Hotel guests have made it clear. Whether traveling to New York City or Durham, NC, they value individuality and personality over uniformity and they are willing to pay a premium to get it.
With the average cost to build a hotel room ranging from nearly $80,000 for budget/economy to over $600,000 for luxury, there’s little room for misjudging guest preferences and remaining profitable. Even redevelopment projects can have a per-room cost of more than $270,000.
Such high costs rule out chasing fads, which is why many in the hospitality industry have watched the continued rise of boutique hotels so closely. Is it to be a short-lived fad, or does the design trend have legs?
Just what is a boutique hotel, anyway?
U.S. News and World Report recently looked at the increased use of the word “boutique” to describe everything from exercise studios and advertising agencies to hotels. The article concludes that “boutique” – as it applies to a hotel – refers to its local personality, smaller size, and personal service.
Guests who prefer boutique hotels don’t necessarily fit into a demographic, as much as they do a psychographic. They can be of any age, but someone who seeks out accommodations at a boutique hotel tends to be curious about authentic experiences associated with the location they’re visiting.
More than 90 percent of those who’ve stayed at a boutique hotel identified as being “curious,” and said they see travel as the best way to satisfy that appetite. Hilton’s soft brand Curio Collection is targeting five audiences based on what fuels their curiosity. Among them: nature, food, culture and spiritualism.
Identifying common traits of boutique hotels is tough since they seek to be more different than alike. However, they do tend to focus on delivering an authentic local experience through their designs, menus, entertainment and amenities. Often that’s a pleasing blend of local art and materials in rooms, with farm-to-table menus and entertainment by local musicians topped off by a lobby staff well-versed in local attractions.
Boutique goes mainstream
The category is growing fast because it’s at the intersection of what today’s traveler wants and today’s hotel companies need, which is higher room rates and occupancy.
“What’s interesting is that you’re able through effective positioning to separate yourself from the brands and distinguish yourself,” HHM President and CEO Naveen Kakarla told Hotel News Now in October 2018. “I’ve learned to appreciate that more in the past 10 years.”
Hotel News Now reports that boutique hotels in the United States charge an average room rate of approximately $221 a night. That’s in comparison to an average of about $127 a night for hotel rooms overall.
This helps explain why Marriott has invested so heavily in its boutique and soft brands in its bid to win over a new generation of travelers and why 25% of the rooms under construction in the United States today are in boutique hotel properties.
The category is growing fastest in revitalized secondary and tertiary cities, where boutique hotels can be built for a third of the cost of gateway cities like New York, or about $500,000 per room, estimates Bjorn Hanson, a professor at the Jonathan M. Tisch Center for Hospitality and Tourism at New York University.
Consider that the Dream Hotel Group opened its first Unscripted hotel not in New York City or Los Angeles, but in Durham, NC. “Smaller cities are the new hot spots for boutique hotels,” proclaims Blueprint, a site sponsored by the real estate consulting firm CBRE.
All these factors have fueled the explosion of soft brands, or “collection” brands launched by the major hotel companies over the last decade. The UK-based hotelowner.co website has said boutique hotels have provided a sorely needed “breath of fresh air” since first arriving on the scene by offering quests a welcome change from the repetitive designs featured by larger hotels or chains.
It all goes to show that all things being equal, today’s traveler will opt for individuality over uniformity. If appealing to travelers’ desires is a fad, so be it.
Whether you are remodeling rooms at a hotel in New York City or developing a new concept for smaller markets, Beachwood Custom can help you find the custom furniture and finishes you need to deliver the boutique experience today’s travelers crave. Why not call us today!