RSBA & Associates 
Hospitality Consulting Services
400 Spear Street, Suite 106
San Francisco, CA 94105
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 News of Boutiques’ Demise Is Greatly Exaggerated
by Rick Swig, May  2002

The Wall Street Journal recently ran a headline, which yelled "Quirky Accommodations are Passe As Travelers Bypass Boutique Hotels".  The thought in the article implied that when the hotel business responds to fads, it can be significantly risky, as expensive rebuilding and refurnishing to the wrong theme can be a costly mistake with long term impact.  There is the assertion that short term trends in a recession environment show a more stoic traveler moving away from flashy boutiques and into more traditional environments.

Will the fate of boutique hotels follow the boom and bust pattern of the sector?  Is the boutique fad a temporary flash in the pan to go the way of go - go boots and hot pants?  What exactly is going on here?

First and foremost, it may be important to recognize that the unique atmospheres, which have been created by the most notable boutique creators, including Ian Schrager Hotels, Kimpton Hotel Group, and Joie de Vivre, were not created to be commodities, but rather alternatives to generic hotel products.  Secondly, the use of the word "boutique" may have been stretched when applied to a several hundred room hotel. 

The initial curiosity factor and the energy along with the novelty aspect of alternative hotel products may be subsiding, thus yielding the need for newly fashioned hotel products to slug it out competitively with traditional products based on fundamental merits of location, product, service, and marketing.  Additionally, the transient customer segments, which have been the boutique focal point, have not been as lucrative for all hotel sectors in recent periods.

Recognizing ongoing trends in the marketplace, Starwood moved to make a commodity out of the brand alternative boutiques through the development of the W brand.  Moving away from cookie cutter formats to reflect customer needs in primarily more sophisticated urban markets, W has combined style with fundamental comforts and amenities to target an under - served distinguishing customer base.  

While the word "boutique" has shifted interpretation from communicating small and personalized to meaning different and unique, Starwood through W may have really just succeeded in creating a new, mass appeal brand.  As an alternative or supplement to Sheraton and Westin, this brand has been developed through the product adjustment to shifting demographics rather than just going "boutique".  After all, the primary W influences of Banana Republic, Pottery Barn, or Kenneth Cole, and others are really retailers with their roots as boutiques, which have moved into mass appeal, commodity retailing.

Renaissance could be considered the "boutique" alternative to the Marriott traditional brands, but that brand’s product has not evolved with as much definition as W has.  Renaissance, as a result, is presented as an independent feeling alternative to Marriot’s other products, but no one has accused the brand of being trendy, unique, or differentiating from other commodity names.  So maybe the new meaning of "boutique" is unique.

"Boutique" hotel practitioners provide needy customer segments with the lifestyle references that they desire through an alternative to the generic establishment.  These hotels may either focus on traditional values or on contemporary cultural trends, but their commonality is their "boutique" (either unique or small product) perspective.  These hotels provide the entertainment or environmental value for their guests based on design, ambience, creative services, or amenities. 

Is the "boutique" hotel segment succeeding or failing? Are "boutique" product types competing favorably with the traditional brands?  Will "boutiques" continue to competitively survive?  The answers are, of course, "yes", "no", and "it depends".  

The "boutique" hotel segment performance should be evaluated with the same standard for traditional and commodity brand segment hotels, as the basic performance issues apply to all segments.  The basic fundamentals of location, product standard and validity, marketing, plus distribution are still the primary considerations.  Delivering on these essentials develops customer loyalty and business stability regardless of traditional or trendy.

The Wall Street Journal article conjectured that "sleeping in a cool place" may be giving way to sleeping with "conventional cousins" and that "travelers respond to fads in hotels much as they do when buying clothes."  This led to the advisory that building unconventional products might be akin to risky business tactics.  Not necessarily so.

Probably more important has been some tendency for some unconventional hotel product operators/developers to overlook the basic customer needs in their hotel designs (ex. good lighting, a comfortable bed, and responsive customer service personnel).  Starwood management has realized that "a comfortable sanctuary" is more important that a "status symbol", while Ian Schrager has recognized that customers "want traditional rooms".  Neither direction requires abandoning the opportunity to be different, but it does consider the balance between functional and stylish.

As evidenced by the downturn of K-Mart and that company's inability to evolve to the needs of their customer in the retail sector, the same issue applies in both generic and non-traditional hotel products.  Success depends on the intrinsic values provided by hotels to their customers.  Whether an individual boutique hotel fails or succeeds has as much to do with that hotel's ability to convert on their strategic competencies for a competitive edge rather than the popularity or productivity of the industry segment as a whole.  

Delivery on the product promise and expectation applies to branded hotels, as well.  Mileage points can be an attractive add on, but a clean, comfortable, and well located product that emotionally connects with a customer will build loyalty and repeat usage more affirmatively.

Are quirky accommodations passe? Only if they don't pay attention to basic customer needs.  Are customers bypassing boutique hotels?  As much as customers bypass traditionally conceived and branded hotels, which do not deliver on expectation.  Will unique products survive?  It depends on their adherence to fundamental competitive initiatives of location, product quality, and service standards.  No surprises here!

RSBA & Associates
400 Spear Street, Suite 106
San Francisco, CA 94105
E:mail:   [email protected]
Tel:  (415) 541-7722
Fax: (415) 541-5333
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