Small hotel growth

The adage ‘good things come in small packages’ could almost be the mantra of boutique hotels, where exclusivity and personal service are offered to only a handful of guests, all willing to pay a small fortune

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By  Sarah Campbell Published  March 11, 2006

|~|Boutique-L.jpg|~|With 48 rooms, the Residence & Spa at the One&Only Royal Mirage is a perfect example of the boutique concept.|~|In a region where bigger is usually seen as better, the boutique hotel model is making small but steady progress. These exclusive resorts, normally offering less than 100 rooms, and in many cases less than 50, offer exclusive services targeting at a niche market, all served up at a premium room rate. The latest regional opening in the boutique arena offers luxury and exclusivity beyond compare. The Qasr al Sharq, Hilton International’s first palace hotel, and the first of its kind in the Kingdom of Saudi Arabia, opens in Jeddah this month. Opulent details adorn every corner of the 46-suite hotel: handpicked crystal and porcelain china, intricate mosaics, upholstery of the finest fabrics from around the globe, and fine art are all unique aspects of Qasr al Sharq or ‘Palace of the Orient’, the luxury accommodation offering opening adjacent to the Jeddah Hilton. “The design brief was to create an authentic Arabian palace of unparalleled luxury, representative of the opulence and hospitality associated with historical Arabia. Palace interior designers spent extensive time researching arabesque design and working to blend colour and texture created specially for Qasr al Sharq. We want our guests to be completely enveloped; this is not just about a nice hotel room, it is an entire sensory experience,” says Marc De Beer, general manager, Qasr al Sharq. The Qasr Al Sharq takes opulence to the extreme, with a ceiling that boasts 60kg of gold leaf, which took six months to painstakingly apply. All beds are adorned with 600-thread count cotton linens designed in Venice and each duvet cover has more then one million stitched threads of fine gold embroidery. Bathroom amenities include Hermes and Acqua de Parma, and a variety of 20 different oriental-scented soaps have been ordered exclusively for the Palace bathrooms. “In general, boutique hotels do not have the traditional hotel room layout. Often room sizes are bigger, or furniture configurations are more comfortable. The smaller number of rooms already affords guests more space in public areas, which will become an extension of the guest room. Of course, in our case, with the smallest room at 65m2 and the largest at 1000m², space will not be an issue,” De Beer explains. “A boutique hotel guest is often a well-travelled person who is looking for comfort and personal attention. He wants to have his own experience and not that of hundreds of others. He is value conscious, but able and willing to pay for the right accommodation and service. “Unlike typical corporate travellers, he will spend more time in the hotel. We are seeing more and more senior corporate travellers who are looking for this kind of personal attention and are turning to boutique hotels as their base during a business trip. A boutique hotel guest will base his loyalty on being pampered and recognised personally, rather than on loyalty points,” De Beer points out. This personal service is also the focus of the team at the 48-key Residence & Spa at the One&Only Royal Mirage in Dubai. “The most important element in a boutique hotel relates to the guests and the hotel service team’s continuous interaction with them. It is such interaction, for example greeting guests individually, which creates a bond, which goes beyond the expected high service levels of any other hotel. The bond translates into emotion, care and genuine warmth, thus making their stay memorable,” says Olivier Louis, general manager, One&Only Royal Mirage. The Residence & Spa, with its 48 rooms and suites, is a perfect example of a boutique hotel and in fact is part of the Leading Small Hotels of the World, which only consider 100 and less keys for classification. Boutique hotels generally have fewer rooms, but all the services, of a normal five-star hotel. With fewer rooms, guests receive a better level of care and attention, greater space and a larger room rate. “To achieve the expected return from a smaller property such as a boutique hotel, guests will be expected to levy a higher rate. However, this is compensated by a higher quality of product and services. All our accommodations range from 65m² to 150m²,” says Louis. The Residence & Spa achieved 90% occupancy for 2005 with an average room rate ranging from US $650 to $1,200, well above the market average for Dubai, which recorded a citywide average room rate of $221 for 2005. In Egypt, The Oberoi Sahl Hasheesh on the Red Sea is also a member of the Leading Small Hotels of the World. The 102-suite property includes six Royal suites and 850m private beach. General manager, Puneet Tandon, agrees with Louis that boutique hotels can afford to charge a higher premium, in exchange for space and exclusivity. “Boutique hotels operate with higher margins. Therefore, while a McDonald’s would need to sell a hundred burgers to make ‘X’ dollars, a Michelin star restaurant would need to sell only a few main courses to make the same amount of money. Boutique hotels are in a position to charge a certain premium for the enhanced and distinguished experience that they are able to share with their guests who are equally comfortable paying the same as long as their high expectations are being met or surpassed,” he says. While The Oberoi has partnered with Leading Hotels for its marketing a reservations requirements, Tandon claims that boutique hotels can be marketed through various reservation channels and sources, but urges that fundamentally boutique hotels should be very choosy in the selection of these channels. “For example, while a budget hotel might work with tour operators who are for the mass market, a boutique hotel would rely on working relationships with other elite, niche and luxury partners. Therefore, it would not only be the channel but the partner that would govern the relationship,” Tandon says. The boutique hotel is a niche product, and has to be marketed accordingly. It can not be all things to all people, as a 400+ room five-star hotel can, so it is important to choose a niche market and target it, tailoring services and facilities to meet this market’s needs. The Al Sondos Suites by Le Meridien in Dubai is a boutique city centre hotel that has enjoyed success through its targeted sales and marketing. “The key to a boutique hotel’s success is to cater to a specific type of client rather than trying to service the needs of every type of guest. For us, we are a boutique hotel that deals mainly with Arab nationals, business travellers and families. Therefore, we have full business facilities, Wi-fi internet throughout the hotel, we’re a dry property and we provide an unparalleled level of service tailored to the needs of this market,” remarks Amal Benzari, general manager, Al Sondos Suites. “Boutique hotels depend on customers who are willing to pay good money for the level of service they are guaranteed to receive. There is a certain appeal for boutique hotels, especially in Dubai because of the fast-paced nature of the city. We have 106 suites at our hotel and our operating costs are high. However, we offer five-star service and charge room rates within that bracket. The majority of our guests are from the region and are travelling on business or with family. This is our niche market and most are return customers,” Benzari adds. Targeting a niche market has been perfected by Dubai’s latest boutique hotel offering. The Montgomerie, Dubai Clubhouse provides the ideal accommodation offering for any keen golfer. This 19-room property is part of the Montgomerie golf course, a 200-acre, 7266-yard links-style 18-hole Championship golf course, designed by Colin Montgomerie in association with Desmond Muirhead. The 19 boutique guest suites provide personalised butler service, the latest in in-room technology including 32” LCD televisions that offer CD and DVD capabilities, five dining options and balcony access from which to view the golf course and the surrounding Emirates Hills estate. If niche marketing is one business tactic of the boutique model, name dropping is another. International hotel chains are tying up with leading fashion houses and designer labels to add exclusivity to their hotel brands. The Ritz-Carlton Hotel Company was one of the first to employ this tactic when it teamed up with Bvlgari for the opening of the Bvlgari Hotel Milan in May 2004. The 58-room five-star hotel soon became one of the places to be seen in Italy’s fashion centre. “Our hotel is a place to see and be seen in Milan, and that makes it a very exciting place to be,” says Atileo Maro, general manager, Bvlgari Hotel Milan. “It is a small hotel, but is incredibly complete. It has a swimming pool and a spa, and is the only top hotel in the area. It is an ‘Urban resort’ and that is the key distinction. It is right in the centre of the city, so it is a key destination,” he adds. The hotel operates with a 2:1 staff ratio, which is high for a European city-centre hotel. Bvlgari takes care of the image, design and the philosophy of the brand, while the staff were trained by Ritz-Carlton. “The guest is looked after in a resort way, even though we are in the middle of the city. Our service is warm, genuine and natural. It is about showing your own personality; it is talent versus service,” Maro says. The Bvlgari Hotel Milan is looking to target the Arab traveller, and hopes to receive a number of guests from the Middle East during the summer. The Ritz-Carlton/Bvlgari partnership proved successful in Milan and a second property, the Bvlgari Resort, Bali, is set to open early this year offering a total of 60 villas. Following in the Ritz-Carlton footsteps, other hotel chains have affiliated themselves with designer brands, with Armani and Versace both lending their name to the hospitality industry. Most recently, Rezidor SAS Hospitality, the Brussels-based, multi brand hospitality management company, concluded a worldwide license agreement with the Italian fashion house Missoni, to develop and operate a lifestyle hotel brand of the same name: Hotel Missoni. The deal will see Rezidor SAS conclude on negotiations for sites for the new brand in the UK, mainland Europe, Russia, Asia Minor and the Middle East. The first three Hotel Missoni’s are expected to be open in 2007 and 30 more will open or be under development by the year 2010. “We have been believers in this market segment for a long time now and this deal gives us the perfect brand to take our share of this fast growing, increasingly important, market sector. I’m particularly delighted because the deal with Missoni has grown into much more than just a deal, it’s a relationship, a natural partnership, and that’s the only way that a brand like this can truly develop. I’m sure when we launch in 2007, Hotel Missoni is going to create quite an impact on the market,” says Kurt Ritter, president and CEO of Rezidor SAS. The design of the hotels will be developed through a tri-party team that will see Rezidor SAS and Missoni collaborate with Studio Thun, the Milan based architectural and design practice, headed by architect Matteo Thun. The hotels will be reflective of contemporary Italian life and style. Already, Rezidor is looking to Dubai as an ideal Middle East launch pad for the Missoni brand. The boutique concept certainly appears to be growing in stature, proving to international chains that good business does come in small packages.||**||

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