Burgeoning Boutiques

By Dennis Nessler | February 19, 2021

Reduced demand in many urban markets in the wake of the pandemic and the need to implement new technology are among the top challenges faced by boutique hoteliers as they look to recover from a difficult 2020.

Several hotel companies, both large and small, weighed in on current conditions within the growing boutique hotel sector during a BITAC Independent Virtual Connect 2021 panel discussion entitled “Burgeoning Boutiques: What’s Driving The Segment’s Rapid Growing Segment?”

Brian Young, EVP, Investments & CFO, Hospitality Ventures Management Group—which owns and operates a portfolio of more than 60 branded and independent hotels—acknowledged the ongoing struggles of urban markets but remains optimistic going forward.

“What we’re seeing is they’re still hugely impacted obviously and a lot of our hotels are driven by that business transient traveler so we’re still seeing that impact. We’re bullish that it’s going to return and as the vaccination kind of makes its way through that travel will start to occur again and things will bounce back,” he said.

Paul Wischermann, president/CEO, Wischermann Partners, Inc.—whose company operates branded hotels as well as a few soft branded independent properties—agreed and noted hoteliers have to be proactive.

“Obviously, a lot has to do with the various levels of restrictions we have. Florida’s behaving differently than Minneapolis, but in general business travel doesn’t exist. So it’s weekends and leisure travel and clearly we have adapted there and focused all our efforts on creating experiences even if it’s urban markets,” he said, adding the company had success growing occupancy with a number of promotions around Valentine’s Day, for example.

Creating unique experiences—particularly through the redesign of historic buildings—is an essential part of the equation for Kirkwood Collection, a company with a portfolio of five boutique hotels in California. The company’s CEO Alex Kirkwood detailed its approach.

“We have a three-person design team and we start with the art and the architecture. Our hotels look fairly residential…People really like an authentic historic experience, which I’m now obsessed with because it lasts forever and you don’t need to re-fluff it every 10 years. You do your soft good refresh, but most of the bones are there and we just kind of come in and rethink it in a little bit of an institutional way. Ultimately it looks like you’re walking into someone’s home and that’s one way we’ve been able to kind of create a story,” he said.

Kirkwood added that part of that story includes adopting new technologies to meet guest needs. He noted the company recently made the decision to put Apple TVs in every room and the impact has been considerable.

“When you’re this small you can’t do the 500 channels of dedicated content with your own internal channel. You just can’t afford that so we were just looking at what do people use in their homes and where is this going? We opted for Apple TV’s in every room. It was tricky to remotely manage, but we figured that out and that’s kind of our new stamp,” he said.

Wischermann, however, pointed out that the investment in technology is very different for larger properties, particularly when it comes to guest history.

“For us it comes with a lot of backbone infrastructure and if you don’t have that you really can’t function. Our information starts with CRM management and pre-arrival emails. The more you go to the high end you need to anticipate the needs of the guests. The only way is if you have the information, which was stored beforehand from prior stays,” he said.

Meanwhile, in light of the economic downturn Young touted the soft branding option, which enables properties to maintain their independence but get many of the benefits of being part of the brand system. HVMG’s portfolio includes a number of soft branded hotels.

“Talking about boutique hotels, in particular, I think this is kind of where you are able to see the benefit of an affiliation, either soft branded or otherwise. In an up market when there’s a lot of demand, especially in those core urban markets, you didn’t really need a brand if you have a unique property you could fill it. But in a soft cycle that’s where that affiliation is helpful, especially on those larger hotels,” he said.

Finally, the panelists took a look ahead for the boutique sector and the lodging industry in general.

Joanna Boey, CEO, Smart Touchless Faucet System, offered her opinion. “I think the demand for automation is going to increase, and touchless is going to increase,” she said.

Kirkwood explained there has been a change in consumer preferences during the past year.

“I’ll be curious to see if there seems to be a shift to smaller properties. Through the pandemic we picked up a lot of displacement from other hotels that were larger. I don’t anticipate that continuing, but I do hope that kind of uniquely boutique and individual experience will continue,” he said.

Wischermann reinforced the point as he offered the keys to success for boutiques.

“Bigger isn’t always better. It’s about being unique and you can still be unique at 180 keys or 120 keys, but you have to stand for something. Either you have a great location or there might be some history in the building, but the story you want to tell has to come naturally and it has to be authentic,” he said.

Young thinks it will eventually be business as usual.

“After this blip of COVID we’re going to see the continuation of the trends we’ve already been seeing, which is the creation of unique properties that have the ability to provide a very unique memory for travelers who are looking for something different. I think as people start to re-emerge and travel more they’re going to want something unique and traveling will not be taken for granted again,” he concluded.