Boutiques Point to Silver Lining
While it's been hard spotting the silver lining in this difficult period for the hospitality industry, I may have found it last month at the inaugural Lifestyle/Boutique Hotel Development Conference Lodging Hospitality and HVS Hotel Management sponsored at the Fontainebleau Hotel in Miami Beach. If you were there, you heard speakers and talked to attendees who were nearly universal in their belief that boutique and lifestyle hotels may point the way out of the downturn.
As several speakers remarked, boutique hotels are good investment vehicles when properly designed, positioned, marketed and perhaps most importantly, operated. They're often more expensive to build and operate than a plain-vanilla hotel, but as Cambean Hospitality founder Brian Scheinblum contended, the rewards can clearly outweigh the risks when done right.
Another reason to consider the boutique and lifestyle segment is the changing fortunes of the luxury hotel business. As public perceptions and tastes veer away from over-the-top displays of consumer excess, many hotel guests are seeking alternative lodging that may not be a Ritz or a Four Seasons, but which offers high levels of design, interesting food and beverage and superb service. That sounds a lot like an intimate boutique in New York City or even a new lifestyle property in suburban USA. Again, service is the key. As Raul Leal, president of Desires Hotels, told the conference attendees, "We're selling experiences, not rooms."
It was also heartening to see the large turnout for the event (about 275 people), including many developers and entrepreneurs seeking to get into the business for the first time. A good example was Annalisa Cariveau, a Minneapolis-based entrepreneur who's developing a large upscale and sustainable residential and resort development in the northern woods of Wisconsin that will include a boutique hotel. She was in Miami to learn more about the hotel business and find partners to help realize her dream. If you listen to the mainsteam media, you'd think it's a terrible time to develop, or even dream to develop, real estate, but it's people like Annalisa who will direct us out of the darkness. The entrepreneurial spirit was alive and well in Miami.
Sure, times are tough, but smart, creative and well-capitalized business people will respond when given the right opportunity. Robert Kaplan of Olympian Capital Group was the most bullish of conference speakers. He believes so strongly in the power of capitalism he's sure the system won't allow the trillions of dollars of at-risk hotel and other real estate to go into an abyss. "There are many smart people working to create a mechanism to liquefy the debt that's coming due in the next few years," he told a panel on exit strategies. It's that kind of optimism that will save the industry. It can't happen soon enough.
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