What exactly is a boutique hotel?

In today’s hotel market one may well ask what exactly is a Boutique Hotel? It seems the word BOUTIQUE has been misused and marketed irresponsibly by many hotel owners and operators worldwide. Nowadays you see the word associated with 2-star Days Inn styled rooms at so-called ‘eco’ resorts where the only eco aspect to their operation is a few plastic bins for so-called separate waste disposal in the guest rooms. Both the word ‘eco’ and ’boutique’ are clearly overused and in most cases not at all relevant to the property marketing itself as being so.

So for ” boutique” some education for those in need of it.

A Boutique Hotel needs to reflect the following. Small, fashionable and independent; when lacking innovative design and stylish high quality personal operations and impeccable amenities, these small hotels are in violation of the fundamental boutique motif and are merely small. Add to what boutique should reflect in a hotel, innovative design, distinctive, individuality, flair, original, and creativity, and you can see how this word has been turned into more than rather a vague term confusing the market, and undermining those that actually achieve it.

Cool, or hip or historic, themed, marketed for business or leisure and more often than not both, the meaning is now an extension of the original boutique hotel urban properties where the key descriptive components were fashion, elegance, glamor and style. Nowadays the word transcends these earlier definitions and crosses many hotel classifications, from small to not so mall, luxury to affordable, urban to resort, chic and cool to traditional. Boutique Hotels have many sub segments.

Ignoring the attempts by chains to be boutique-ish, the W brand for example, and the Malmaison Group in the UK, boutique hotels independence has enabled owners and operators to keep at arm’s length corporate standards of the chains that more often than not hinder the creative ideas of those employees on site in supplying distinguished and personalized hospitality services to the travelers they know.  In boutique hotel operations it is much more than employees knowing each guest’s name, which in some of the so-called larger boutique hotels is an impossibility anyway.

It is in my mind more a return to traditional hotel keeping, knowing your guests and fully understanding their requirements as individual travelers and then actually delivering that service in an exceptional manner, all within an environment that has innovative design, distinctive characteristics, where individuality and flair shine through, and the whole experience to the traveler is original and creative.

Some development priorities summed up:

  • An at home feel in both size, elegance and throughout it is of a different perspective.
  • Inviting, at peace with itself, snug, social.
  • Top of the line, select and personalized. Personalized means sincere and warm.
  • Home made, hand-made, not the standard factory produced stuff. This goes not just for the set up and fit out, add to that food, beverages, paper, amenities.
  • Hello to the designer! Square foot by square foot thought through!
  • Concepts that are of quality, from design to delivery.
  • Amenities unseen near you, out of the box, from soaps, to personalized jams, cookie wraps, cocktails on arrival, smart phone, limos to the office, and the house essence.
  • And time and time, time to create, time to prepare to deliver!

For boutique hotel development planning and management that deliver on the true concept of the word, contact mark@turnerlodgingco.com.

Hotel business plans: does your asset manager participate?

In the world of international hotel management business plans are for all purposes, most sit on shelves gathering dust as soon as they are completed, some approved by the board then handed to the banks, perhaps incorrectly compiled solely by the financial department.

In the hospitality world of hotel brand management most form an annual ritual of head office wishing to find out what their management fees will be under pressure from the CEO who is hell bent on growth, while the GM and the team put a proposal that is rather conservative knowing that some so called expert higher up will boost it up killing off any incentive to achieve it.

Some are for owners who do need the truth, some are for owners that do not need the truth, for what ever reason and they are numerous.

Some are to back up the feasibility study to obtain financing for a new project.

Some are the feasibility study (we are building it so you better tell me how much profit we will make 1st year!).

Some don’t gather dust, those created by smart business operators and owners.Some are for real.

Real ones are living documents, put together by all members of the team, from the bottom up, line item by line item for each cost center and for each market segment being part of the revenue generation plan. Everyone is in sales so everyone is involved. Everyone you ask, yes, even the pot washer.

The result is a plan that with some prodding skywards from those above is an achievable and motivational tool that the owners and operators can feel proud in achieving.

Yet how many actually make sense, and that are worked on monthly by hotel owners and management as a team, with an asset manager who has the skills to see things from a different angle to that of the management company and who is probing for opportunities to unlock value during the annual business cycle. Not all that’s for sure.

For resort management or hotel asset management that really makes a positive difference, email mark@turnerlodgingco.com.

Hotel asset management for food and beverage

Area Directors often lack the skills set to analyze and critique a hotel’s asset management  program for food and beverage.Many just don’t have the experience or background, and many corporate food and beverage executives are more focused on bringing out group-wide programs or promotions, mostly of some meaningless importance, which could well be driven at hotel level, instead of focusing on areas where real difference can be made to an owner’s real estate asset value.

Given approximately 65% on average of full service hotels revenue comes from room sales, at around a 80% profit margin, and with that the majority of a management company’s fees , it is no wonder the focus is on the rooms department to drive profits, but this is barely partially correct.

Owner’s needs are therefore often neglected. Positioning a hotel’s food and beverage offering is critical to drive profits in both rooms and the food and beverage operation, lack of skills and ability at corporate level therefore affect profits and with that a hotel’s value is not maximized.

Lets take the UK here, and ok, some efforts at corporate level have been made by some, but let’s face it, they are few, and hotel restaurants on the whole are a dying breed. I blame corporate leaders and so called brand franchise standards.

Asset Managers are not tied to some corporate protocol and brand standard, and have the skills set to asses a food and beverage operation to bring in positive change. They can bridge the gap between owners and management, safeguarding the owner’s asset interests.

In food and beverage this is a detailed process, from understanding a hotel’s investment strategy, its type, positioning, asset hold period, and capital resources, to assessing the existing conditions, studying the hotel offering or what is termed the food and beverage program, the competitive set and local offering, doing a swot, and compiling a financial analysis.

Then produce a road map, putting it all together. For owners’ best interests.

Let’s take just the financial aspect of this process alone. No help here from external sources and industry reports, this involves knowledge and the ability to get down to the core of how the food and beverage department is operated. Scary stuff for some management companies!

An important key to this process is to breakdown the profit of each outlet within this department. Opportunities are so often lost because of management mostly just looking at the whole department’s net profit and not what outlet is drawing down profit potential within the whole department. A lazy approach at best.

I could talk all day on this, but let’s as an owner ask ourselves a few questions, in this small segment of financial analysis within this large area of expertise.

  • Do you know how each outlet is contributing to profit, that’s breaking down all costs including kitchen production cost?
  • Do you know if all your labor costs and labor production skills are in line with your average checks and service levels?
  • Do you know your group vs. transient per cover expenditure?
  • Do you know how your average check per seat compares throughout your departments, and with it the reasons and opportunities and the action plan you have to improve it?
  • Do you know your outlet loss leaders?
  • Do you have a detailed financial profile on each outlet and with that the issues and plan to improve performance?
  • Is your pricing focused on margins only, and not based around menu engineering and with that a focus on the amount you actually bank?? That’s an eye on $’s not %’s

That’s a few of many that need asking, just in the finance reality check.

For a reality check on your food and beverage department contact me at mark@turnerlodgingco.com

 

Condominium hotels and resorts, advice for investors (Part 1)

The term condominium hotel is best summed up by this description: The accommodation units are individually owned but they are under a management umbrella and marketed as a unified group and operated as a hotel. Add on some common area facilities such as a spa, a front desk, restaurants and bars and administrative areas, with in-room dinning, property upkeep and maintenance .

All very simple really, or is it? What makes a condo hotel unit such a complicated piece of real estate  to purchase and be owned? The following commentary is not unheard of. Not what you will hear from a real estate agent!

The most important aspect to consider is the relationship between the players, i.e., the developer and real estate agent who are hell-bent on selling the units, the rental management operator or hotel operator who is concerned the buyers are being misinformed with hugely overstated revenue projections by the developer’s sales team (revenues they will never be able to achieve), the management of the common areas (strata) who may or may not be the rental or hotel operator who is concerned that the owners are not fully aware of all the ongoing fees and cost involved in looking after the property as perhaps these fine details have not been presented in the purchase contracts (a classic response to any one who asks is “they are being worked out right now”) and the owners, the buyers who buy into it.

First up the buyers (the owners ) review all those glossy sales packaging, great pictures, revenue projections in your face that have little or no realistic market research behind them, which may or may not resemble the actual projections the management company presented to the developer, who package it all very well of course with fine print that is basically meaningless. Your home in paradise!

Then owners end up being peeved off with the management company who have to bear the brunt of the owners’ frustrations as they gradually find out that their net revenue, after all the commissions and operating costs, in no way cover all of the ongoing costs, and that includes strata fees to cover the management and upkeep of the common areas and the like, all the general repairs and maintenance, taxes, etc. Especially so after deducting the rental operator’s fees that could be near 50% of revenue.

So as condo hotel ownership gets to be a bit of a financial let down for the owners, the pressure gets tight, everyone is trying to reduce costs and maximize revenue. So the owner decides it is about time to take a trip and have a bit of a break, and experience his second home and see what is actually going on. (See Part 2 of this most interesting topic!)

Condominium hotels and resorts, advice for investors (Part 2)

Upon arrival the front desk agent greets you in the same friendly manner as they would greet a normal guest, and a key is handed over and you make your way up to your unit.

As you enter you are immediately taken to the dark marks along the wall near the entry  door, luggage marks you guess, the dining table has large scrape marks and one leg is partially broken, there are  glasses and plates missing from the stock you originally purchased, the towels look faded and worn, the carpet hasn’t been vacuumed well, the drapes are not fitted correctly with broken attachments at the top and the bed sheets have hairs on them.

You reflect back to your last monthly statement, which details costs of 50% of revenue to the rental manager, $275 in maintenance and repair costs, the electricity and water bill, your portion of travel agents commission costs and credit card commissions, and the hotel marketing franchise fee, and then you try to figure out how much if any will be left over to pay the mortgage and property taxes. You also note last month was the high season and you couldn’t even stay in your unit so you expected your bottom line income to be one of the best months of the year.

You ask to speak with maintenance about the work not completed in your unit, and get transferred to the rental management company’s in-house maintenance department. A voice mail kindly responds with a message request, which you leave, which is not replied to.

On return from a day enjoying the sights, you decide to speak to the rental management company to complain, firstly about all the revenues which are below expectations, and then all of the repairs and maintenance issues you feel are costs that should be borne by the rental management company as the damage you have seen in the unit has to be renter and guest related and not owner related.

A conversation then occurs that focuses on the definition of what normal wear and tear is, and the owner’s responsibility in covering normal wear and tear costs, but the broken table leg is agreed to be fixed by the management company at their costs. That makes you feel good, until you remember the rental income issue was never discussed. You then make a call to someone else and are reminded that there is a lot of competition and the rental market is not growing as was originally thought, but “we are out performing the competition,” what ever that means. You decide it’s time for a night out to relax and take a meal in the hotel’s restaurant thinking any profit will be reflected in your next monthly statement until you realize on return to your unit that the hotel management company does not share any profit in other areas of the hotel other than income generated through the rental of the units.

Boy, this is getting messy you think, and off back down to the bar for a night cap! (Continued in Part 3!)

 

Condominium hotels and resorts advice for investors (Part 3)

Have you read Part 1 and 2 regarding condominium hotels and resorts?

Following on in this true saga, the next morning on awakening you feel water on the bathroom floor and look up to see on the bathroom ceiling a water stain and dripping water. A quick call to the front office agent and you get passed onto the rental maintenance department. However you are then  passed onto the common area building maintenance department, (the strata property management company as your building has both a rental and a strata property management company and is not managed by one operating entity)!

You are becoming confused…

The strata property manager then makes it clear this is a strata issue and that the owners of the unit above will be contacted and this issue will be fixed by the strata property management company.

The strata property manager now has to ascertain the reason for this leak, and after some time and cost to the owner above concludes it was from a leaking water pipe connection to the dishwasher in the kitchen above, which backs onto their bathroom.

So you pass that information off thinking that the owner above wasn’t in the unit at the time  and why didn’t the rental management company take action on this to stop it, as they rented the unit out. Or shouldn’t they have charged the renter you think, but on asking the strata manager for an explanation so you can better understand how the system works get told that the rental management company didn’t report the issue, as they should have done, and the guests were not charged for any damage. On asking the rental management company why this happened you are told that the guest checked out before they noticed anything wrong as it was a hidden pipe problem, so they could not consider charging the renters, and anyway this was a wear and tear issue and not related to any actual direct action which could be defined as abusive by the renters, so no action would have been taken to charge the renters anyway.

You are perplexed and further confused.

Why was the leak not reported to the strata manager earlier, why did housekeeping not report the damaged ceiling in the suite below?

All this leaves you wondering why you did not have this kind of discussion with the strata property manager and the rental manager prior to purchasing the unit. You reflect that the only information you were supplied was some beautiful artistic renderings and some income projections. You leave more troubled than you were when you arrived, blaming yourself for not doing adequate due diligence on buying a second home.

Now add-on to this, how about this model being further complicated by a developer promoting it as a fractional development with 3-month segments with 4 possible owners,  and a flexible rental pool option? One owner can rent if they wish, the others may not if they do not wish to.  Yes, it happens! Anything to sell something!!

Work that one out!!

Who pays for what, is the first question one needs to ask as a buyer, then do your sums and work out the bottom line and ask yourself ‘will this be a good financial deal for me?’ It is a financial investment transaction, you are not buying into a second home, you are buying into an investment where the users of the unit will not be as caring as you, with an investment model which over the years has proven to be a risky one.

Lesson:  Owners and buyers, beware of the so-called ‘income projections’ presented by the developers and uneducated real estate agents that are totally unrealistic and that bear little or no resemblance on what the net income could possibly be. Get independent advice before buying into a condo hotel.

Lesson: Developers partner with hospitality management that knows how to get results!

Developers who want a partner to make a long term success of a project please contact Mark, and for owners, please do the due diligence!

Boutique hotel development room design considerations

In designing and planning a boutique hotel room basic design elements take center stage at the commencement of the development process..

Jumping from the planning of the guestroom floor with the slab and design configuration options, defining the room mix is at its core based on the market study, or the basic understanding of what market the hotel is to attract.

The guestroom program defines what bay within the architectural design will be allocated to king, queen and twin bedded rooms, the variety and number of junior and king suites, service areas, and what connects to what directly. The design team, and that includes the interior designer at the outset, studies a wide range of options and room layouts paying particular attention to the optimum width of the architectural bays, and how to use them to best advantage.

Over the years it has been ascertained that a width of a hotel bay and the associated net width of the interior of a guestroom in a single bay, be at a minimum 4.1m for an upscale property. This permits a major advantage in that it allows the king bed to be positioned against the bathroom wall and not as one usually finds in a standard hotel room on the side of the wall. It should be noted there is not that much advantage in a wider width unless it reaches 4.9m. Then a lounge or/and work area can be placed on the opposite wall to that of the bed, and allows for a 5-fixture bathroom.

The market definition for boutique hotel usually arrives at a consensus that 75% of the rooms should have king beds with additional keys being allocated to single or larger suites and queen queen rooms. In boutique hotels  the rooms are usually somewhat smaller than the norm given the fact many are renovations of old hotels that owners have  acquired at an attractive price and cost-effectively remodeled, the role of the design team becomes even more important in applying techniques for combining the guest activity zones within a room in a way that increases the flexibility of use.

To fit the market position as a true boutique hotel, projects need to create elements that distinguish themselves from being just a traditionally renovated room, adding flair and humor to give distinction from just a remodeled hotel room.

Nowhere in the room is the planning and design more important than in the guest bathroom;  to maximize the efficiency of design, bathrooms are positioned in pairs, together with the pairing of two guests rooms back to back.

Usually total guestroom area allocation at a minimum for an upscale property equates to about 24 square meters for the living area before space is allocated to a closet and an entry area, with a 1.8m by 2.8 meter bathroom. Total guestroom of 36 meters square at a bare minimum.

Summing up, 3 key areas need addressing, the net width of the inside walls, the length and the size and shape of the bathrooms. However it is not so much the size, it is how that size is utilized that holds the key to a well designed market-focused boutique hotel room.

Larger and more sexy bathrooms for boutique style properties are obviously more important than in a 3-star branded hotel at an airport. Guest bathrooms with compartmentalized toilet, separate shower stall with spa style shower heads, 2 sinks, and a tub are becoming more the norm and guests are sure to measure the boutique hotel experience to what  they enjoy in their homes. Obviously exceptional good use of space by the interior design team for each square foot available can overcome in the guests mind any limitation of size of the living area and the bathroom.

However the space is utilized, the bottom line is that innovation and artistic expression need to go hand in hand with practicality, designs that combine good flexible function and comfort within an established budget based on the market positioning, with technology aspects within the room that are easy to use.

For more advice in the design of  boutique hotels contact Turner Lodging Co; remember, a hotel design team is only as good as the hotelier who guides and inspires their creativity, helping them to integrate operational efficiency and day to day functionality into the design as only a hotelier could.