Can the hotel brands do boutique?

19 March 2009 by
Can the hotel brands do boutique?

Boutique hotels, it would seem, are the latest must-have accessory for global hotel brands, with Hilton, InterContinental, Marriott and Starwood all getting in on the act. But can a multinational chain really run a "boutique" hotel? Emily Manson reports.

The launch last week of Hilton's new lifestyle brand, Denizen - the latest in a string of global boutique brand announcements - has once again brought the contradictions of the concept to the fore.

Coming hard on the heels of Starwood's relaunch of Le Meridien and its expansionist plans for W, as well as IHG's first UK opening of Indigo in January, and Marriott's recent tie-up with Ian Schrager, there appears to be an almost unseemly rush to cash in on this market.

Ross Klein, Hilton's new global head of Denizen, was formerly Starwood's "W man". In accordance with the "hip ‘n' cool" nature of this project, Klein - formerly a marketing man at Ralph Lauren - has shed his clean-cut American image, complete with jeans and open-necked shirt, and instead donned a goatee and the obligatory tie-dye-styled designer jumper to ensure the non-corporateness of Denizen is properly conveyed.

However, the self-proclaimed "easy breezy" Klein is betrayed by his PR machine, who make getting an interview a trial of epic proportions. Could it be that they are nervous at launching a new brand without any firm locations to announce? Or that they have no images to release? Or perhaps it's the undefined "legal issues" that are rumoured to surround Klein's defection to Hilton which remain ongoing? Who knows?

But here's what we do know about Denizen. It's the product of five separate studies, canvassing the opinions of more than 4,500 Hilton loyalists, staff, developers and owners, travel and trade professionals. Klein says Denizen is "the epicentre of upper-upscale, with value for price paid but not luxury" and is something Hilton needs to round out its luxury and lifestyle portfolio, taking its total brands to 11.

"The category has just not got it 100% right yet it's riddled with compromise," Klein adds. "Denizen is a great collaboration and a great example of entrepreneurial empowerment. No one has yet occupied the space that has the discipline and design as an authentic business hotel where you know you're going to be able to get the fax as well as a martini, and be able to work but also have fun."

To this end, Denizen will allow guests to choose their time of arrival and departure, and make a lot of other "pre-stay choices". There will also be "relaxation hubs" and "communal-style society restaurant tables". As Klein says: "A lot of boutique guests want to choose the rhythm and not have it chosen for them. Other operators have got the loud part right but not the quiet part."

It is, of course, impossible to know if Hilton has got it right with Denizen: it is still just a drawing-board concept with the first property due to come on line in 18-24 months.

But what about the bigger picture? Can the global chains really do boutique, or is it inevitable that they will just become another corporate brand to shelter under their umbrella?

Tim Kemp, founder of the Firmdale hotel group, is sceptical: "Of course it's a contradiction in terms, but the chains can't help themselves. With boutique or design hotels, you need the owner to design it and be there knowing when something needs refurbishment, not designed by committee where some want black, some white and you end up with grey. I have a definite idea of what I like and I stick to that."

It's all about size and personal service, Kemp adds. "The chief executive officer of Hilton is never going to make a guest a cup of tea. The trouble is there are too many investors in big corporations who can exert influence on a place, but they're divorced from the operations side and just want more rent."

Robin Hutson, founder of Hotel du Vin, agrees: "I much prefer hotels where there is an individual's passionate stamp on that hotel, rather than something that looks as if it's come out of a committee, a board room or an accounts department," he admits. "I like to see the idiosyncrasies."

However, Robert Cook, the current chief executive officer of Malmaison and Hotel du Vin, is more positive about the global brands entering the market, and admits their global distribution systems will provide them with an instant competitive advantage which will "keep us on our toes".

"Smaller operators need to be smarter and more edgy in their distribution systems," Cook notes, "and in order to compete with the big muscle behind the global brands, that may well include joining consortia such as Design Hotels and Mr and Mrs Smith."

However, he warns of the bad times that befell Malmaison when it was taken over by Radisson. "You can't apply the big group mentality to boutique operations. One size does not fit all: you have to make the brand stand alone, as Starwood did with the W brand.

"Don't try and fill it with mainstream personnel," he continues. "It's a different machine and you have to allow the entrepreneurial spirit to flow and not run it by committee. That's the worst thing - it's like having a brand within a brand."


Kurt Kinsell, head of InterContinental's EMEA region, has just launched the first UK Indigo in Paddington, London. The midmarket boutique brand is based on the Fibonacci numbers sequence - hence the shell logo - and has the theme of renewal, with its USP being seasonally changing signage. Kinsell, of course, is convinced that the chain-boutique hotel concept has legs.

He says: "Big brands more clearly understand how to discern and differentiate a product for a traveller. Indigo is created specifically for business and leisure travellers that want high style and high design. Yet at the same time boutiques are hard to find off the shelf, so a big corporation such as IHG creates access and provides distribution for that. We also have the benefit of the trust of our brand and of course guests can still get loyalty points, as they're still staying within the IHG umbrella."

Kinsell adds that big corporations can also afford to do things smaller operators can't, such as get insight into customer segmentations to really understand what they want. Chains such as IHG also challenge the original ethos of a boutique offer, which Kinsell says was exclusive, rather than inclusive.

"Boutique offers first started out with a mantra of ‘we're hip and cool and we dare you to be hip and cool enough to stay with us'. We feel there are people who want style and design but from an inviting place that provides easy access through our website," he explains.

This increased access and visibility will, Kinsell adds, change the boutique scene: "There will always be space for niche players but it will raise questions for a number of hotels. How can they deliver the same kinds of returns to owners when we can demonstrate the ability to advertise and promote across the world? Independents need to spend significantly more to achieve the same things."


Hotel consultant Melvin Gold believes that the concept of boutique hotel design originated in the independent sector because independents are more nimble and flexible at innovation, design and unstandardised, quirky products.

"Even the original chain involvement in boutique hotels followed the pioneers in the sector such as Schrager," he says. So almost by default, chains can only follow not lead in this sector.

However, Gold adds: "The success of W suggests that the chains can find a way, albeit with a larger hotel product, to make the boutique concept work. The subsequent success of products such as Malmaison have shown that the public is ready for design-led, quirky products that have strong consumer appeal. If the big brands can take that approach and add to it their branding, distribution systems and quality of management, then it suggests a way forward."

But he concludes: "I don't believe they will ever be at the forefront of innovation in this area, as independent hoteliers are more fleet of foot."

Perhaps Starwood's former chief executive officer and W-creator, Barry Sternlicht, was the one who got it most right. He freely admits that the whole point of W was to create a hotel that he wanted to stay in, so he never did consumer research for the concept. He was the focus group and customer, he says, and that was what mattered. All the rest just followed.


Starwood Hotels & Resorts Le Meridien & W

InterContinental Hotels Group Indigo


Marriott International
Edition by Ian Schrager


Ritz Carlton


Eva Ziegler is flamboyant and European - "a real break from the mould for us", says the PR, ahead of my meeting. But this is Starwood they don't really do European flamboyant. They do Sheraton, they do Four Points, they do American stalwart. OK, they do W, but that was arguably an anomaly in their portfolio and the brainchild of former chief executive officer Barry Sternlicht. Until now.

Ziegler has been in charge of rebranding Le Meridien for the past three years, and more recently she has led the global development of W. To have appointed a "flamboyant European" to these key roles is a considerable departure for the previously US-centric company.

Ziegler is billed as a one-woman tornado who is going to make sweeping changes to the fortunes of these brands despite the global economy's collapse. Ziegler is the product of a highly branded marketing background with stints at Saatchi and Saatchi, Coca-Cola and Toyota.

She is using her previous corporate branding experience in her current job. "You have to understand the product, and product position is the essential part and starting point of the branding strategy," she says. "It's not about behaviour or changing the core concept."

But with hotels, Ziegler admits: "There's also a softer side of the game and a lot of hotel stuff is about the human component - ie, intangible and experiential - whereas cars are about engineering and launching products."

For Le Meridien, the rather tired ex-AirFrance hotel chain that has lost its way over the past decade, she plans a massive overhaul and link in with art and culture.

Starwood bought the brand in 2005 and Ziegler was brought on board the following year to overhaul it.

The result was LM100 and the Unlock Art programme, focusing on harnessing input from creative experts in cuisine, fashion, art and architecture - and includes each property forging a link-up with a local contemporary cultural experience.

"We needed to make the hotels relevant for the 21st century and make it a more holistic branding. We now evaluate every decision through three core values chic, culture and discovery," Ziegler says.

The trouble is, however, that Starwood does not own any Le Meridien properties: they are all managed (85%) or franchised. So with plans to relaunch and rebrand 60 of the 110 properties by 2011, there is the issue of funding to contend with. The ball-park rebrand figure, she says evasively, is anything between €5m and €50m, depending on type, size and condition of hotel.

But Ziegler remains positive. "Economic slowdowns can be seen as an opportunity to invest in the relaunch of a brand so that when the upswing happens we are in the best possible starting position."

To date, she has not encountered problems from owners unable to secure finance for the rebrand. "Our owners are excited about the opportunities to participate in le Meridien's unique programmes such as Unlock Art and the arrival experience, plus those initiatives are low cost and high impact."

The rhetoric may be positive, but she does admit some cost-cutting initiatives have been implemented - without affecting the customer experience - and that they are becoming more "easy going" on deadlines to make it financially digestible for owners.

Of W, the already successful cult boutique brand with 26 properties worldwide and the expectation of tripling its footprint by 2011, she doesn't appear worried. Because W is, arguably, one of the first boutique offerings from a global brand, she's confident that its trendsetting and escapist image will endure. Its clear definition obviously helps. "It's flirty, escapist and playful, with a twinkle in its eye," she says. "It's a little bit sexy with a bar scene hook that trades on socialising and aims at the ‘see and be seen' type."

Ziegler dubbed the recent opening of the W Paris Opera a major milestone for transforming W hotels into a global brand, yet she admits it's not the brand's spiritual home.

"W is exemplified by New York, and Le Meridien by Paris - with its understated, quiet intellectual stimulation and creative people it's a more natural fit," she says. "W is more than a brand, it's an established lifestyle brand" - which may allow it, to some extent, to transcend the bun fight that is currently taking place on the boutique hotel circuit.

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