multiples. Another finance man,David Twardock,president of Prudential It happens in music,film,fashion,cuisine,television,in just about Mortgage Capital Company,raises traditional supply and demand every pursuit of leisure and culture for cash.Independence of spirit issues.The only concern I would have is if there are too many matters,even when independence of ownership no longer holds. brands out there,that people are driving development in order to (The ethos is still visible at Virgin Airlines,though not Virgin music; get more product in the market place,and overdevelopment can still at Oddbins but not Bottoms Up;still there at W hotels,but result out of that dynamic:Point taken,Mr Twardock,and such an Malmaison?)facing this issue-the culture of individuality- will be issue of competition has indeed caused one Robin Hutson to avoid a the multiples'biggest challenge. particular town(such as Leeds,which already had a 42 The Calls and Some observers believe it is design that drives this sector.Not so; a Malmaison).But,macro-economically,Mark Lomanno at Smith Hotel du Vin is almost anti-design and a market leader.Others see Travel Research has shown,via regression analysis,a good(76 per age segmentation as the key,but the attraction of this sector is as cent)fit between supply and demand for his defined boutique much to baby boomers as Generation Xers,and its appeal to women hotels,where demand increases as supply rises,and falls when the is probably a more crucial demographic bias in a less patriarchal 38 ar:eun.•rrr<e•in% , 1 / • business world.People talk about'lifestyle'but this,like design,is earns more than him),Robin Hutson had it right when he set up The another self-limiting,soon-to-be-dated label.The sector does have Alternative Hotel Company.Since that title is now available-thank fashion appeal but with longer legs than any fad.(To plagiarise Cecil you,Robin-we propose that the sector previously known as the Beaton:'Fashions change but fashion,like the poor,is always with boutique hotel market'be re-named'the alternative hotel market' us.')Ian Schrager sounds a touch cute when he declaims,'You are and keep its doors open to individual hotels with attitude. where you sleep',but he is stating a truth of consumer marketing. Guests are choosing hotels where they feel right,as individuals. the much-respected voice of the US hotel establishment,Jeff Weinstein(Editor-in-Chief of Hotels magazine)defines the sea change in classical terms:'It is time to take notice of what has become a mature industry and the changing preference of customers' What the Americans call boutique hotels now define a prosperous niche:1 per cent of total industry rooms,3 per cent of total industry revenue.The sector is here to stay,longer than the term'boutique', we suggest.The word boutique'suggests smallness and fashion too overtly,and perhaps too much femininity to boot.This sector represents a distinct shift away from norms,sameness,uniformity, the mainstream.The man who coined the best term for this market has now,kindly,stopped using it as the name of his company.In the era of a Prime Minister who plays a Fender guitar(and whose wife ref ik This is 'my' which to each individual tAl means'yours'." Christopher Oakes,General Manager N N.it Fib IL . mama in ur.0u39 111111111.1111111.11111.111111.1.11.11.1111.16. 1