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The circle is now complete. InterContinental Hotels Group (IHG), the world’s largest hospitality brand, just acquired Kimpton Hotels, the world’s first boutique hotel brand.
But what does a boutique hotel even mean anymore?
Starwood Hotels was the first large chain to jump into the boutique/design/lifestyle segment on a large scale with its successful W Hotels flag, and since then many of the global hotel groups have followed suit through either acquisition or new development.
Hyatt launched Andaz, Hilton has Canopy, and Marriott invested big into the market with Autograph Collection, Moxy, EDITION and AC Hotels. Internationally, Melia’s ME brand, Carlson Rezidor’s Quorvus and Radisson Red initiatives, and Shangri-La’s new Hotel Jen are just a few more examples.
The factors spurring this trend are manifold, beginning with rapidly changing demand from a younger, more well-educated and well-traveled consumer who actively avoids any type of generic travel experience. Only two decades ago, hotel brands marketed themselves based on product consistency, especially attractive to consumers traveling abroad in a rapidly globalizing marketplace with so many new emerging destinations.
Since then, brand consistency has shifted from a positive business driver to a toxic mark of shame, quickly.
Today, digital communications have helped remove much of the fear of the unknown, obviating the need for brand experience sameness. At the same time, the explosion of digital content and social media has viscerally promoted the value of authentic, hyper-local, destination-specific, experiential travel to millions of travelers attempting to build social equity based on having unique experiences.
Social media exposure has been a big reason behind the rise of so many suddenly trendy destinations from Vietnam and Morocco five years ago to Iceland and Bhutan today. The same is true for the rise of cult-like “tribes” slavishly loyal to lifestyle hospitality brands ranging from Ace to Airbnb.
How many people today make travel purchase decisions based on how their experience will play out on social among their personal and professional networks?
There’s no data on that but the big hotel brands sure want to tap into it, which is driving so much of this new development around “authentic, local, experiential” hospitality to the point where those words are beginning to chafe.
Because, W Singapore doesn’t really feel like an entirely different experience than W South Beach. You pretty much know what to expect at each property. In fact, the new W Bogota that opened this week is newsworthy because it’s in Bogota, not because it’s a W. The same thing could be said about a Kimpton in D.C. or San Francisco, or a ME in Cancun or Madrid, just as much as an InterContinental or Marriott in Prague or New York.
Meaning, these boutique brands that are so popular today are evolving into a reincarnation of the Hiltons and Hyatts from previous generations. Since the parent hotel groups are public companies, consistency is still all-important to their bottom line. All we’re talking about here is just a shift in room count and design.
In effect, with so many suppliers evolving in the same way to distance themselves from the mass-market hotel of the past, they’re developing the mass-market hotel of the future.
Is Efficiency the New Experiential?
There are some exceptions. Brands that will choose to remain small in scope, such as Ace, 21c, 25hours, Grupo Habita, Unlisted Collection, and perhaps others like Andaz and citizenM, will offer a semblance of “unique” experiences based simply on low supply.
Another point of consistency for all of these legacy brand-operated lifestyle hotel brands is price. For many travelers, they are expensive, especially in major markets. Prohibitively so. The travelers of tomorrow who are hungry to immerse themselves in a destination spend less time in a hotel than in the past, unless it’s a resort experience, and their travel budgets are adjusting accordingly.
Some brands have adapted with smaller rooms, stylish but inexpensive furnishings, and expansive lobby/F&B experiences, but price is becoming a huge purchasing factor for people who want to travel more and farther away as efficiently as possible.
Yes, efficiency hospitality is the new black, which brings us to the shared lodging and hybrid hotel/hostel models. They are the two most exciting, unpredictable, spontaneous—and more importantly, affordable—hospitality sectors today, which are still very much in their nascent development stages with infinite potential to change travel over the next two decades.
In no means is that to suggest that all of these lifestyle brands will lose marketshare to the point where they’re unprofitable to keep building. The exponential rise of middle class travelers globally will ensure their long-term success and expansion. What it does mean is that boutique hotels are drifting toward the center. They’re becoming mainstream while losing some of their counter-culture mojo due to basic supply and demand economics.
Simply put, high concept design has been democratized. The boutique hotel of today is becoming a commodity, no matter how many fashionable designers, architects, chefs and retailers you throw at it.
The Boutique Boom is Spiritually Bankrupt
Avi Brosh, founder of Paligroup Hotels, broached this topic at the first annual Skift Forum in New York this year.
“It’s 2014, what does boutique even mean today?” he said. “I don’t really know what it is.”
Brosh then made the assertion that boutique hotels have become a victim of their own success, because they’ve become an “asset class” not unlike shopping malls and industrial parks.
“It’s no longer a stylistic benchmark or authority in experiential authenticity,” he said. “I would suggest that boutique hotels as they’re known in the asset class capacity have become spiritually bankrupt.”
Summing up, Brosh explained that “boutique” to him equates with independent hotels, versus properties developed by large brands, committees and traditional place-making techniques designed to increase returns for stakeholders.
From a business perspective, the beauty of the IHG/Kimpton deal is the synergy between the two brands and their reward programs, especially for business travelers, and the overnight ability for Kimpton to scale globally. For a business traveler, all of that is a really great thing.
Many Kimpton loyalists, however, lamented big brother taking control over their beloved boutique brand, but that was to be expected. When you create a brand that impacts your consumers on such an emotional level, many of them don’t take kindly to an outsize overlord scooping up the product. At the same time, it’s a little naive to think IHG is going to mess with the Kimpton formula too much.
And that’s exactly the point—it’s become a formula. That’s fine for the P&L sheet, of course, but there’s a massive generation of travelers out there seeking something different.
Greg Oates covers tourism and hospitality development. Email him at email@example.com.