MIAMI BEACH, Florida—Boutique and lifestyle hotels don’t have to be luxurious to be a part of a jet setters fashionable life; they simply need to provide a unique environment in a comfortable setting that appeals to multiple layers of consumers.
Panelists speaking on the “Boutique and Lifestyle Doesn’t Have to Mean Luxury” panel during the opening day of the fourth annual Lifestyle/Boutique Hotel Development Conference said trends are pointing to more value-conscious consumers being willing and able to seek out affordable, unique experiences in hotels other than “big beige boxes.”
The panelists agreed with moderator Michael Sullivan, managing director of real estate for DLA, that boutique and lifestyle hotels are all about an experience, with some design quirkiness that speaks to guests.
Kimberly Christner, president and CEO of Williamsburg, Virginia-based Cornerstone Hospitality, said the timing is right for boutique hotels to take center stage in smaller towns across the United States because they don’t need to be in the ultra-luxury class to provide solid returns to owners. Cornerstone, a development and management company, has a dozen properties in its portfolio, including independent boutique hotels.
“You’re going to have secondary and tertiary markets that are going to need these kinds of hotels,” Christner said. “‘Boutique’ is experience, and it happens a lot today with historic hotels. With new market tax credits available, it’s a viable way to revitalize small towns.”
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| Gene Kornota of Neighborhood Development Corporation and Acme Hotel Company |
Gene Kornota, principal with Chicago-based Neighborhood Development Corporation and Acme Hotel Company, said there’s a paradigm shift with younger consumers who prefer a comfortable, unique environment rather than going to an über-cool upscale hotel that’s short on providing a welcoming atmosphere.
“It’s safe to say it’s no longer about stars and diamonds,” Kornota said. “We see it as ‘fun,’ not ‘fine.’”
Kornota said staff at mid-priced lifestyle hotels can have tattoos, facial hair and other forms of individual expression, as long as they are well trained in their job functions. He said the success of Whole Foods in the supermarket sector provides a good lesson to hoteliers in the mid-price boutique hotel business.
“It’s less rehearsed than a traditional product, and consumers like that,” he said.
Jason Brown, acquisitions and development director for Yotel, said the continued delineation between what brands mean in terms of boutique and lifestyle will help hoteliers.
“Hopefully it makes the lifestyle/boutique umbrella easier to understand,” Brown said. “Boutique is a term that’s a little overused today. What it was designed to do was to take a product that was 2 or 3 stars and put it against the big boys.”
Size can make a difference
Regardless of the price point, the lifestyle/boutique hotel segment covers a wide spectrum of property types. While once considered the ideal size, 200 rooms is too large for some people and too small for others.
When Rich Flores, senior director of marketing of Night, Dream and Planet Hollywood Hotels for Wyndham Hotel Group was coming up, it was 150 rooms or fewer. “The Ws of the world blew that out of the water.”
“Boutique seemed to be associated with size,” Kornota said. “Perhaps lifestyle evolved because of the overuse of boutique. Lifestyle defines who you are or who you aspire to be.”
If the mid-price lifestyle/boutique hotel is all about experience, it starts with the configuration of the guestrooms and public space.
“Night combined the living elements and allows the user to use the space how they want to use it,” Flores said. “It breaks down traditional walls of the beige boxes. We’ll push the envelope on the number of rooms.”
“The way people work is fundamentally changing,” Brown said. “The office/living room/bar area ... we look at these as essential (elements to hotel’s success).”
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Jason Brown Yotel |
The 669-room Yotel in New York has 20,000 square feet of public space that accommodates the office, living room and bar elements all mixed into one.
“Look at the luxury world … they’re all re-evaluating how they’re going to change,” Flores said. “The lifestyle midscale segment is the growing segment. That’s the segment that’s going to move us forward.”
Unique offerings
The panelists said quality—and sometimes unique—amenities are required for lifestyle hotels regardless of the price level.
Kornota said that includes things such as “knock-and-drop” room service, a great bed and shower head all the way down to the most basic items any hotel needs. For example, instead of a traditional do-not-disturb sign for a door, the Acme Hotel in Chicago uses a blackboard mounted on the exterior of the guestroom door.
“It is the most used, most fun way to communicate with your guest or for the guest to communicate with the world,” he said. “In some cases it needs to be edited, but it’s a lot of fun.”
In addition, the hotel leaves a thermos* of hot coffee with the morning newspaper.
“It’s those special things that make a difference,” Kornota said.
At Yotel, one of the special things is a luggage-storing robot called “Yobot” that appeals to guests.
Christner said things such as using local artists and local furnishings are a big part of her company’s focus on being boutique. Cornerstone’s 44-room Craddock Terry Hotel and Event Center in Lynchburg, Virginia, has a resident fox terrier to greet guests, which is one of the property’s most well-known assets.
She said special things such as delivering a continental breakfast in a shoebox is a touch her customers remember.
“The consumer is very forgiving,” she said. “Even if you don’t have the best food in the world, they can still relate to the experience.”
Work and reward
Hotel performance is also an important part of a property, along with guest experience. And as such,average daily rate was a much-debated topic on this panel.
“At the end of the day, it all comes down to numbers,” Brown said, adding that successful lifestyle/boutique hotels often have to take items off the profit-and-loss statement that might take veteran hotelier cringe.
Investor interest in the mid-price lifestyle/boutique segment is gaining steam, the panelists said.
“Investors like the lower amount of risk,” he said. “We have a lot of legwork to get a lot of people comfortable with it. We hope over the next cycle or two we get institutional investors to get comfortable.”
Christner said there’s no difference in the returns that owners expect whether a property is a Hampton Inn or a boutique independent hotel.
Flores said Night is targeting tertiary markets, including college towns. The brand will look at older hotels that no longer fit into other brands’ plans, including Hampton Inn and Holiday Inn assets that left those systems. A general rule of thumb is that the brand will require a renovation worth $10,000 per key.
“It’s an amazing amount of work to keep a lifestyle hotel relevant as opposed to a regular midscale brand,” Kornota said. “Lifestyle brands are sexy, fun and they’re interesting to write about. You’ve got to constantly out there to give (people) something to talk about.”
Correction, 25 October, 2012: An earlier version of the article incorrectly used thermos to refer to a specific brand. It has been changed to the generic term.