Today, we borrow a time-tested technique to add another dimension to our community development explorations: the Q&A. Moving forward, we’ll periodically bug an expert we know to shed some light on topics our clients and colleagues care about.
As David Brooks suggested in a recent snarky opinion piece, boutique hotels are all the rage. Just about every downtown development group wants one to complete a perfect neighborhood. So we turn to Eric Brooks, a long-time pro in hotel development, to help us understand the niche. (Eric’s bio is at the bottom of the blog post, along with his contact info.)
PlaceMakers: Hi, Eric. Thank you for taking part in our first PlaceShakers Q&A. You’ve worked your whole career in hotel development and management, particularly with higher-end properties. Let’s talk about a niche that seems to rank high with New Urbanist developers and city planners — the boutique hotel. What is a boutique hotel anyway? And what makes them so appealing in a New Urbanist context?Eric Brooks: Boutique hotels are best defined by a collection of attributes: typically less than 100 rooms, independent of any chain affiliation; a focus on design at a human scale of comfort, ambience and intimacy; fine dining, and service that anticipates the needs and expectations of the guest. I tend to be rather dogmatic in this view; and for real brick-and mortar examples, I refer to the membership of Relais et Châteaux. There are certainly boutique hotels outside this international association, but for our discussion, this collection sets the bar.
As for the second part of your question, I believe New Urbanists are drawn to boutique hotels for their sense of place and belonging. Boutique hotels want to have a connection to the look and feel of a neighborhood, as opposed to being a generic brand dropped into a location without regard to its surroundings.
Hotel chains lack the subtlety required to create a boutique, so they have gravitated to the boutique’s alter ego: the “hip” or “Lifestyle” hotel, such as Hotel Indigo by Intercontinental Hotels. Most often, they fall far short of what a well-designed and well-managed boutique hotel can offer to both its guests and to surrounding neighborhood. The consideration of a hotel type other than the boutique hotel for New Urbanist-style development or redevelopment can do a disservice to the entire planning effort.
PM: Have you ever seen a chain get it right?
EB: Yes, but I would not use the word “chain.” Rather, there are carefully assembled corporate collections of boutique hotels, often spread amongst resort locations. The properties are certainly not homogenous, as the “chain” concept implies. A few outstanding examples would be Orient Express Hotels, Auberge Resorts, and Rosewood.
PM: How about scale? We tend to think of boutique hotels as small; and you mentioned a limit of 100 rooms.
EB: The scale is related to the feel. These hotels are intentionally intimate, typically 40 to 100 rooms, at times a little larger, with interior design and furnishings — including those in public areas — that have a high-quality, residential feel with conspicuous attention to detail. And that focus carries over to service and amenities as well. The staff is knowledgeable about local sites, events and history; and can make informed recommendations on nearby shops and restaurants.
PM: Some of those attributes seem similar to those of a B&B or an Inn. What’s the difference?
EB: A B&B is just that: a modest bedroom and breakfast, with typically less than 20 rooms and limited lobby space. The owner/manager may be the epitome of hospitality, but there is no full-service restaurant, even the breakfast may not be cooked to order; and hotel services, such as evening turndown and valet, are lacking.
“Inn” is not a distinct category. Many B&B’s and boutique hotels use “Inn” as part of their name. To be cute about it, I would say an inn is either an oversized B&B, or a small boutique hotel.
PM: Smallish doesn’t mean cheapish, no?
EB: Indeed not! Boutique hotels cater to discerning leisure and business travelers, who seek and select accommodations based on their character and amenities, and who are willing to pay a premium for experiences that meet their heightened expectations. “Experience “ is an important word in the world of boutique hotels and resorts. Many hotels chains have become quite adept at providing a bullet-proof, no-ugly-surprise experience; but that is far from the “Wow Experience” that a boutique hotel can offer: exquisite accommodations, anticipatory service, fine dining, and an exciting neighborhood at your doorstep. That is the experience that drives recommendations to friends, family and colleagues.
PM: So the higher price points can support higher development and management costs?
EB: Certainly, if the right conditions and an identifiable demand for the boutique hotel product exist.
PM: The right conditions being?
EB: The ideal conditions are those New Urbanists tend to admire and emulate: for instance, an historic neighborhood with a wide variety of shopping, dining, and entertainment within walking distance. Also, nearby parks, museums, and other attractions that have established the neighborhood as a destination. I live in Savannah, and have undertaken development, restoration and adaptive re-use in Charleston, Savannah and Aiken. Each of those communities presented the right conditions.
I do want to point out that a design-centric boutique hotel can also have an immense impact on its immediate environment.
PM: For example?
EB: I recently inventoried every small hotel in New York during a three-day visit. I know Manhattan is certainly not an easy-to-replicate context for development; but, as many New Urbanists argue, New York is also an assembly of neighborhoods and “villages,” like Gramercy Park, the West Village, and SoHo.
PM: Excuse me. Every small hotel in New York?
EB: It was an exercise to quickly establish a common design vocabulary with a New York-based client, who intends to develop a “boutique hotel” in the university town of his alma mater. Dan is very successful in business, but he knows hotels only from having stayed in them. I didn’t want to be talking about apples, while he was imagining oranges. And so I was off to New York, with the first day spent on my own. It was like speed dating with desk clerks as I charmed my way into guestrooms, suites, restaurants, and roof terraces. I actually enjoyed this almost flashcard drill as immediate impressions highlighted brilliant design concepts and execution. (I also saw quite a few pigs wearing lipstick.) The next day, Dan and I toured my short list candidates as we assembled various concepts that we thought would translate to a Midwestern university town. It was a very successful exercise.
PM: What was your favorite discovery?
EB: I was stopped short when approaching the new Crosby Street Hotel in a gritty part of SoHo. In space-starved New York, on a small 10,000 square-foot lot, the owners — a British husband-wife design team — set the building back eighteen feet from the narrow sidewalk in order to create a breath of fresh air. When the tree wells are planted this spring, the setback will form a pocket park. That brilliant waste of space created a marvelous sense of arrival into a very charming lobby filled with discerning guests paying hefty rates for the experience of staying there. I was quoted $765 per night.
PM: If the area already has dining options, does a boutique hotel have to have its own restaurant?
EB: Typically, a boutique hotel not only offers quality dining to its guests, but it also attracts local residents. I once managed Chicago’s Tremont Hotel, which had the distinction of being the first small European-style (read “boutique”) hotel in the U.S. Its restaurant, Cricket’s, consistently made the top ten list in a very foodie town. Many boutique hotels have upped the game by recruiting high-profile restaurateurs and celebrity chefs to create big buzz about their dining offerings — and they deliver! By the way, Starwood Hotels purchased the Tremont Hotel, and ruined it.
PM: Okay, we get the potential for a high-end boutique hotel in an infill historic neighborhood location. How about in a new town project that hopes to age into that sort of appeal over decades but is planned on a greenfield site or as a suburban retrofit? Developers may long for a boutique hotel to complement their walkable, mixed-use ambitions. What do they have to know to make the numbers work for them?
EB: Developing and owning a hotel is not for amateurs or the feint of heart. First, there must be a proven market. The idea of “if you build it, they will come” is a sucker’s game. Vince Graham was wise to limit his hospitality product to a small B&B as part of his I’on development in Mount Pleasant SC. For anyone planning a new town project on a greenfield site, my advice is to be very cautious.
Let me go back to Dan and his university town. At first, I thought he may have mistaken the extortionate rates he paid during football weekends for a business opportunity; but just through desktop research, I found the market to be deep and diversified. The university, its teaching hospital, and spin-off biotech businesses generate a critical mass of inbound visitors requiring accommodations; and don’t forget those football weekends.
PM: Talk a little more about those risks and ways to mitigate them. What does a market analysis have to demonstrate to justify what level of investment?
EB: Sticking with Dan for a moment, our preliminary study of hotel demand and supply, by rate segment, showed a marketplace anomaly. Two properties are posting very high occupancy and average rate by virtue of their location at the edge of the campus, although their physical product and service are mediocre. Our strategy is to raise the bar, and become the first-choice property at the market’s highest price point based on location, plus product and service.
PM: Does a boutique hotel represent a higher risk as a stand-alone product lacking the economies of scale and brand awareness?
EB: Good question. I begin by saying that “independent” does not mean “isolated.“ Boutique hotels remain a pet subject of travel writers; and favorable mention in published articles is perceived as an authoritative third-party endorsement. The shelf-life of this “editorial advertising,” which is a powerful and inexpensive tool, can be extended through reprints, and posts to the ‘Press Room’ section of the property’s website.
Most important, the Internet has leveled the playing field by becoming the most important marketing tool and reservation channel in the Hospitality Industry. Today, 76% of travel planning and hotel selection begins with an Internet search. And remember, boutique hotels are actually sought out by their core market. An independent property can have the same web presence as a Hilton or Marriott, perhaps even more.
There are companies that specialize in the management of independently positioned properties; and associations exist that maintain a strong market presence. Preferred Hotels is aggressive in promoting its members, while Relais et Châteaux serves more as an imprimatur for its loyal following.
PM: What can a city or a downtown development group do to attract a boutique hotel developer?
EB: Municipalities can assist by offering tax incentives, issuing industrial bonds, and by planning and managing parking in ways that relieve the developer, at least in part, from that burden. The Chamber of Commerce, downtown development authority, or other quasi-government organization can underwrite market data collection, and destination marketing. The entity responsible for the master plan can deliver on a neighborhood design that makes walking safe and appealing, and provides appropriate landscaping, street lighting; parks, greens and squares; public safety, and the full range of transportation options.
PM: It’s a new year. So take a look at what’s ahead for the design and operation of the boutique hotel niche. What do you see as the next big thing? And how can municipalities and developers position themselves to take advantage?
EB: I see accelerating trends more than a singular next big thing. My favorite chapter in John Naisbitt’s first 1982 edition of Megatrends was “High Tech, High Touch,” which said the more automation and technology imposed on our lives, the more we would crave the counterbalance of socialization in an atmosphere of benign and salubrious comfort. That was thirty-two years ago, before personal computers, cell phones and full body scanners. Now it is driverless cars, intrusive social media, and Google Earth. 2014 will see, across all generations, greater interest in a high touch quality-of-life environment, which underpins both New Urbanism and the boutique hotel. Okay, a prediction: the public areas of boutique hoteIs, particularly those in urban settings, will blur the lines between lobby, restaurant and bar as guests are invited to linger and relax; and sitting areas are designed to encourage socialization. The New Year will also see a fuller economic recovery, which stimulates both leisure and business travel. Although interest rates will tick upward, there will be greater debt and equity capital available for new development.
Eric A. Brooks
Eric began working in hotels and restaurants while attending university in Germany and later progressed through the management of domestic and international properties to eventually become a developer of hotels and resorts at every market level. The 2009 completion of Bermuda’s acclaimed Tucker’s Point Hotel & Spa is the capstone of the resort and the pride of his career. Eric enthusiastically embraces New Urbanism and lives an Old Urbanist lifestyle in the Landmark District of Savannah.
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