Boutique hotels offering personalized service and hip design are in
The next big thing in L.A. hotels is small.
The “boutique” segment of the local hotel market is thriving, with intimate, stylish hotels of around 50 rooms emerging in former nursing homes and apartment buildings around the Westside, and soon downtown.
“There’s definitely a move toward boutique-style hotels,” said Alan Reay, president of Atlas Hospitality Group. “That is the buzzword in the hotel business.”
Although the number of boutique hotels in Los Angeles County is not tracked, several hotel experts agreed that it is growing. In fact, hotel owners coast to coast are increasingly looking to lure travelers “with unique hotels, such as conversions of historic properties and smaller, boutique hotels,” according to the March 20 issue of Crittenden Hotel/Motel Real Estate News.
Boutiques in L.A. are generally three- to four-star hotels, with no more than 75 or so rooms, ranging in price from $130 to $300 a night, considered the mid-market range. But there’s more to it than the number of rooms and nightly rates.
Equally important are the intangibles the premium placed on personalized service and hip design. Standardized they are not. More often, boutique hotels are in converted, older, architecturally interesting properties.
Take the & #201;lan Hotel, which is slated to debut in May on Beverly Boulevard near West Hollywood. Owner Bob Rechnitz said he retained an architect of high-end, custom homes to remake the former retirement home into a chic, 50-room hotel. The retro-1960s exterior will be of glass and steel, with colorful interiors, mohair chairs in the rooms and a cyber lounge.
“The most successful boutiques are operated by individuals or small companies that can put a high level of attention into the properties,” said Bruce Baltin, senior vice president with PKF Consulting.
Boutique clientele
Customers tend to be from the entertainment industry and Internet set, as well as some leisure travelers, in large part from abroad. But regardless of where the guests come from, once they’ve had a satisfactory stay at a boutique hotel, they tend to be repeat visitors, industry observers said.
“It’s a certain crowd,” Rechnitz said. “The age group goes from about 50 down to the early 20s, and it’s young entrepreneurs, not so much business (executives) on an expense account.”
Among the boutiques that have cropped up in the past year or two through either new construction or a major renovation are the Standard and Argyle on the Sunset Strip, the Avalon and Crescent in Beverly Hills and the Hotel Oceana in Santa Monica.
Others soon to open include the & #201;lan, the Luxe at Rodeo Drive (formerly the Summit) and the soon-to-be-renamed and improved Beverly House Hotel in Beverly Hills. In addition, several operators of existing boutique hotels said they are scouting the marketplace for more opportunities.
The owner of West Hollywood’s Chateau Marmont and Standard is planning to manage a new hotel in downtown L.A., to be created in what is now an empty office building. And the Hertz Group is renovating the historical Park Plaza Hotel in the Mid-Wilshire area as a 78-room, deluxe boutique.
Since the 88-room Avalon opened last June, average nightly occupancy has risen to around 85 percent and rates have gone from $150-$175 up to $189-$245, said General Manager Sam Cole.
“The boutique trend is pretty hot because people are tired of staying in a place that’s like any other place. They want character and charm,” Cole said.
Elegant touches
To succeed in the increasingly competitive market segment, Cole said, boutiques must combine personal touches with top-notch professionalism and functionality. To that end, the Avalon copied the high-quality mattresses featured at the Four Seasons, and added down comforters, chenille throws and 300-thread-count Frette sheets, which are so soft they are “like sleeping on silk,” Cole said.
“You need the hotel to have special things happening, but it has to function as a hotel,” he said.
The Oceana also goes all out to create a unique feel. The 63-suite yellow hotel on Ocean Avenue (originally built as an apartment building in the 1950s) features a central courtyard with heart-shaped pool, lemon trees and lanais outside the rooms. Refrigerators are stocked with Haagen Daaz ice cream and Wolfgang Puck pizzas.
The hotel plans to soon institute “jogging with the general manager” in the mornings, so he can get feedback from the guests.
“A real boutique hotel to me is where you can be treated like you’re a resident,” said General Manager Seth Horowitz, who notes that the average stay at the Oceana is a whopping 15 days. Average nightly occupancy runs close to 90 percent year round.
An important factor fueling the growth of boutiques, besides strong customer demand, is the favorable economics for operators. Boutique owners don’t have to pay a franchise fee to become part of a larger chain, a savings equivalent to 8 percent to 10 percent of revenue. And the hotels can succeed without such costly amenities as a restaurant, ballroom or big meeting spaces.
“Typically, they have a good strong average daily rate and are more cost-effective,” Reay said. Successful boutique hotels typically generate net income equal to about 40 percent of revenue, about twice the 20 percent to 25 percent for the full-service ilk, he said.
Another attraction is that it’s easier to win city and community approvals for smaller hotels, which are usually conversions of existing buildings, than it is for new, ground-up developments. For evidence of cities’ aversion to big hotels one need look no further than the Beverly Hills City Council’s recent rejection of a proposed 204-room luxury hotel.
