Columbia University Roundtable Examines Boutique Hotel Segment

NEW YORK? Boutique hotels have been the hot topic in the national lodging scene for some time now, especially in New York City. Columbia University recently held a roundtable discussion for Columbia?s Real Estate Development Program, which discussed the history of boutique hotels and new trends in this unique segment of the lodging industry. Participants at the roundtable, titled ?New Concept Hotels? Growth Potentials and Niche Products? included Jerry Merkin, Editor-in-Chief of HOTEL BUSINESS?; Peter Slatin, Editor in Chief of Grid Magazine; Michael Fishbin, Director of E&Y Kenneth Leventhal?s (?EYKL?) Hospitality Services Group for the eastern region; and Brian Tress, Manager in EYKL?s Hospitality Services Group New York practice. Hotel company panelists included Vijay Dandapani, Chief Operating Officer of Manhattan based Apple Core Hotels, and Kinsey Dyckman, Managing Director of Manhattan/Los Angeles based Unique Hotels and Resorts. The roundtable discussion was moderated by Michael Buckley, Partner in EYKL?s New York office and Director of Columbia?s Real Estate Program. The boutique hotel concept was born in the early 1980?s in San Francisco, with Bill Kimpton, founder of San Francisco-based Kimpton Hotels and Restaurant Group, who is known as the creator of the concept. What Is ?Boutique?? The concept has since evolved, noted conference attendees. Today there is no single definition as to what constitutes a boutique hotel, as property types vary in size, market orientation, and rate positioning. The experts did concur that these niche hotels typically occupy renovated buildings in urban cities with high barriers-to-entry, offer intimate and personalized service, and are well known for their ambiance, stylish design, and posh amenities. Within the boutique hotel segment, several sub-segments have formed. ?At the high end of the boutique segment are guests whose primary goal is adventure, status, and image, a niche that Ian Schrager very successfully dominates. At the upscale end of the range are guests whose main goal is a unique, personalized experience at a good value, a concept that the Kimpton Group has perfected,? according to Tress of E&Y Kenneth Leventhal. In terms of development potential, one of the primary reasons that boutique hotels are raging among hotel developers is that they are easier conversion candidates than chain affiliated hotels, which typically have standard design requirements. According to Fishbin, ?pound for pound, boutique hotels are higher value producers due to the high percentage of revenue being generated by the rooms [which are generally smaller in size relative to traditional hotel types]?and with some companies now clustering properties within specific urban location, even more leverage has been gained through operating efficiencies. Two major points of discussion focused on size and location. Typically, boutique hotels have been located in primary urban centers and ranged in size from 100 to 200 rooms. Now, according to Slatin, these properties are growing. ?We are seeing boutique hotels on steroids, blown up to a larger size.? He cited Starwood Hotels and Resort?s new ?W? Hotel in Manhattan (650 rooms) and Ian Schrager?s upcoming conversion of the Henry Hudson Hotel (1,100 rooms) as examples of this trend. Locations That Work Some attendees said that they are concerned over the limited marketability of these properties in markets other than urban centers. The concept has proven it can work in New York City, but will it work in Scottsdale? Both of the representatives of hotel companies on the panel stressed the continued importance of service to any successful hotel operation. Unique Hotels & Resorts? Dyckman stressed the ?intimate, personalized service? of Unique?s hotels, and stated that ?in order to withstand market share erosion, it is extremely important to deliver a memorable experience to the guest ? this means spending money on training.? Dandapani of Apple Core

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