Boutique Hotels Push Back on Major Chain Brand Conversion Tactics

The world’s largest hotel companies expect independent hoteliers to flock to flag affiliations and their accompanying global reach during the coronavirus recovery to rebuild business. Don’t hold your breath, says an organization representing boutique hotels.

The Boutique Lifestyle Leaders Association and partner organization StayBoutique launched this week the #BoutiqueStrong campaign and council to provide boutique hotels and businesses with resources to rebuild and succeed during the coronavirus economic recovery.

The move comes weeks after leaders of multinational companies like Marriott, Hilton, and Hyatt each indicated on first quarter earnings calls they expected properties converting to one of their many brands to fuel growth in the first few years of rebound from the pandemic. Travelers will initially value safety with a brand they recognize above all else, the big brand ideology goes.

But boutique hotels can just as easily provide heightened cleaning and safety standards while still offering the experience that inspire visitors to make a reservation in the first place, the #BoutiqueStrong council argues.

“Our message with the forum and task force is to make sure we don’t lose our soul in this and become a generic thing with a good paint job. You have to have some good mojo that still speaks to the guest,” CB5 Hospitality Consultants CEO and #BoutiqueStrong Council member Jody Pennette said. “A boutique hotel’s appeal comes from the street and neighborhood perspective that’s harder for a big brand to do because they have to speak to the bandwidth of a very spread out audience.”

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The council provides seminars on matters like revenue management, talent acquisition, and legal guidelines to boutique hotelier members. The plan is to grow the educational offerings to 50 courses, said BLLA Chief Operating Officer and StayBoutique co-founder Ariela Kiradjian.

“It’s not just about reopening but moving forward in this new paradigm,” she added. “If you’re thinking things are going to go back to how they were in January, that’s never going to happen.”

The campaign provides guidelines on reopening properties with stringent, heightened health and safety guidelines as bigger hotel companies offer — but with a delivery that stays true to the quirky nature of boutique hotels. Think: less in-your-face cleaning seals of approval.

“The consumer is going to look for everyone to have their act together from a compliant-safe operation. If you don’t do that, you’re out of the game,” Pennette said. “But in the boutique sector, we have to add that emotional level that has that creative spirit and verve that drove us to open one of these properties in the first place.”

Pennette’s work on the council focuses on food and beverage spaces within boutique hotels and providing the expected level of safety and social distancing without an abrasive delivery. Recommended table capacity will be capped between four and six people with tables spaced apart at six-foot distances to abide by various government orders. This ideal party-sized table format would hopefully inspire more collaborative menu ordering and sharing bottles of wine — pushing up higher per-table revenue in a low-density recovery.

“It’s a good way to address some of the challenges, and the room still looks good,” Pennette said.

Leverage What You Know

The #BoutiqueStrong council plans to advise BLLA members to leverage guest feedback in deploying new operational strategies to get through tough times, Nashville-based The Hermitage Hotel Managing Director and council member Dee Patel said. Boutique hotels are able to quickly pivot during unexpected circumstances, and that will be an asset during the economic recovery.

“We want to convey and demonstrate we’re a trusted, safe place and one where you know you’re coming to a healthy, trusted place where there’s also empathy and flexibility,” she added. “We’re trying to build guest loyalty and show this is a place where you can bring your family to and enjoy a night away and not think twice about it.”

Being a boutique property doesn’t mean operators are ignoring new health and safety procedures, Patel added. Just like bigger brands, the Hermitage Hotel offers contactless check-in and digital room keys through a smartphone app. Public and high-touch areas are cleaned at higher frequencies, and guest rooms sit empty for 72 hours between visits. The hotel staff add personal touches like care packages in guest rooms with curated items as well as masks and disinfectant, given the circumstances.

“As we look through our protocols and develop plans for reopening, it’s important that, while you are pausing certain offerings or substituting others, to stay true to what the property is. There’s nothing socially distant about our hospitality industry. That’s not what we do,” Patel said. “But big brands are touting partnerships with major cleaning brands. That communication could go two ways. One, it could be great you partnered with a disinfectant, or it could raise the question of, ‘Did you not disinfect your hotel before this?’”

Not-So-Easy Money

Boutique hotel operators still have to grapple with more than innovative ways to marry rigorous hygiene protocols with hip brand identity. They have to lure travelers back, and this is where bigger companies think they hold all the winning playing cards.

Hotels in some markets around the world hit single-digit occupancy rate lows, and they have to navigate a way back to levels that can, at the very least, break even. The major global brands come armed with high marketing budgets, global distribution channels, and booking systems to quickly match prospective travelers with a specific property. The independent operator just needs to sign a franchise agreement, take on a flag, and they would have access to all these marketing riches — as long as they pay the ensuing fees.

But initial franchise fees can run in the tens, if not hundreds, of thousands of dollars range. Tack on reservation fees, marketing fees, and the percentage of total room revenue major brands are entitled to, and a cash-strapped boutique hotelier may not find it financially viable to ink a deal with a massive conglomerate.

“I think things are going to change. As we get back to being true hoteliers in hospitality, independent operators aren’t going to want to sign a 10 or 20-year contract,” BLLA founder and CEO Frances Kiradjian said. “I think contracts will come down, and I don’t know what that will do to those who signed all those contracts. I hear too often of people who signed with a brand and are now down to single-digit profits. They look at themselves in the mirror and wonder why they’re in the business.”

Boutique hotel operators and organizations like the BLLA may find opportunities in the downturn just as the bigger brands expect to find some of their own. The BLLA can act as a conduit for independent operators to access bookings through travel agents, websites, and booking systems that don’t require signing costly contracts for flag affiliation, Kiradjian said. The organization even plans to expand its own direct booking system.

“I’m not anti-big brand. You have to do what makes sense for you. If it does, do it,” Ariela Kiradjian said. “But if you want to keep your identity and authenticity, just know you’re going to lose that. If you want to keep your identity, you’ve got to stay independent.”