ULI Washington News

Trends 2014: Hospitality: Where Lifestyle Stays

By Emily Washington

While the growth of boutique and lifestyle hotels has been a key trend in the hospitality industry in recent years, the defining features of these hotels remain elusive. Panelists at ULI Washington’s Real Estate Trends Conference last week explored the defining features of these unique hotels along with their role in meeting changing market demand.

Nelson Migdal, co-chair hospitality group and shareholder of Greenberg Traurig, LLP moderated the panel, featuring David Pollin, co-founder of the Buccini/Pollin Group, Deanna Francl, principal at Gensler, and Timothy Grisius, senior vice president of Marriott International.

This group discussed the changes in demographics and consumer preferences that are leading both business and leisure travelers to demand a local experience when staying in a hotel rather than the feel of a chain hotel that offers the same experience in every city.

Technically, the difference between a lifestyle and a boutique hotel is that lifestyle hotels are owned or franchised by large hotel corporations rather than by independent owners. But, as Francl said, “From the guest’s perspective, there is less of a difference between the two because chain hotels are seeking to develop lifestyle hotels to mimic the boutique experience. Especially for leisure travelers, lifestyle hotels are blending into boutique hotels.”

Marriott’s Autograph line is an example of the boutique guest experience. Pollin explained, “Autograph hotels are built to provide Marriott booking and points with the charm of independent, locally run hotels. They are essentially endorsed by Marriott, without advertising the Marriott brand.” In spite of the rise of lifestyle and boutique hotels, some customers’ preferences for earning hotel points for brand loyalty remain lasting advantage for large hotel brands. Additionally, high and growing consumer reliance on online booking services provides a competitive advantage to chain hotels because large brands pay lower rates for booking services like Travelocity, Grisius said.

Capitalizing on these advantages, major hotel chains are taking significant risks to cater to the preferences of travelers who seek the lifestyle experience. Whereas hotel chains do not typically seek to own the properties under their brand, groups including Marriott are holding lifestyle hotels on their balance sheet. However, Grisius pointed out the fine line that brands must walk while seeking to meet the lifestyle traveler’s demands. “The Charlotte Marriott is being gutted and modernized, but they need to be very careful about alienating loyal customers,” he said. “They cannot go to the extreme modern end of the spectrum to attract young travelers.” Additionally, he explained that when building modern lifestyle hotels, such as Starwood’s Aloft , brands need to be very careful to get the location and market positioning right the first time, because these smaller hotels cannot be easily be converted into more traditional business hotels.

Lifestyle and boutique hotels may seem more tailored to leisure travelers, as opposed to hotels centered around large meeting spaces for conventions. To some extent this is true. “Boutique hotel guests do not want to see conventioneers,” Pollin said, “but the other side of the spectrum is when you’re travelling with a handful of colleagues, and you need a small space to meet. These hotels can provide small spaces that are either rented out or first-come-first-serve.”

As Francl explained, well-designed lobby spaces can be ideal spaces for both travelers and locals to experience “alone-togetherness,” where they can sit to work while being in the presence of other people. New York’s Ace hotel perhaps exemplifies this quality, with its lobby that serves local freelancers as much as guests. In a world where large hotels are beginning to eliminate room service, an amenity that cannot be provided on a cost-effective basis with union wages, many lifestyle hotels are moving to a grab-and-go model for providing guests easy access to food. These hotels may place a greater emphasis on providing a nice bar experience, with the assumption that guests will go out to experience a local restaurant for dinner. However, other hotels are seeking to provide a local dining experience by locating their restaurants at the front of the lobby and contracting with local restaurateurs who will attract locals and visitors alike.

Here in DC, developers have been slower to deliver lifestyle hotels relative to cities like New York or Miami, but Francl cited The W as the best example of a hotel embodying the trend here. A challenge for DC hoteliers is that while construction costs here rival Manhattan’s, room rates do not. However, she said that “DC is getting hip. It’s just a matter of time before DC begins attracting this type of hotel.”

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