How to Start a Boutique Hotel

Luxury hotels were a big deal in Atlantic City in the 1920s, as depicted in HBO's hit series Boardwalk Empire. In the 1950s and 60s, Atlantic City was actually known as the "Queen of Resorts" before gambling was legalized in 1976 and monstrous casino hotels took over the landscape. So when New York City-based companies Cape Resorts Inc. partnered with Normandy Real Estate Partners L.L.C. a few years ago, they wanted to re-create the luxurious boutique hotel of Atlantic City's historical past. They developed the only boutique, luxury, and non-gaming hotel in Atlantic City, The Chelsea, to cater to travelers looking for a refined, independent experience away from the casinos.

Starting a boutique hotel in a time of economic volatility as seen in the past few years is a risky proposition, but if done correctly, it can be a profitable business venture. As travelers change their vacationing patterns, they want more out of their experiences than some of the traditional big-brand hotel chains can offer.  In this guide, we will discuss what exactly a boutique hotel is, the principles to focus on when opening one, and how marketing yourself differently can lead to success even with competition from larger, branded competition.

Definition of a Boutique Hotel

Boutique hotel is a term popularized in North America and the United Kingdom to describe hotels which have typically between 10 and 100 rooms, but can be as small as 2 rooms in a commercial setting (as opposed to rooms for rent in private residences), and often contain luxury facilities in unique or intimate settings with full service accommodations. Typically boutique hotels are furnished in a themed, stylish and/or aspirational manner. Boutique hotels are often individual and focused on offering their services in a comfortable, intimate, and welcoming setting, so they are very unlikely to be found amongst the homogeneity of large hotels.

What to Focus on When Opening a Boutique Hotel
From the very start, as McInerney notes, the biggest factor in success as a boutique hotel is destination and location, from the traditional leisure traveler to the business traveler and then events and conventions.
There are two branches of Boutique Hotels: Boutique Hotels in city destinations, and Boutique Hotels in resort destinations. The Boutique Hotels in city destinations are not only visited because of their convenience, but also because of the city’s fashion. Also, there are Boutique Hotels in resort destinations, which generally are located in hidden places, like islands or mountains.

Dating back to the days before it was a casino town, Atlantic City has been a destination for wealthy urban residents from three of the largest metropolitan cities in America. It is located less than three hours by car from Philadelphia, New York City and Washington, D.C., making it an ideal weekend or even overnight trip. These facts were critical in choosing Atlantic City as the location for The Chelsea.
 

 To Swig, the keys to measuring success with a boutique hotel are as follows:
•    Defining the hotel's purpose and/or niche
•    Developing a high-quality product created to appeal to an underserved clientele
•    Conveying a clear, interesting message to the target market
•    Not spending too much money in development to make profitability with your product difficult to achieve

As you design the hotel, you should be forward thinking in terms of amenities but also consider the market you are in. For The Chelsea, they focused on Atlantic City's past while also incorporating modern amenities. There are historical photos throughout, but a salt-water swimming pool, restaurants with floor-to-ceiling windows overlooking the water and distinct post-modern design scheme.

The Cost of Opening a Boutique Hotel

In terms of start-up costs, buying an existing property and renovating to fit your needs is much more cost-effective than developing an entirely new project. Cost will also vary based on how many rooms you are building, as well as the additional amenities of the resort. This is considered a per key basis, or how much money is spent on the resort compared to how many room keys exist. According HVS and their 2009 end-of-year study, the cost per room (when factoring in land costs, site improvements, soft costs and working capital) could be anywhere from $75,000-$400,000, depending on the hotel and location. To determine the local per-key sales figures, check out the HVS study or find a local hotel industry consultant in the market you are targeting to figure out the going rate.

How to Market Your Boutique Hotel
An oft-overlooked aspect of opening a smaller hotel is your product distribution, or how you market yourself. Because you don't have that existing brand recognition of the larger chains, you need to get the word out there about your resort. By defining your resort as a brand of one and communicating your standards in the same way that larger resorts do, your customers will gain a level of comfort and familiarity with your resort. Telling a unique story behind the location or history of the hotel (for The Chelsea, it's nod to Atlantic City's past) can put you over the top in terms of occupancy and success.

The good thing for many start-ups is that the Internet has made this marketing aspect considerably easier. You can now put your boutique hotel on a level playing field with some of the larger branded properties thanks to the benefits of travel search engines like Expedia, Bing, Hotels.com and more as a great way to raise your brand recognition.

No matter how you break it down, it comes down to your return on investment as a boutique hotel. But with no franchise fees and the opportunity to operate with your own customer service ideas and brand characteristics, boutiques offer the chance to succeed as an independent hotel.

Source: :Boutique Hotel