To Boutique or not to Boutique: A Planner's Dilemma
Author: Sandi Cain
July 2008
Features
They’re often sleek and shiny with lots of high- tech toys, glam bars with a buzz and sometimes celebrity chefs and rooftop restaurants.
Increasingly, they’re also targeting group business. They’re boutique hotels, and while they may be hard to define, they’re all the rage. Some planners eagerly embrace this sector as an additional option for meetings, while others hesitate, not sure what they’re getting into—or exactly what hotels fit the profile.
“Some clients think it means high-end and small; others think it means a hotel with more service,” says Kathryn Jurgensen, president of Premier Meetings in Irvine, Calif. “One client thinks it means small and privately owned and managed.”
That uncertainty can make it tough on meeting planners. Cheryl Rivas, a planner with Irvine-based Meeting Sites Resource, says few boutique hoteliers have a national sales office, making it a bigger challenge to find people familiar with each hotel. But clients who want something unique increasingly are asking about such properties, compared to other brands.
PERSONALITY PLUS
Boutique hotels burst onto the scene in the ‘80s with Ian Schrager’s Morgan Hotel Group in New York and with hoteliers like Kimpton and Joie de Vivre on the West Coast. Today, Morgan has seven hotels across the country, including the Los Angeles and Scottsdale Mondrian, San Francisco’s Clift and the Las Vegas Hard Rock. Joie de Vivre and Kimpton have almost 75 distinctive hotels between them.
The phrase “boutique hotel” has become almost as commonplace as “Starbucks coffee.” Taken from a French word for a small, upscale shop, hoteliers use it to refer to small, upscale independent hotels with a distinctive design. But the reality goes even further. Today’s boutique has personalized service, unique spaces, the comforts of home, and typically fewer than 200 rooms. Some are historic; some have a theme. Early boutiques may have been converted from historic homes or office buildings. Others are custom-built. Few are operated by major hotel chains—though the big guys are getting in the act and muddying the waters with boutique brands and renovations of mainstream hotels that give them a boutique feel.
But smaller boutiques are popping up in more destinations—and under more new brands—Palomar, Viceroy, Edition, et al. Boutique Magazine earlier this year called the boutique trend the most important phenomenon in the hotel industry since the establishment of franchise hotel chains (Howard Johnson and Holiday Inn being the pioneers) back in the ’50s and ’60s.
Many boutiques have trendy celebrity chef-driven restaurants and lifestyle bars that feature the latest in pomegranate drinks and vodka brands. New boutiques have also rediscovered the roof. Now, pools, nightclubs, Jacuzzis, spas and restaurants dwell where once only air conditioning units resided. And they all boast their own “lifestyle,” with luxury services like 24- hour room butlers, cabana boys and personal- ized service.
Major players in the West include Kimpton Hotels, Joie de Vivre, Kor Hotels, Preferred Boutique (a unit of Preferred Hotels & Resorts), L’Auberge Resorts, Morgan Hotel Group and Larkspur Hotels & Restaurants. Broughton Hospitality and Ayres Hotels are smaller groups based in Southern California. (See sidebar page 45 for more about these groups.)
Outside the U.S. you’ll find Boutique Hotels & Resorts of British Columbia and Utell Boutique Hotels and Resorts in the U.K. Big hotel groups like Starwood have boutique-ish brands like the eclectic W Hotels and the newer aloft, which cater to a similar demographic on a grander scale. Hyatt Place is another up-and-comer in that category.
I WANT IT ALL AND I WANT IT NOW
General travel trends play into the growth of boutiques. Gen X and Y travelers want the comforts and lifestyle they enjoy at home when they hit the road, along with unique experiences. According to the recently released 2008 National Travel Monitor from Orlando-based marketing firm Y Partnership, 38 percent of Internet travel site users say they’ll spend up to 20 percent more for customized products. The survey also indicated that two-thirds of leisure travelers want to go somewhere they’ve never been—a trend that seems to carry over to the meetings market. And almost half of all travelers now say they could care less about a brand name when choosing a hotel, which bodes well for the boutique sector, whose brands aren’t yet universal.
Another factor driving the popularity of boutiques is the increasing affluence of the traveling public. According to a survey by the Travel Industry Association and American Express, 44 million travelers last year stayed in upscale hotels and 17 million stayed in luxury hotels while on leisure trips. Of those, 63 percent of Gen X travelers and 30 percent of Gen Y travelers—a third of whom have household incomes above $100,000—stayed in upscale or luxury hotels. Given the trends, it’s hard to believe that these travelers would want something different when they travel on business.
Corporate planners may have been the first to take notice. Many corporate meetings have 50 or fewer participants—an ideal size for almost any boutique property. But they’re not alone. At Calistoga Ranch (a L’Auberge Hotel and member of Preferred Boutique: The Preferred Hotel Group), Director of Sales Julie Baker says associations sometimes bring groups for brainstorming sessions or board meetings, while corporate groups come for retreats. The petite property has 46 guest lodges, fire pits, bocce courts and meeting areas that bring the outdoors inside. “Association groups (typically) pay for the trip themselves, so sometimes they’re more flexible on pricing,” Baker says.
There’s no question that cost comes into play no matter where a group is headed. But with hotel rates soaring in many major convention markets, a boutique hotel may be equally attractive on rate.
THE APPEAL
The devil is in the details, as the saying goes. And the details that seem to draw planners to the boutique environment include unique activity options and decor, spas, high service levels and an intimate feel rarely found at big convention hotels. The ability to buy out either the entire hotel or the entire meeting space is another attraction for some groups.
“Sometimes [groups] move out of larger hotels because they get lost in the crowd,” says Joey Miranda, regional director of sales and marketing for Larkspur Hotels & Restaurants of San Francisco. “In a small hotel, they feel like they have all the attention.”
Then there’s the creativity. Imagine the possibilities of buying out the bar at Maison 140 Beverly Hills for a wine and cheese party in a setting with both French and Asian influences; or a high-flying rooftop buyout for a reception amid the cabanas at the Chamberlain West Hollywood. Add a Wii tournament in the library at the Viceroy Santa Monica. Think big in Napa with an elegant event at the barn-style Solstice at Solage Calistoga—sister property to Calistoga Ranch. Provide time for a spa treatment on- site or at a partner spa followed by a lunch featuring local, organic food. Add a star-gazing or mixology team-building program at Viceroy Palm Springs. Or choose from one of Kimpton’s themed meetings programs available to every group.
At the new Ivy Hotel in the Gaslamp Quarter in San Diego, planners can buy out the nightclub for an exclusive dinner or use it during the day for a luncheon or reception. The 159-room hotel also has the largest rooftop space in the city, according to director of marketing Jessica Martinez. While groups have held dinners and receptions there, one automotive group staged three weeks’ worth of events for Jaguar at the hotel—complete with a Jaguar perched on the rooftop space for all attendees to inspect.
But those devilish details also keep some planners wondering whether boutiques can deliver on catering, or audio-visual services or other standard services offered at bigger hotels. Larkspur’s Miranda says there’s no reason planners should have to give up big-hotel efficiency to enjoy that kind of creativity offered at boutique properties. She believes small hotels should have an efficient front office, proper A-V staff and knowledgeable catering people because guests expect high service levels regardless of the hotel’s size. “Boutiques had to grow up and start to look at the business model,” she says. “Guests don’t care if you have a food and beverage director, as long as the food is delivered in the same way.”
Planners like Mick Boersma, Ph.D., of the Talbot School of Theology, a School of Biola University in La Mirada, Calif., rank service levels and flexibility high among the reasons they not only use boutique hotels but go back time and time again.
Boersma has held retreats at Ayres Hotel & Suites Costa Mesa since 1999, largely because of the location, the intimate feel of the hotel, great food, attentive staff and the flexibility offered when last-minute changes occur. “They bend over backward to cater to groups like ours on a budget,” he says.
Good food, great service, intimate spaces and a family atmosphere also were a hit with Lynn Newsome, a planner from ZLC Financial Group in Vancouver, British Columbia who tried something new with her seminar group of 60 people at the Bellwether Hotel in Bellingham, Wash. (a Preferred Hotel).
“The Bellwether is not just another hotel room,” she says. “It’s cozy, intimate without being too small, friendly and welcoming…and the food is beautiful.” Attendees also enjoyed the waterfront setting.
Bellwether Sales Manager Gina Mazzeo says corporate groups can extend the group rate for two days on either side of the event in order to have leisure time to explore the area. And because Bellingham itself draws a lot of association business, the Bellwether strives to get some of them to hold their board meetings at the hotel.
DECISIONS, DECISIONS
Before planners make the leap to a boutique, there still are things they should consider. Joie de Vivre’s chairman and CEO Chip Conley says that large and performance-driven meetings are better suited to a regular meetings hotel, while those that are team-focused or dedicated to creative/strategy sessions do well at boutiques. That’s something hotels should ask planners about, he says.
“Boutiques inspire more creative thought, so (we) should ask the planner if it’s a left brain or right brain meeting,” he says. Then consider the personality of the group. “Do they want the Hard Rock or the Hotel Del Coronado?” he asks.
But Conley cautions that even if a boutique hotel is a fit, planners also should pay attention to how the sales staff treats them as an indicator of what the hotel is like. “If they ask about catering, A/V and know the basics of meetings, that’s a good sign,” he says. “But if they don’t know what a breakout session is, you’ve got a problem.”
Premier Meetings’ Jurgensen says it can be a challenge to find the boutique best-suited to a particular group. She uses Krisam Group, a Washington, D.C.-based sales group for hotels and resorts to help narrow the field.
Even with such assistance, Meeting Sites Resource’s Rivas says planners should take care to check on the service level of a particular boutique and ask about its flexibility with last-minute changes. She also suggests finding out if all the guest rooms are alike, because some historic hotels—or themed properties—might have major variations among rooms.
Kimpton’s Director of Sales Jesse Suglia says boutique hoteliers are developing their meetings products in response to such concerns, and learning how to better work in multiple cities on multiple projects while not losing the customization that planners and attendees want. Kimpton, for instance, partnered with Portsmouth, N.H.-based Newmarket International on RFPs to help planners source their hotels more quickly.
Steve Buckler, vice president of sales and marketing for Newport Beach-based Broughton Hospitality, puts it in perspective. “Our hallmark is simply reinforcing what most planners want: consistency and assurance that a hotel can serve the group…and doing it in a hotel with a unique design that reflects the local environment.”
Sandi Cain, a regular contributor to Smart Meetings, is a freelance journalist who has covered the meetings, hospitality and tourism industries for more than a decade.
BOUTIQUES ON THE HORIZON
Boutique brands are multiplying at a dizzying rate. No sooner do you pass a pop quiz on the difference between aloft and W, Auberge and Solage, than another new brand turns up.
If you had a hard time getting used to Westin’s Element—a sort of boutique extended-stay brand, you better start now to learn the difference between a W and the new Edition, announced in April.
The first Edition (pardon the pun) is set to appear in Los Angeles in 2010, with several others to debut the same year. This newest entry into the increasingly segmented boutique sector is coming to you from a partnership of Ian Schrager and Marriott. The Edition is set to be a high-end, extra-trendy luxury boutique hotel planned as a global brand that will have as many as 100 hotels.
It has an ambitious agenda: complement the Marriott brand portfolio, become a globally branded boutique lifestyle hotel, respond to social imperatives, reflect changing lifestyles and provide a unique experience.
So far, the buzz has revolved around whether Ian Schrager and Bill Marriott can work together. Early reports have Schrager responsible for design and concept and Marriott responsible for managing and marketing the hotels. Stay tuned.
BOUTIQUE SECTOR SNAPSHOT
- In 2006, boutique hotels included in PKF Consulting industry surveys averaged 166 rooms each with average occupancy of 77.3% and an average daily rate of $223.23. Other hotels surveyed by PKF averaged 244 rooms each with 71.8% average occupancy and a daily rate of $140.84.
- Between 2000 and 2006, the boutiques achieved occupancy, rate and profitability measures above other PKF-surveyed hotels.
- In 2006, food and beverage revenue at boutique hotels averaged 23.5% of total revenue, below the industry-wide average of 26.7% at other hotels.
- Total revenue at boutique hotels historically has averaged 56.1% more than the average U.S. hotel.
- Boutique hotels in 2006 received 70.5% of their revenue from room rentals, 16.7% from food, 6.8% from beverage and 3.9% from other operations.
- Between 2000 and 2006, total expenses were roughly 55% greater at boutique hotels than the typical U.S. hotel, measured on a dollar-per-available-room basis. But boutiques achieved profits that averaged 57% more than the other hotels in the survey.
- In general, boutique hotels gained the most revenue during periods of prosperity, but suffered more than other hotels during industry-wide recessions. Between 2000 and 2003, U.S. hotels saw total revenue drop by an average of 15.1%, while boutique hotels saw revenue drop 36.2%.
- During the 2004–2006 period of prosperity for hotels, boutique properties saw revenues climb 36.6%.
- First-generation boutique hotels often sprung from the renovation of a historic building near a central business district and typically received some sort of urban redevelopment tax credits to keep development costs down. Today’s boutiques are often new-builds in more diverse areas and with more tech and entertainment bells and whistles, causing development costs to rise. —Source: PKF Consulting, Atlanta
WHO’S WHO
JOIE DE VIVRE HOTELS
Launched in 1987 with the Phoenix Hotel in San Francisco, Joie de Vivre has grown its portfolio of themed boutiques from one to 26, with several more in the works and half a dozen others under management contracts. The San Francisco-based company most recently converted a former Radisson into The Domain in Sunnyvale, Calif., whose theme blends nature and technology. Other hotels in its all-California portfolio include Hotel Vitale, Hotel Adagio and Acqua Hotel, but the company also manages the Coast Hotel in Long Beach.
Chip Conley, chairman and CEO, says meetings clients like the fact that service is more personalized and that groups have more privacy than they would in a larger hotel. “It’s the difference between art and science,” he says. “The boutique is more unique and artful, while the large hotel is more assembly-line.”
Conley says Joie de Vivre has recently begun to focus on group business, so a lot of its earlier hotels don’t have huge meeting space. But with several hotels centrally located within blocks of each other in San Francisco, the company can assist groups that want to use more than one hotel close together.
KIMPTON HOTELS & RESTAURANTS
Started in 1981, San Francisco-based Kimpton is widely credited as being the company that inspired the boutique trend in the West. Kimpton created the Hotel Monaco and Hotel Palomar brands and now has 43 hotels throughout the U.S. and in British Columbia, Canada.
Director of Hotel Sales Jesse Suglia says the company has a focus on sustainable meetings and personalized experiences in addition to its signature meetings packages. “We’re a leader in the boutique segment,” he says, with a wide range of products.
Suglia says planners and attendees are looking for unique and personalized experiences, not just a rerun of what they did last year. “We push back on standard meetings,” he says, with the ability to service planners in most major markets while still customizing the meeting with unique features.
KOR HOTEL GROUP
Los Angeles-based Kor Hotels pride themselves on “legendary locations” that range from West Hollywood, Beverly Hills and Santa Monica to Miami, New York and several Mexican resort destinations. Its Viceroy brand will number eight hotels by 2010, building on the Palm Springs and Santa Monica model.
Kimberly Partlow, public relations manager for the company, says Kor’s advantage lies with food and beverage and its ability to be creative with meeting space. “In Santa Monica, the cabanas are prime real estate,” she says. That hotel sees a lot of entertainment industry business, particularly during the citywide American Film Market convention. Groups like Microsoft and General Motors have done buyouts. Viceroy Riviera Maya will open next year with villas on the lagoon; another Viceroy will open in Snowmass, Colo.
LARKSPUR HOSPITALITY
Larkspur Hospitality runs 22 hotels and six restaurants under the Larkspur name throughout California, Oregon and Washington. The company includes both boutique and extended-stay properties with the former including The Belamar Hotel in Manhattan Beach, Calif., the Sainte Claire in San Jose, Casa Munras in Monterey and several hotels in San Francisco.
“What sets any of us apart is service,” Miranda says. “When you can walk in and (staff) knows who you are...it’s an authentic experience—that’s really the difference from larger hotels,” she says.
Miranda says another difference in San Francisco is that the various boutique companies are willing to cross-sell groups. “We want to keep the business in the boutique environment,” she says.
PREFERRED BOUTIQUE
Preferred Boutique is an arm of Preferred Hotels based in Chicago and runs from Newport Beach, Calif. Started in 2005, its other hotels include Alisal Guest Ranch and Resort in Santa Ynez Valley, the Copperwynd Resort in Scottsdale and the Lodge & Spa at Cordillera in Colorado. In all, it has 60 hotels under its marketing, sales and operations wing. Preferred doesn’t own any hotels, but those that want to join the group have to pass a rigorous inspection. Hotel Bellwether in Bellingham, Wash. and The Ivy in San Diego are members. Others include the Hotel Albuquerque in Old Town, Hotel Capt. Cook in Anchorage, Ceiba del Mar in Mexico, the St. Julien in Boulder, Colo. and Beaver Creek Lodge in Colorado.
AYRES HOTELS
Costa Mesa, Calif.-based Ayres Hotels is a 100-year-old family-owned business with a portfolio of 16 European-style boutique hotels in Southern California. No two are alike, and many of them have meeting space.
“We understand we cater to mid-size meetings, and we don’t try to do more than that,” says Don Ayres III, who oversees operations for the hotels. The biggest spaces are at the Costa Mesa, Ontario and Manhattan Beach properties. Ayres says a big advantage to planners is that the hotels are family owned and operated and reflect family values of honesty and fairness.
“We want planners to ask us if the owners care about the business and know what’s happening at the property,” he says.
BROUGHTON HOSPITALITY
Based in Newport Beach, Calif., Broughton Hospitality was launched in 1999 by former Joie de Vivre exec Larry Broughton. The company now has a collection of 12 hotels spread from Chicago to Bali, with its California properties concentrated in Santa Barbara, Santa Ynez Valley, Lake County, San Simeon, Santa Monica and Palm Springs.
Broughton focuses on having a unique design at each hotel that reflects the local environment. Meetings programs are custom-designed for each group and the hotelier partners with groups in the community for things like surf lessons, kayak tours, whale watching or art gallery tours. In Santa Monica, guests at the Georgian will find a shopping concierge to help them make the best of their resources.
“We also partner with high-end restaurants in Santa Monica and Santa Barbara,” says Steve Buckler, vice president of sales and marketing. That enables groups to more easily schedule dine-arounds or private dinners.
RESOURCES
Ashland Springs Hotel
ashlandspringshotel.com
Auberge Resorts and Solage Hotels & Resorts
aubergeresorts.com
Ayres Hotels
ayreshotels.com
The Belamar, a Larkspur Collection Hotel
thebelamar.com
Boutique Hotels & Resorts of British Columbia
bhrbc.com
Broughton Hospitality
broughtonhospitality.com
Costanoa
costanoa.com
Joie de Vivre Hospitality
jdvhospitality.com
Kimpton Hotels & Restaurants
kimptonhotels.com
Kor Hotel Group
korhotels.com
Larkspur Hospitality
larkspurhotels.com
Lodge on the Desert, Coastal Hotel Group
lodgeonthedesert.com
MonteLago Village Resort
montelagovillage.com
Morgans Hotel Group
morganshotelgroup.com
The Pines Resort and Conference Center
basslake.com
Preferred Boutique: The Preferred Hotel Group
preferred-boutique.com
Sunrise Springs Inn and Retreat
sunrisesprings.com
The Upham Hotel; Country House Inns
uphamhotel.com
W Hotels Worldwide
whotels.com
