When the market to buy and build hotels returns to normalcy, the boutique and lifestyle segments may lead the way. That was one conclusion from a panel discussion during this week’s Lifestyle/Boutique Hotel Development Conference at the Fontainebleau Hotel in Miami Beach. Lodging Hospitality sponsored the inaugural event in association with HVS Hotel Management.

“It took a long time to get there, but investors now view boutique hotels more favorably than traditional hotels because they understand the profit potential of these properties,” said Peter Greene, first vice president, investment properties for CBRE Hotels, during a panel discussion on exit strategies 

According to one hotelier on the panel, the boutique properties with the highest margins are those operated by their owners. “The infrastructure and overhead created by a management company or brand manager suppresses margins,” said Neil Sazant, a principal of the family-owned Sagamore, a Miami Beach boutique. “When we switched from a management company to in-house management we were able to drop $1 million to the bottom line.”

His remarks carried caveats, however. Many boutiques are small properties, which are easier to operate, and while the absence of brand fees means sales & marketing costs can be lower, it’s imperative that boutique properties employ aggressive sales teams.

While boutiques may see a boom once the economy and credit markets turn, existing owners and those looking to develop today face extreme difficulties in securing financing. And since there have been very few transactions recently, it’s very difficult to determine valuations for boutique or lifestyle hotels. Values won’t improve, predicted Greene, until 2012, even though operating results should see an upturn next year 

Cap rates for the few boutique transactions consummated have soared in recent months, said the panelists. While cap rates were as low as four to six percent during the mid-decade boom, they’re now hovering between nine and 11 percent.

In all, the panel was bullish on the lifestyle and boutique segments and believes the industry will find a way to right itself.

“Capitalism is such a strong system it won’t allow trillions of dollars to go into the abyss,” said Robert Kaplan, principal of Olympian Capital Group. “Many smart people are working today to create a mechanism to liquefy the real estate and hotel debt that’s coming due in the next few years.”