Lifestyle Hotels – fad or for real?

Here is how BLLA defines Lifestyle and Boutique Hotels:Boutique Hotel

Boutique Hotel

A term to describe intimate, usually luxurious or quirky and upscale hotel environments for a very particular clientele.

Lifestyle Hotel

A property that combines living elements and activities into functional design that gives guests the opportunity to explore the experience they desire.

Luxury Boutique Hotel

An extremely luxurious hotel environment created to express unique lifestyle experiences that are synonymous with health and wellness.

Trendy or Modern Hotels

Lifestyle Hotels, Branded Boutiques or anything other combination of words that can create an inviting distinction from traditional hotels is in vogue these days. Every franchiser/hotel chain of substance is dabbling in this phenomenon, a few more successfully than others.

What was germane to a boutique hotel in past decades is beginning to take root in “distribution channel friendly” hotel chains in recent times.  Therefore every large hotel chain now has lifestyle hotels of their own in operation or under development across the world.

What exactly is a ‘lifestyle hotel’ you may ask? Well, the beauty of expression is in the words of the beholder. Here are some industry stalwarts and what their definition is. Here are some excerpts from the Lifestyle/Boutique Hotel Development Conference (excerpted from HNN):

“Label it what you’d like, for us it’s about having a local experience as a traveler,”.said David Duncan, president of Denihan Hospitality Group.

Patrick Goddard, president and CEO of Trust Hospitality said. “Guests see the definition “as a reflection of themselves.”” He added,  “things such as high-end finishes, personalized experiences from pre-arrival to post-departure, sensory elements and community engagement also are critical components” 

“A boutique hotel or lifestyle hotel is a big hotel trying to be small, and that’s OK. This sector is less about branding the hotels than letting the guest brand themselves. … Hotel brands and hotels individually are a similar reflection of one’s individuality.” said Jason Pomeranc, co-chairman of Commune Hotels & Resorts

Finally, here a statement that tied a tiny knot in my brain as I tried to decipher it – “When we think about our lifestyle portfolio, we really think it’s people who crest over from wanting space, state and rates to wanting to define themselves by their choice of where they stay,” said Jay Coldren, Marriott’s VP of lifestyle brands.

So, as you can see there is little consensus on what Lifestyle hotels really are. The idea is novel and it creates demand in an industry that badly needs it. It is a philosophy more than an idea from what I can gather. And the canvas for this philosophy is large with new ideas being painted every day.

So, after some research and analysis here’s what I came up with as the most sensible reason for its creation. Lifestyle hotels are designed to give the modern traveler exactly what he wants in a hotel. It is meant to provide a seamless transition from the lifestyle he cares about or appreciates to a lifestyle he can sustain when traveling. Better yet, lifestyle brands target the traveler’s way of life to create touch points that go beyond the traditional rewards programs that most travelers are used to. The purpose is to give the traveler an immersive experience that will have them coming back for more. They plan to drive loyalty not just by targeting customers penchant for savings, but by appealing to their tastes and preferences. 

Lifestyle hotels are a lot like boutique hotels, but with distribution and ‘economies of scale’ clout provided by the chain. It is meant to offer the traveler all the reward perks he had become accustomed to in a boutique type setting offering much more than just savings.

Now, the question really is how do you take a boutique hotel (boutique by definition to me is unique and lonely) and daisy chain the concept? How can it stay boutique and yet belong to a chain? How can it be multiplied and brand standardized thereby providing the economies of scale in FF&E procurement that the franchisers pride themselves in providing? I suppose you can’t unless you are the Indigo brand of IHG. They basically take existing hotels and manage the rebranding such that they are able to provide consistency to them by creating some brand standards  that apply across all Indigos, but don’t require total duplication of assets.

Now, the Ascend brand from Choice does pretty much the same thing. How one can have an Ascend transformation of a boutique hotel from 20 rooms to 600 rooms boggles my mind, unless of course it is basically gap management and standardization of a few amenities common to all assets slated for conversion. All this just to bring it under the distribution umbrella of the franchise? How you create value for a 20 room conversion I can’t fathom. I can appreciate the notion that a 100-200 room boutique property, but for as little as 20 rooms?

While I haven’t researched the investment requirement for conversion properties (I suppose that would be a very subjective analysis), I still can’t see why it would be an enticing value proposition for the developer. I can see the chain’s value proposition (increased revenue streams), but fail to see one as clearly for the developer/owner of the existing boutique hotel.

As for new development, I think it is a great concept but for conversions I am uncertain about the value proposition especially if conversion costs are high.

Here are links to some of the Lifestyle hotels by different brands:

Hotel Indigo by IHG

Hyatt Place by Hyatt

Aloft by Starwood Hotels

Edition by Marriott

Ascend Collection by Choice

In summary, I believe that this concept is here to stay unless of course the concept is made so murky by eager franchisers that they dilute a great concept. Also, it isn’t easy to simulate or become the next Starbucks, Apple or Nike especially in an industry that is prone to brand volatility.

Next blog, I would like to write about the EB-5 Visa Program and its utilization in hotel investments as I think it is an area that is not very clearly understood by developers. Until next time, take care.

Vikram (Vik) Antin

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