Market snapshot: Boutique hotels

25 May 2005
Market snapshot: Boutique hotels

The demise of the boutique hotels sector has been predicted many times since the opening of Anouska Hempel's Blakes Hotel in London in 1980, widely considered to be the first of its kind.

Doom-merchants have included Bob DiLeonardo, president of the eponymous hotel design company, who argued in 2003 that the boutique market was overcrowded and close to extinction. A year later Accor executive Michael Flaxman said that the popularity of boutique hotels had been a short-lived trend.

Yet despite the forecasts, the boutique market appears to be thriving in the UK, spreading its influence both geographically and in terms of the impact it has on more mainstream hotels.

Because boutiques come in many different sizes, shapes and forms, quantifying their place within the £27b UK hotel market is problematic.

There are no definitive figures on the sector's size or growth rate or, indeed, precise agreement on where the boutique market even starts and finishes.

Some operators even disagree with the term "boutique", preferring instead to call themselves "lifestyle", "townhouse" or "designer" hotels.

Often, though, boutique hotels will be smaller properties, with perhaps fewer than 50 bedrooms, and design-led. They are usually city-centre hotels, but are increasingly being found in rural and regional locations too.

Key players

Both started out as independents but are now owned by property group Marylebone Warwick Balfour (MWB).

Firmdale Hotels, also with six properties, is another big name. Founders Tim and Kit Kemp have had a strong influence on the market since opening their first property, Dorset Square, in London in 1985.

Also worthy of note are:

  • Alias Hotels (properties in Cheltenham, Exeter, Manchester and Brighton),
  • Gordon Campbell Gray's One Aldwych (London)
  • Myhotels (two in London, one in Brighton)
  • Eton Group (three in London, one in Leeds, one in Edinburgh)
  • Christina Ong's Halkin and Metropolitan (both London)

US operator Ian Schrager, credited with bringing the concept to the USA with the opening of Morgans in New York in 1984, has dipped his toe in the UK market with the St Martins Lane and Sanderson hotels in London.

The big chains have also started to test the market. Hilton opened the 129-bedroom Trafalgar Hotel in London in 2001 and Starwood has been looking for a site in the capital for its boutique W brand.

If the definition of a boutique hotel is purely that it is design-led then Thistle's 900-bedroom Cumberland Guoman at Marble Arch in London could even be included in the sector, argues consultant Melvin Gold.

On the other hand, if one of the unique selling points of a boutique hotel is its individuality, can any chain hotel truly be boutique?

Growth prospects

Property specialist Christie & Co, for one, has predicted continued growth for the boutique sector and the sector's influence is increasingly spreading outside London.

Recent developments include chef-restaurateur Terry Laybourne's Jesmond Dene House boutique city-centre hotel, which is due to open in Newcastle in September 2005.

At its half-year results in March 2005, MWB described market conditions as "encouraging".

It reported turnover at Malmaison up by 42%, occupancy levels up by five percentage points to 80% and average room rate nudging £100.

Key trends

Some observers argue that the boutique sector is rapidly becoming a victim of its own success.

It is becoming harder to differentiate a boutique hotel from a mainstream one, and those differences that do exist are becoming increasingly blurred, argues Robert Barnard, partner at consultancy PKF.

"There are lots of niches being created at different market levels. People want to carve out specific positions for themselves; they want to enable themselves to appeal to slightly different markets. It is becoming much more sophisticated," he adds.

At the cheaper end of the market brands such as Dakota, launched in 2004 by Malmaison founder Ken McCulloch, are positioning themselves as, effectively, "boutique budget" hotels.

At the other end of the scale, chains such as InterContinental, through its Indigo brand, have also been trying to tap into what might be considered traditional boutique territory.

Essentially, argues Gold, the beliefs and impulses of the boutique sector - that you can have a modern, individual, design-led but value-for-money hotel - are increasingly being embraced by more traditional operators.

Financially, there has been some consolidation, most notably in MWB's acquisition of Malmaison and, in October 2004, of Hotel du Vin. But most boutique operators remain independent.

Future prospects

As long as hoteliers continue to want to position themselves as niche players and differentiate themselves from the pack, the market will continue to thrive, predicts PKF's Barnard.

"The boutique sector has set the challenge for the mainstream hotel sector," adds Gold. "It has become almost unacceptable now to walk into a hotel and find it covered in 1970s chintz.

"With products such as Malmaison, Dakota, Hotel du Vin or even chains such as Alias, you can go to these hotels in regional locations and find quality rooms in a modern design at a reasonable price."

Yet there is the danger that, once everyone is doing the same thing, no one is different any more. And there may also be the issue that if you live by design, you die by design - if or when fashions change.

But probably the biggest cloud on the horizon is the prospect of an economic slowdown, argues Little.

In a downturn, one of the first things to be slashed is the travel budget. "If people are feeling poorer, they will start to draw in their horns and will not be able to afford luxuries," he says.

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking