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Boutique and Lifestyle Hotels, two sides of an urban concept

Read our exclusive report on boutique and lifestyle hotels, from their origins to recent concepts. In fact, what is a "boutique hotel”?

Lacking a clear definition, the boutique hotel concept was coined by Ian Schrager. This New Yorker first gained his claim to fame alongside his partner Steve Rubell with the creation of Studio 54 in Manhattan. The success of this club among trendy American clientele led the team to look into the hospitality industry and offer a concept based on design and personalized service, which was part of a reactionary movement against the uniformity of chain hotel rooms that were on the rise back then. In 1984, the Morgans opened on Madison Avenue. The first link in the boutique-hotel concept later gave its name to the group that was developed by Ian and his partners. It remains one of the icons of this network to which have been added the Royalton and the Paramount in New York, the Mondrian in Los Angeles, the Delano in Miami. Although Ian Schrager, a better designer than manager, no longer has control of it, the Morgans Hotel Group continues to symbolize the commercial success of boutique-hotels through the quality of its properties and the choice of its locations.

Out of these first creations was born a model that draws the contours of a concept that refuses by nature to be locked into overly restricting codes:

  • Location: this is above all an urban concept that is specific to capitals, major business centers and trendy resorts. Unlike charming hotels, boutique-hotels do not offer a retreat, but rather make their guests feel the beat of the city.
  • Architecture and design: there are no set rules, except the resolve to maintain a contemporary spirit. The building itself may have a history, a unique character, but its design projects it into another dimension. Andrée Putman, Jean-Charles de Castelbajac, Kenzo, Christian Lacroix, Karl Lagerfeld, Martin Margiela… the greatest fashion designers have dabbled in boutique-hotels. Themes are part of the hotel’s personalization. Quickly enough, Ian Schrager, asked Philippe Starck to decorate several properties (The Royalton, The Paramount, The Hudson) between 1988 and 2000. Together they created their own style from furniture and lighting right down to the uniforms of personnel.
  • A lobby that is both a living space and passageway: Bar, club, music lounge, restaurant, library all at once, the lobby designed for socializing is made for seeing and being seen. Discretion is not the goal: quite the contrary. Creating a buzz is integral to the DNA of the concept.
  • Limited capacity: the limit is relative as it also depends on the local reality. While boutique hotels generally have fewer than 50 keys, it is not rare for the figure to surpass 200 rooms in major cities such as New York, Hong Kong or Los Angeles that are accustomed to supersize properties. It is not so much the number that counts as the feeling of being one of the Happy Few that uphold a selective image.
  • Personalized service: the kind one would receive from a personal host who pays his guest the highest respect. The boutique-hotel was created in opposition to the implicit anonymity of properties managed by giant chains. It is thus important for each client to be identified and recognized, both physically and in terms of his particular expectations.
  • High pricing: this is the natural result of all the previous characteristics. The boutique-hotel is a luxury or upscale, hotel.

Developed by independent hoteliers

Since the growth of hotel chains speeded up in the 70s, the unbranded hotel supply began to steadily shrink. Innovation, increased comfort and security provided by a chain that makes adapting to standards a priority… combined to make clients prefer this new modernized hotel supply. At the time, the slogan of the #1 global chain, Holiday Inn, was: “The best surprise, is no surprise!”, suggesting an unpleasant one. It must be admitted that the independent supply did not excel in terms of coherency of its equipment, bedding or decoration. But by a natural countercyclical effect, twenty years later, standardization led to banalization and a kind of boredom for travelers. Today, it is good form to denigrate concepts that are considered excessively universal.

Independent hoteliers in city centers, whose strength lies in their location, leapt in. Following in the wake of Ian Schrager and a few others, such as the Germain group in Canada, Núñez i Navarro in Barcelona, Leonardo Hotels in Europe, Elegancia and Astotel in Paris rejuvenated their properties. Not a month goes by today that an aging hotel isn’t reborn as a fashionable boutique hotel at the touch of a fashion designer’s magic wand.

At the same time the increase of commercialization via Internet and the creation of consortia networks around the boutique-hotel concept shook up the foundations of hotel groups that were surprised by the popularity.

Design Hotels are structured around a concept

Twenty years ago or so, Claus Sendlinger, a German events specialist, foresaw the development of the boutique-hotel phenomenon with himself as a major client. He got together a dozen or so Californian owners who wanted to benefit from his marketing experience. The Design Hotels took on the form of a sales company. It expanded progressively into Europe and Claus stopped all other activities to fully dedicate himself to the project by moving the headquarters from the little California resort of Sausalito to Berlin. Today, this collection of hotels characterized by their very contemporary design includes close to 300 and just over 20,000 rooms in fifty or so countries. The network brings marketing sales tools to isolated owners who have elected to be original. Last year it reached an average daily rate of 245 euros, with a majority of European clientele, followed by a strong third of US revenue and close to 10% of its business from Asia-Pacific.

The firm made a first financial agreement with the German group Arabella, a major franchisee of Starwood Hotels & Resorts in Germany. In 2012, Starwood Hotels bought back the 50% of Design Hotels AG that was owned by its franchisee. While it does not want to get involved in the daily management or merge the reservation systems, the American group is keeping a watchful eye on this niche.

Other groups have followed a similar route, and Preferred Hotel Group, in addition to its Preferred, Sterling and Summit networks, which are already dedicated to the sale of independent hotels, launched Preferred Boutique in 2005. The collection encourages the diversity of members from small palaces to encampments of tents, from alpine chalets in Colorado to private residences in the Caribbean. The tie between them remains that of a hip experience, that is offered to upscale clients. Preferred Hotel Group developed the tools to the benefit of 650 properties regrouped in one or the other division. “Belonging to a voluntary chain acts like a brand incubator, which allows the owner to keep control over his assets and yet stay connected worldwide, and with OTAs. It thus has backing from a global brand,” explains Steven Ross, one of the vice presidents of PHG. Last year, the group generated $834 million for its members, up 14% on 2012.
For some of their members, Small Luxury Hotels, Leading Hotels of the World and even Relais & Châteaux do nothing else but allow unbranded properties to reach upscale clientele who are seeking character, modernity, a difference within the security of a known brand.

Internet opened the way to global distribution for independent hoteliers   

Without turning to a consortium for marketing support, independent properties that present themselves as boutique-hotels have a broad choice of specialized sites for their sales. In Europe, among the most active is which lists more than 1,300 boutique-hotels worldwide. It was founded in London in 2006 by a Frenchman, Xavier Bentes. “Our positioning is no longer just boutique-hotels, but all contemporary and design structures," explains the founder, a partner of Air France/KLM’s Flyingblue, its booking fees are not as high as those of the usual OTA with its commission ranging from 8% to 20%, depending on the properties and supply.

Founded in 2000 by Laurent Vernhes and Michael Davis, two veterans of the new media, Tablet Hotel is intended as a “remedy against boredom during travel and a serious antidote to overdosing on the choices available on Internet.

In 2004, Splendia was created. It was founded by Elie de Coignac and Benoît Durand, following their meeting in Marrakech and their shared passions for e-commerce and luxury travel. Based in Barcelona, Splendia now has international staff of 70 and around 3,000 hotels-partners worldwide. “In order to be chosen, a hotel must have the following exceptional qualities: location, architecture, design and services. These are the key priorities to our selection,” explains Elie de Coignac.” Last year the site generated a business volume of 40 million for 500,000 guests handled.

Hotel groups get back on track

At this point in the global unfurling of the boutique hotel phenomenon, hotel groups could not fail to respond. The answer has a name: lifestyle, a concept that Starwood Hotels & Resorts quickly adopted. Frits van Paasschen goes straight to the point: “Our global brands are founded on lifestyle concepts, avant-garde design and constant innovation, elements that are central to our competitive advantage.”
The lifestyle approach transposes the lifestyle that is familiar to upscale clientele: innovation and accessibility of technology, personalization that encourages conviviality, a sense of emotion in the experience, and versatility of functions that are under the same roof. The lifestyle hotel becomes an external extension of its clients’ life styles.

Hotel groups have tried to square the circle: by creating an identifiable trademark that nonetheless does not deny the individuality of each property; the creation of a network that may be marketed worldwide while strongly identifying each hotel with its local environment; the quest for economy of scale while encouraging differentiation and originality. The answer is: Hotel Indigo for IHG; Edition for Marriott International; Andaz at Hyatt Hotels; W and Aloft at Starwood Hotels; HNow by NH Hotel Group; Canopy by Hilton at Hilton Worldwide; Cambria at Choice Hotels; MGallery at Accor; Radisson Red at Carlson Rezidor, and many more…

By combining five essential trends in different ways, Lifestyle hotels plan to recuperate clientele lost to unbranded hotels:

  • to make sensations come alive: the five senses are awakened upon arrival at the hotel with an olfactory signature, background music, lighting adapted to the time of day, furniture design, original F&B offer and – last but not least – the quality of materials used in interior decoration that seems to invite the touch.
  • technology that is rethought to make life easier: available computers, flat screens in the room and at reception, MP3 or smartphone bases, tablets as the universal tool …
  • appropriate familiarity with staff: Personnel are not there to serve, but to accompany the stay, part-confident part-concierge, part-personal shopper, part-computer expert. For management this means functional flexibility with the quest for availability of dispositions particularly open to contact with reception personnel.
  • the constant availability of installations and services: the lifestyle client lives 24h/24 by choice or obligation when travelling on business. Meals must be available at any hour and there must be opportunities for sports, relaxation and spa or working at the bar… Flexibility, fluidity, accessibility… terms that are associated with the concept.
  • a living space turned toward the outside: the hotel is not a fortress but a destination representing local life. It hosts cultural, musical, artistic, festive events that keep it abuzz on social networks and reinforces its unique personality.

The creation of a sales network happens through the development of a collection of unique pieces with the same DNA, unlike a chain where each link is a clone of the last. In the United States, Joie de Vivre Hotels, Kimpton Hotels & Resorts are gracing the pages of interior design magazines as are Leonardo Hotels, Andels or Angelo.

Demonstrating the strategic interest of having a well-known brand on the lifestyle boutique segment is the recent acquisition of Kimpton Hotels & Resorts by IHG for some 350 million euros. It brings management contracts for sixty or so properties throughout the American continent. By associating the brands Indigo and Even, this division of IHG portfolio will have more than 200 properties operating or in the pipeline in twenty or so countries. IHG offers the brand Kimpton the possibility of exporting its brand worldwide, while adding a new offer to its brand portfolio for its investors. The group will also take advantage of the expertise developed by Kimpton Hotels staff in terms of F&B and animation of public spaces for its other brands.

IHG has been reactive to the development of the independent boutique-hotel concept. The first Hotel Indigo opened its doors in Atlanta in October 2004, followed by a second property in Chicago six months later. The following year the concept was exported from the United States to Ottawa, Canada. A while would pass before it crossed oceans eastward to London, St-Petersburg, Rome, Berlin, Paris… and westward to Beijing, Xiamen, Hong Kong. The inventory has close to forty operational hotels and a dozen or so others in the pipeline. Because of its flexibility, the brand offered a broader possibility for converting hotels or existing buildings in city centers, the primary target for IHG. The brand reflects local culture, the character and history of the property’s neighborhood with an interior decor that changes from one season to the next. The brand is also more easily accessible to franchising.

Even for IHG, Starwood Hotels & Resorts group had scented change upwind, and at the instigation of its charismatic president at the time, Barry Sternlicht, W Hotels began at the end of the ‘90s. The first W Hotel property opened in December 1998 in New York. It was designed to offer the character and personality usually found at unique independent hotels while guaranteeing the reliability, fitments and services that business travelers expect from a brand. The concept bears a strong imprint of the New York signature that is definitively hip and contemporary. Every busy city around the world will see one or several W Hotels open with no two alike, although they bear the same genes. The 46th property has just opened in Bogota, Colombia, and the pipeline is generously filled to reach 60 hotels by 2017, by adding, Shanghai, Amsterdam, Dubai, Abu Dhabi, Mumbai, Jakarta, Panama, Muscat, Chengdu, Suzhou, New Delhi and Kuala Lumpur.

With Andaz, the Hyatt group broke away from its brand policy that always associated the group’s name to the brand. Andaz is the personalized response that breaks the established codes of chains. Reception has been replaced by check-in at the bar or in a salon, a Host or Hostess has replaced the receptionist as the guests’ permanent interlocutor. The city and the neighborhood wend their way into the hotel’s common areas where the property’s neighbors, local shops, monuments, attractions are honored. The décor insists on the unique local character of the destination. In London, Amsterdam, New York, and soon in Paris, Andaz is opening in landmark luxury buildings without a complex.

A group like Accor founded on the rigorous codes of Novotel and Ibis, had a duty to itself to find a concept that is out of line with its formatted image, whence MGallery, a collection of charming properties. The group presents it as follows: “Each hotel tells, in its own way, the story experienced by a traveler during his or her stay at the property. MGallery has close to 60 exceptional hotels, all different, that offer a unique experience. Rooms have been arranged and spaces decorated with a goal to discovering and meeting cultures. As for dining, it echoes local gastronomy or reinvents culinary classics.” The concept is founded on three pillars: Originality, Elegance and Consideration through personalized services. It is produced in three universes: Heritage, Serenity and Signature for more contemporary approaches.

The last launch to date, Canopy by Hilton (a project slowed by the failure of Denizen and the ruling by the United States Federal Court to penalize the American group for plagiarism of Starwood Hotels brand “W”) shows that a global group such as Hilton Worldwide could not be bereft of a “lifestyle” brand. The concept plans to take advantage of reactions from the public regarding brands launched by competitors to define the contours of “Lifestyle 3.0”, according to declarations from Christopher Nassetta, CEO of the Hilton group. “We are not targeting luxury,” insists Gary Steffen, the brand’s general manager and partisan of the “accessible lifestyle” approach. The energy and décor will draw on the local environment with a rustic touch: bricks or waxed cement, visible beams… at a cost of around 100,000USD per room (ex-real estate) for a capacity of 150 to 250 rooms in city centers. A dozen or so franchises have already been signed with a goal for 30 openings before the end of 2017, with some new-build constructions but mostly conversions.

Examples may multiply further, demonstrating how hotel groups are reacting to this phenomenon that is not just a passing fashion. Specific cases have shown that hotels that adopt the boutique hotel concept or the lifestyle version have been able to boost their occupancy and average daily rate compared to more “impersonal” properties.

A study in Vienna specifically reflects the results of a boutique hotel in 2013:  Stadthalle, which also takes a true environmental, naturally complementary approach on this segment. This 79-room property in the 3-star category, was recently decorated in a very personalized manner and realized an average daily rate of 92.36 euros in 2013 when the average daily rate was 80.14 euros on average for 4-star properties and 152.91 euros for 5-star properties (local classification). Performance was also higher in terms of occupancy rate that reached 74.90% for the Stadthalle across the year, varying from 70 to 73% at 3-, 4- and 5-star properties. This means the property’s positioning allowed it to stay generally above the competition. In an interview, Claudia Plot, hotel director, clarifies its price positioning: “Although there is strong competition, we could show that we also had a unique product, something which was incomparable in the city. That made us believe we had to stick to our price policy.” Last but not east, this enables her to tell more through direct channels and thus negotiate lower commissions with OTAs, in a “win-win” deal.

Also read:

  • Carlson Rezidor launches two new brands
  • Hilton launches a new lifestyle brand
  • IHG buys Kimpton Hotels & Restaurants

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