Trend Watch: Inside the Rise of Boutique and Lifestyle Hotels

Little Albion Guest House master room

Blame Airbnb and the internet. Lifestyle and boutique hotels are all the rage now with new niche properties capturing media attention and opening at a rapid rate. According to a report from Colliers International, 10% of Australia’s national accommodation development pipeline are boutique and lifestyle properties, up from 3% just six years ago.

It seems every major hotel company has launched a new brand, many of them ostensibly targeted at the Millennial demographic, although evidence suggests they are being used by all age groups. These brands include W, Aloft, Indigo, Moxy, Sofitel So, Voco, Ovolo and many others. Among local brands and operators that have made a mark are Art Series Hotels, QT, Old Clare, Spicers Retreats, Paramount House, Little National, Veriu and 8Hotels.

The major players agree that the shift to lifestyle and boutique hotels is being driven by consumer preferences – so what learnings can established operators take from this trend and apply to their own businesses?

Defining boutique and lifestyle properties

The first thing to note is that boutique and lifestyle hotels are very similar but with a different name.  It’s accepted that boutique hotels are typically less than 100 rooms, while lifestyle properties have up to 150.

For Karen Wales at Colliers International, lifestyle hotels are the next generation of boutique hotels.

“They borrow the best elements of boutiques – small, intimate and modern – and throw in the advantages only a chain can offer like loyalty programs, distribution and economies of scale,” says Wales.

“As a result, lifestyle hotels are generally more affordable and accessible than boutique hotels but acknowledge that travellers are not singular in their wants and needs.”

Paul Fischmann from 8Hotels, a sector pioneer, also points out that “stand-alone, one-off properties have always existed but are now coming to the attention of people sick of the big block properties created by Hilton and Marriott in the 70s and 80s.”

Alex Thorpe, who created the Veriu brand with co-founder Rhys Williams, agrees.

“We have always had a view that people in general are walking away from those big homogenous properties and given a choice would rather stay in a boutique hotel.” 

Sector characteristics

Karen Wales says lifestyle properties have several elements in common. 

“Each brand has made a targeted shift to cater to guests’ specific lifestyles, from tech-savvy millennials to health-conscious athletes. Although the presentation and design differ amongst the lifestyle hotel brands, it is evident that the key elements are consistent. These include:

  • Focus on the experience rather than simply the product or service.
  • Connect with individuals and build relationships.
  • Connect with their local environment to leverage what the precinct offers.
  • Offer innovative facilities and new forms of entertainment.
  • Enhance online presence and implement aggressive marketing strategies.
  • Emphasise life enrichment, creativity and rejuvenation.

Airbnb a stimulus

The incredible impact that Airbnb has had on the accommodation sector is well known with the focus to date very much on its phenomenal growth and the threat that poses to traditional operators.

But both Alex Thorpe and Paul Fischmann say Airbnb has also had a major influence on consumer tastes, particularly in terms of motivating travellers to search for something different and – dare we say it – authentic.

“No two Airbnb properties are alike, they are all individual and that is what consumers are increasingly looking for,” says Fischmann.

Alex Thorpe adds that Airbnb has also fired a desire among travellers to stay in interesting near-city neighbourhoods – locales that Veriu specialises in - rather than just the CBD.

Gentrification has also helped in this regard. In Sydney, for example, Surry Hills has become trendy over the past decade with the result that many older buildings, including warehouses, have been renovated and repurposed with dozens of new bars and restaurants opening.

Hotels have followed and two of the biggest boutique openings over the past year – Paramount House and Little Albion Guest House (which is operated by 8Hotels) – have occurred in the area.

Learnings

The biggest learning from the smart money pouring into the boutique and lifestyle sector is that consumers want something unique, modern and well-equipped. Also, because of the internet, established brands don’t matter so much anymore. But website and positive reviews do.

These opportunities are there for everyone, however at end of the day, the fundamentals of running a successful property remain the same. Good hospitality has always involved creating a special guest experience, providing genuine hospitality and being part of the local community.

“For me it’s always about the fundamentals: a great location, excellent product, brilliant service and genuine value,” says Paul Fischmann, adding that a comfortable bed, good shower, the right lighting at the right time and great sound insulation are also vital. 

“If you get those things right you’re going to be successful. Ignore the trend and focus on the fundamentals. It’s been that way since the dawn of time.”