Chip Conley and his San Francisco-based Joie de Vivre Hospitality survived the dot.com bust almost a decade ago and the boutique hotelier is using that experience to survive the current downturn. Hotel Maya, a 197-room resort-like property in Conley’s hometown of Long Beach, CA, will celebrate its grand opening next month after a $20-million renovation and relaunch.

By September, the largest boutique hotel collection in California—and second largest in the country—will have added 15 hotels over 18 months, bringing the portfolio to 38 properties. Joie de Vivre has an ownership stake in 14 and the rest are third-party management contracts. Conley says the split used to be closer to 50-50, but “during the good times you want to own, and bad times you want to manage.”

Conley’s unique approach has proven successful since the opening of his first property, the iconic Phoenix Hotel in San Francisco, in 1987. He defines a niche psychographic market for each of the 38 hotels through magazines and then uses five adjectives to describe both the magazines and the hotel. Coastal Living and Fast Company magazines define Hotel Maya and the five adjectives are relaxed, connected, creative, active and escapist.

Conley then relies on his employees to deliver an experience to match the descriptions. His core philosophy, outlined in his latest book, Peak: How Great Companies Get Their Mojo from Maslow, is that happy and enthusiastic employees create strong customer loyalty, which results in profitable investors.

Conley is confident his approach would work outside his home state and admits expansion could soon be coming, but he won’t be anymore specific on location. The affable CEO did get specific on several other topics during a recent interview.

What’s unique about Hotel Maya?

It’s more resort like. It’s a stylish Latin America beachfront resort in Southern California. It’s very affordable. We’re doing an all-inclusive package, which you see in Mexico and the Caribbean a lot, but not here. People can go ala carte, but they can also go with the Mayan Journey (the all-inclusive options). This one is particularly interesting to me because it’s my hometown, but it’s also 11 acres of waterfront in Southern California, which is really hard to replicate. The design of this place is going get a lot of awards. It’s a fascinating modern, Latin exotic flavor. It’s becoming more and more Latin there, so we’ve created a resort that is almost a reflection of 21^st century LA.  

How is your company and portfolio surviving the downtown?

What’s interesting is, whether it’s fortune or not, seven years ago we had a similar experience with the dot.com bust. So in some ways we’ve gotten prepared for this in advance, we know what to do to get through and survive. I’m proud to say, over the last year, every month this year 65 percent of our hotels have gained market share. At a time when many in the boutique (segment) are losing share, we are going counter to that. It’s been really encouraging.

How have you stayed profitable?

We’ve made a lot of expense reductions; we’ve moved all of our employee (health insurance) pool to Kaiser. We had an HMO and PTO choice. We want to provide great coverage and if we move everyone over to Kaiser (just the HMO option), we can save a lot. It’s not just how we do gaining market share, but also the expense side. We’ve had to do some layoffs.

You take pride in taking care of your employees and Joie de Vivre is often ranked as one of the best places to work, how do you keep that up during these tough times?

Good timing for that question. This past week was our employee recognition week, we usually do a bunch of fun activities, but we had to cut back this year. We had less money for it, so this year I wrote 80 personal thank you notes to all those that work in the headquarters and passed them out to each person. Sometimes just having a personal thank you, which cost less than a dollar, is far more meaningful. Someone came up to me today and gave me a big hug. I wrote all weekend, all very personal. She told me she’d never leave. Loyalty is built one on one with people you work with. I’m still a big believer in all that. Some of the things that are most valuable are the little things that don’t cost anything.

Other examples of ways you keep employees working hard, happy and loyal?

All of our employees (3,500 in the company) get two free stays in one of our hotels each quarter. We continue to do that. Every salaried employee gets one month paid sabbatical every three years. We didn’t change that. I’ve had partners worried that (employees) would come back and quit. We’ve had over the course of the last 10 years hundreds take the sabbatical and I can only think of one time that someone came back and gave a notice a month later. It doesn’t happen very often.

Boutique hotels seem to be gaining a lot more mainstream traction. Why is that?

Boutique hotels are a long-term trend, not just a blip. Boutique hotels are more than a quarter century old in the U.S., but in Europe, they’re centuries old. The independent hotel movement in Europe has been bigger than chains. In many ways (the trend here) is a reflection of how consumers choose to spend their money. Hotels follow retail in a big day. Thirty years ago you had Sears, Montgomery Ward, JCPenny; now all those are in trouble like (many of the older hotel brands). In retail you had Target and Walmart come in, and boutique retailers like Williams-Sonoma, Abercrombie & Fitch, Urban Outfitters…a bunch of boutique retailers that help create products that are more personalized and niche oriented. It’s happening in hotels now. Boutique hotels are more niche, more personalized. More boutique/lifestyle hotels are being created in the suburbs than urban markets. You’ve also got the Indigos, Hyatt Places, Alofts…that whole chain three-star boutique product, or lifestyle, are all going in the suburbs. Before it was a more urban and a gateway city phenomenon you’d see in San Francisco, but not in Kansas City. Now boutiques are going into secondary cities and suburbs. It’s partly because the consumer is more sophisticated.

Is that a good thing?

I think it’s great. It’s great they are giving the mainstream public a broader collection of choices. And frankly, the boutique market is not just the high-end market. It’s the same thing I’ve been saying for 22 years since I’ve been doing this: Our roots are in the two- and three-star hotels. I’m a big believer that boutique hotels are meant to appeal to the broader mass market, so this is a good thing.

Do you try to brand or at least connect your 38 properties through JDV?

We have a loyalty program, the Joy of Life Club, and signage. But the primary branding we do is the branding of the hotel. JDV branding is secondary to that. That’s by choice, because we really do think people appreciate the independent and unique product. That’s where we always will differentiate ourselves. (The big hotel companies) will take the W model and do it at the three-star level. It’s not a bad thing, but there are people looking for less chain-like products.

What’s the advantage for the big hotel companies with boutique or lifestyle brands?

The No. 1 benefit for an owner who would choose that brand would be you get to connect to the distribution system.

Where’s your advantage?

Generally speaking, people prefer boutique or lifestyle hotels that are reflections of where they’re at and not feeling predictable. One challenge is making that scalable. With time, a customer who likes an original flavor stays at three locations (of a brand) and then gets bored. The one in Kansas City was just like the one in Miami. That’s the opportunity we have and chains can’t do that.

Check out www.chipconley.com or www.jdvhotels.com for more information.