News

Boutique Hotels Go Mainstream

Providence Business News
Elizabeth Graham is a PBN staff writer.
Contact her at Graham@PBN.com.
Read Full Article with photography, here.

June 14, 2019

Early on a chilly Wednesday morning just before Memorial Day weekend, Christopher Bicho walks into the Town & Tide Inn in Newport. An aroma of French toast lingers in the dining room, where a couple from Florida is finishing breakfast. Bicho asks about their stay as they get up to leave.

'We loved it,' the woman says of the 12-room inn, which opened in September on Memorial Boulevard halfway between downtown and the beach. It's one of Bicho's six boutique hotel properties in Newport, including one under construction. Competitors are set to open five more within the next two years.

They'll join two boutique hotels that have reopened in the past year under new ownership and brands, and another that plans to remain open during renovations.

'There's this huge demand for lodging that's happened in Newport over the past 10 years,' said Bicho, president of Vacation Newport, which specializes in renovated boutique inn and Airbnb properties.

Boutique properties, loosely characterized in the industry as having a unique design and a focus on cultivating guest experiences, are increasingly sprouting up in Providence as well.

Two of six new hotel projects there are boutique, developers say, while one other is marketed as such by Marriott International, its parent company.

The once-venerable Biltmore hotel reemerged in early April from renovations rebranded by owner Graduate Hotels as Graduate Providence. It is styled like a boutique hotel with a sales campaign aimed at millennials, in an effort to connect it to The Dean Hotel and Hotel Providence, well-known boutique accommodations in the Creative Capital.

WHY BOUTIQUE?

What's behind the push toward boutique lodging? Travelers are increasingly seeking immersive experiences when visiting new places, and many are willing to spend a little extra on a distinctive place to stay, travel specialists and developers say.

'It's part of a larger trend across the board. It's how people want to travel, it's about people crafting a unique experience tailored to their interests,' said Kristen Adamo, president and CEO of the Providence Warwick Convention & Visitors Bureau. 'It's people visiting different neighborhoods, really trying to have an authentic, local experience. It's an overall shift in how people are choosing to travel.'

Market observers say that millennials are buoying the trend, forsaking big-box hotels' bland predictability for one-of-a-kind accommodations.

'Millennials tend to be shifting the paradigm a bit, in going after experiences versus the need to acquire points under a certain brand,' said Meri Keller, vice president of the hospitality consulting firm Pinnacle Advisory Group. 'It seems to be a general trend that millennials are a little less concerned about saving money. They're still willing to pay for the right experience.'

East Coast cities such as Boston and New York, as well as inland destinations that include Nashville, Tenn., are reflecting the move away from large brands, according to Thomas Riel, PWCVB vice president of sales and service.

'There are fewer and fewer big-box hotels being built,' he said.

Rhode Island, along with much of the rest of New England, is responding, says Rob Blood, CEO of Lark Hotels.

The boutique hotel company renovated and reopened the Cliffside Inn in Newport in May, as a sister property to The Attwater and Gilded.

The 31-room Surf Hotel, set to reopen in July with a new look under the company's name, is part of a larger project on Block Island that Blood expects to open as the Block Island Beach House next Memorial Day.

Lark is among a growing group of hotel owners that sees appeal in unusual locations that are well-suited for small, sophisticated lodgings.

'As hotel owners and operators, we can interpret what those locations are and personify them through the hotel, and in doing that we can provide more than just a place to sleep,' Blood said.

‘HEALTHY MARKET'

In a broader sense, new hotels are opening in Rhode Island because there is a need for rooms, local travel specialists say.

Demand for lodging has increased about 4% annually over the past several years in the Providence-Warwick area, according to Riel.

'We're a very healthy market, and I believe that's what attracts hotel developers,' he said.

In Providence, hotel occupancy rates exceeded the national average in 2016, 2017 and 2018, with 70.2%, 73.9% and 72.3%, respectively. So far in 2019, occupancy rates are at 67.6%, with peak season still ahead, according to figures from PWCVB.

New projects will add 934 rooms to the 2,352 existing in Providence.

With opening dates for the Residence Inn by Marriott, Holiday Inn Express and Best Western Glo all upcoming, and Woodspring Suites and Homewood Suites now open, big-brand hotels account for a large percentage of those new rooms.

Hoteliers, whether boutique developers or huge companies, do their due diligence before starting a project, and rarely take risks, Adamo pointed out.

'If they don't see a need in a market, they're not going to build it,' she said.

According to a report by hotel-industry research group STR, Newport's hotel occupancy rates hit 85.5% last August, compared with a low of 33.4% in January 2018.

More rooms are needed, Bicho said, but Newport's seasonality and geography are strong deterrents for major brands. Staff sizes shrink as occupancy rates dip in winter, and there are few large tracts of available land for big-box hotels to build on.

Boutiques, often located in renovated buildings, can prosper with fewer rooms, less overhead and a smaller staff than bigger competitors.

In Newport, nearly all of its planned new rooms and those opened within the last year are described as boutique.

Average annual room occupancy in the City by the Sea, which now has 2,361 hotel rooms, hovers around 63%, with a 65.8% rate in 2016, 61.8% in 2017 and 62.3% last year. And rooms are becoming more expensive. Average rates in the city increased from $214 in 2016 to $235 in 2018, STR noted in its report.

Daily rates averaged a high of $330 in August last year.

Those numbers are what developers are looking for, said Evan Smith, president and CEO of Discover Newport.

'For developers, when you see rates going higher, that's a financial indicator that the market can sustain new hotel rooms,' he said.

Brad Cherevaty, a co-owner of Broadway restaurant and bar The Fifth Element in Newport, is happy to see more rooms, even as he and business partner Frank Doyle plan to build their own 40-room hotel above and next to the restaurant.

'We're all for it, there's a need,' Cherevaty said, adding that in years past the city has not been able to accommodate huge crowds. 'When large international events [happen] here, people are staying in Providence, they're staying in Fall River.'

Such overflow was particularly attention-grabbing in 2015, when Newport hosted the Volvo Ocean Race's North American stopover for the first time. The 13-day event drew thousands to the city, but many ended up staying in hotels across the state, partly because corporations involved in the international race kept their groups together by booking large blocks of rooms. Other events taking place simultaneously, including a number of college and university graduations, added to the pinch, local travel leaders said.

'I think the issue that drove so much room inventory to Warwick and Providence was that Volvo waited too long before committing to room blocks in Newport,' recalled Smith. 'By the time they decided what they wanted, many Newport properties had sold out with other group business. '

As a result, about 1,500 hotel rooms in Providence were used by corporate guests associated with the race, according to a 2018 estimate from PWCVB.

But Providence's gain didn't come at the expense of the Newport Marriott. General Manager Walter Andrews estimates that 1,200 room nights were booked in connection with the 2015 stopover.

The hotel had reopened a month earlier after a six-month renovation, but still accommodated race sponsors, a sailing crew and others associated with the event.

'We had a tremendous amount of bookings,' Andrews said. 'We knew we had to be open for that race.'

In 2018, when Newport again hosted the Ocean Race stopover, fewer rooms were booked from other events, but the race drew smaller crowds. Still, at least 800 of the race's corporate representatives stayed in Newport.

According to Andrews, a unique market such as Newport's lends itself to cooperation between big brands such as the 320-room Marriott and smaller lodgings.

'You do need hotels like us, to attract the big customers,' he said. 'Boutique hotels just give people a different choice of where they want to stay. They just have different amenities that people like. … I think we work well together, and if a large group comes in, boutique hotels just add more rooms.'

The same is true of Airbnb accommodations, Andrews added.

'It is an expansion of the market,' he said. 'I think Airbnbs are just a different taste of what someone wants to do, and sometimes bigger hotels don't have rooms available.'

Boutique hoteliers are filling a niche, but they are no different from national brands when it comes to analyzing regions and gauging demand, said Dale Venturini, president and CEO of the Rhode Island Hospitality Association. 'The market drives everything,' she said.

BUILT TO EXPERIENCE

Boutique offerings tend to vary according to destination. Such hotels in large cities are often designed with a downtown experience in mind, featuring common areas open to the public.

At The Dean Hotel in Providence, guests aren't sheltered from the noise of the streets.

'We are smack dab in the middle of the city, and there's likely construction going on, and we like that [because it's part of the city fabric],' General Manager Aarin Clemons said. 'I'm giving you a truly local experience that is very tapped into what's going on locally.'

While an urban, boutique stay may offer ambience and authenticity, it doesn't always mean a high price tag or lots of amenities, such as a spa, pool or airport shuttle.

'Lately, there seems to be a line blurring between boutique and luxury,' Clemons said. 'Boutique is our marketing way to say independent, a little bit different and usually limited service.'

The Dean, hailed by travel writers in both the United States and overseas since its 2014 opening, hosts many guests bound for creative events, business or a college visit. Owned by ASH NYC, a real estate development and design firm, the Dean's rates start at about $100 a night, similar to boutique hotels the company operates in Detroit and New Orleans.

Hotel Hive, set to open in 2021 in the former Providence Journal headquarters and Kresge building, will aim to offer the same type of urban experience.

'There's always going to be a market for very high end – that's not what we're all about,' said Jim Abdo, president and CEO of Abdo Development, the group behind the Hotel Hive. 'What we do have is a price point that's typically below market, with very comfortable accommodations.' The company also operates a Hotel Hive in Washington, D.C.

In Newport, boutique hotels generally accommodate the upscale, leisure market. A number of Bicho's rooms will go for up to $600 a night on weekends in peak season, and a renovated, antique firehouse that he rents as a boutique Airbnb property is also popular during the summer.

Paws on Pelham, Bicho's soon-to-open, 13-room inn for people and their dogs, expects to command up to $450 a night in busy months.

Developers of the 57-room Brenton Hotel, under construction at the corner of America's Cup Avenue and Long Wharf, have said that rooms will go for up to $800 a night in peak season, an amount comparable to other luxury boutique hotels in the city.

With about a dozen boutique properties today and more to open soon, Newport has set a benchmark, said Smith, of Discover Newport.

'The appointments, the exquisite architecture and interiors are so luxurious and unique. … That has been and continues to be a hallmark of what Newport offers,' he said. 'What we've been doing in the last 30 years is upping that bar.'

WHAT'S IT MEAN?

Though the term is used freely, not everyone agrees on the definition of a boutique hotel. That could change this summer, when the Boutique & Lifestyle Leaders Association, a trade group that represents boutique and lifestyle hotels worldwide, plans to release a definition.

Stay Boutique, a brand launched by BLLA in 2017, has developed an algorithm to determine whether a property meets the boutique standard. Hotels that qualify will be included on a list that, along with a boutique definition, will be released in late summer.

'The hotel industry does not have an official definition, and this has definitely been an issue,' Ariela Kiradjian, a BLLA co-founder, said in an email. 'We are launching the official definition, along with guidelines, so it's very clear not only to the industry but also to the traveler which hotel is boutique, and which is not. Boutique back in the day purely meant small. That definition is not accurate for today – boutique is a specific type of experience.'

According to a 2012 research paper by the BLLA, boutique hotels are unique, personalized and not part of a chain.

Cultural and historical features are vital, along with authenticity. Other attributes include 'social spaces such as living rooms, libraries with social rooms and many high-quality, in-room features.'

Properties that don't make it onto this summer's official list can request a review, BLLA co-founder Frances Kiradjian said.

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