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By Frances Kiradjian

The complexities of boutique hotel development were discussed by an illustrious panel of hotel-industry luminaries at the fifth annual BLLA Boutique Hotel Investment Conference New York.

Moderated by Jay Newman, chief operating officer of The Athens Group, the panel featured Michael Fuerstman, co-founder of Pendry Hotels, a new luxury brand from Montage Hotels & Resorts; Allie Hope, head of development and acquisitions at Virgin Hotels; Matthew Livian, SVP and CIO of Sydell Group; Chris Pardo, co-founder of Arrive Hotels; and Jason Pomeranc, chief executive officer of The Pomeranc Group.

The panelists were asked why should a customer choose their brand over others. Pardo answered first, saying Arrive focuses on small hotels and connects them directly with the local area and community, integrating its services with local residents and making for a more personal experience.

Hope said Virgin Hotels marries its customer-engaging company culture with a hospitality ethos. It focuses on giving customers what they already want, but providing a platform for them to find it. She said the company also focuses on putting the customer in control of the experience, particularly through its app.

Fuerstman talked about how Pendry wanted to put forward a concept that was true to great service culture and a space driven by design and lifestyle, catering to a new generation of luxury consumer.

Livian explained how Sydell’s approach stems from the fact that the company began its life as an opportunistic real-estate sponsor looking for under-appreciated real estate and finding the best branding solution for it. “The secret of our success is that each of our hotels has been a unique design and unique customer, and that’s what our clientele wants.”

Asked what their typical hotel looks like, the panelists showed that they had quite a broad idea of size (varying from four to 500 rooms). Hope said Virgin likes to include a live music venue and 10,000 square foot of media space in each hotel. Livian said there’s a focus on public space as well as going after “quirky” attributes that other companies might find off-putting. Pardo said a lot of his hotels have a strong food-and-beverage offering and no lobby, while Pomeranc said it was more about finding the perfect solution for each individual space, whilst also including a signature food and beverage outlet and nightlife spot in each property. Fuerstman also commented that “It’s not just about the execution, it’s also the space, making most of what you have and doing right by the neighborhood.”

Discussion turned to which markets were musts and which to be avoided. Most agreed on the importance of the largest markets such as New York and Los Angeles (except Pomeranc who pointed out the Ace Hotels has not lost out by avoiding NYC). Hope expressed doubts about West Hollywood as a market, whilst Pomeranc said that downtown LA was showing cause for concern in the luxury market.

But the most excitement was in the secondary and tertiary markets. Fuerstman talked of opening hotels in Baltimore and San Diego. “We really made an impact and it’s a really cool way to build buzz around what you’re doing.”

Next the panelists discussed the state of capital and Hope talked of how construction leverage has been a lot harder recently, “but we’re happily surprised we have projects moving forward in this environment”.

Livian commented that new development is currently very difficult, talking of problems finding a deal with private equity and foreign capital slowing down. “But in our space, it is always going to be hard to finance assets. So much of what we’re doing is about the execution. Your relationships, your track record and your ability to execute are so important.

Pomeranc described the current situation as “an opportunistic moment in this lull where equity is going to buy low leverage”, saying that for buying existing assets and speculative purchases this could be a lucrative moment, but the in-between area is a lot less reliable.

Finally, the panelists talked about their target customers, with Pardo mentioning that his hotels are finding a lot of their customers are former Airbnb guests. There isn’t anywhere else to stay for them that’s worthwhile in these places. So, we’re reaching Airbnb customers who want a greater quality of service.”

About Frances Kiradjian

Founder of the Boutique & Lifestyle Lodging Association (BLLA), Frances Kiradjian, a 25-year hospitality and travel industry seasoned professional, created BLLA to give a  voice to independent properties as well as small brands around the world, offering them the opportunity and the means to compete on a level playing field with major hotel  companies. BLLA serves more than 750 members, including hotels and the suppliers that sustain them.

Frances states why she created the BLLA. “My passion for independent boutique & lifestyle hotels are what drove me to create a place where leaders in this hotel sector can meet on common ground,” said Frances. “I wanted to institute programs for enhanced awareness to global travelers and offer vendors the opportunity to focus their marketing efforts through sponsorship of BLLA programs, events & conferences.”

Kiradjian is a graduate of the highly respected Marshall School of Business at the University of Southern California (USC).

Contact: Frances Kiradjian / 818-264-4810

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