Branded boutique hotels are set to drastically change the Middle East's hospitality landscape. Lee Jamieson asks if the major brand operators behind their development are too big for boutique?"Boutique" is a slippery word that resists categorisation. Boutique hotel properties can be both affordable and expensive, small and large, old and new, or independent and chain-affiliated. Today, the word "boutique" perhaps more correctly refers to a niche hospitality concept - a niche that is attracting the attention of big brand operators.
The new boutique
"While the idea behind the boutique hotel is continually evolving as with all leisure properties, the essentials of the boutique concept remain," explains Emaar Hospitality Group (EHG) chief executive Marc Dardenne.
"You can always expect top-class personalised service and a smaller number of guest rooms. Big brand operators can bring in operational efficiencies but managing a boutique hotel will ultimately be based on the value differential created. This can also be achieved by small operators with the right vision, ideas and resources."
EHG, which currently operates The Montgomerie and The Arabian Ranches Golf Club, is actively considering expanding its boutique properties through its five-star brand The Address. Like many other operators in the region, it is responding to an emerging customer desire for a branded boutique experience.
"Boutique properties are increasing in popularity due to the levels of personalised service offered," continues Dardenne.
"The smaller the hotel, the easier it is to connect with the guest, establish a long-term relationship with them and offer a tailor-made package. The bigger brand operators are beginning to see how sophisticated travellers are now looking for more than just a pillow to rest their head - they want a complete experience in itself."
As the Middle East's hospitality scene continues to grow at a phenomenal rate, brand operators of all sizes will be forced to diversify their products and exploit emerging niches.
"Big brands have tried to engage the boutique traveller through several interim solutions such as developing the ‘hotel within a hotel' concept," explains Jumeirah Group vice president, brand strategy and management Thatcher Brown.
"For example, many hotel brands have expanded the traditional reach and services of the concierge through a ‘concierge floor' product to offer a more personalised service at a premium."
Beyond the Middle East, the branded boutique revolution is already in full-swing. The US has recently seen a great deal of activity with Starwood Hotels and Resorts' W Hotel, and Marriott International's unlikely alliance with Ian Schrager, the pioneer of the boutique hotel.
Interest in the branded boutique concept has emerged with impeccable timing for the Middle East's hospitality industry, which is now well-positioned to profit from this trend.
"The Middle East market has only just become sophisticated enough to support the demand for differentiated products like the boutique phenomenon," explains TRI Hospitality Consulting associate director John Podaras.
"Even then, this is only evident in selected markets like Dubai, Oman and Abu Dhabi where aspirational lifestyles are a decision factor."
Balancing brand and boutique
"Brand" and "boutique" are not incompatible terms. In the fashion world, boutiques have always been associated with designer brands and exclusivity - concepts that are very familiar to today's large hotel operators.
"It is possible to remain consistent with a brand while introducing unique and innovative benefits to a hotel," explains Dardenne.
"The idea behind a boutique hotel is to offer a distinctive experience, which is achieved through the service standards and amenities provided. A branded boutique hotel is therefore not a contradiction in itself, but a unique offering."
The development of a boutique brand requires a careful balance between brand visibility and the individuality of the experience. This can be difficult to achieve in an ever-diversifying industry and some big operators have found it difficult to capture the boutique essence in their packaged products.
"The boutique phenomenon is definitely evolving - predictably into a packaged product," explains Podaras.
"One wouldn't describe W or Park Hyatt as boutique concepts - yet this was the space they were aiming for when they launched."
Hyatt has evidently learned from its experience and has left no stone unturned in the search for a new branded boutique concept. The result was Andaz, a new brand which is currently being expanded globally. Andaz aims to deconstruct the hotel experience by breaking down the barriers between guests and employees and combine the various hotelier roles into a single host.
"Our brand delivers personal preference by putting the customer back in the driving seat," says Andaz director of operations, Jonathan Frolich.
"In a typical hotel you would have to get through the doorperson, bell attendant, check in desk and the associated paperwork before you even get a key to your room. This all puts up barriers and the administration of the check-in process takes over from the service interaction."
"So, we've gotten rid of the check in desk and the lobby and replaced it with a lounge. Our hosts are armed with mobile computer tablets and they can check you in anywhere, anytime. If you want to check in at the bar, in the lounge or on the way to your room, it can all be done." Up close and personal
Andaz's philosophy is at the heart of today's branded boutique experience: getting closer to the guest than ever before in a non-hotel-like environment.
"It is essential to personalise the whole guest experience," says Per Aquum managing director of marketing and communications Mark Carson.
"Before our guests arrive at Desert Palm, Dubai they can tell us what books, films, drinks, and amenities they like - even smells. We can then arrange for that to be part of their experience.
"For example, if we know a guest likes a particular author, then we can use our connections with publishers to get an advance copy of their latest title. So we have a research team that works hard to personalise the experience and gather information through tour operators and concierge services like Quintessentially."
In true boutique style, Per Aquum partner with other key high-end luxury brands to create unique guest experiences. Its partnership with Bang and Olufsen allows guests to trial the company's latest products in the guest room, and a partnership with Aston Martin has resulted in test-drive experiences.
"Aston Martin knows that we have like-minded customers and we know they have like-minded customers," says Carson. "It makes sense to find synergy in our marketing and utilise each others databases to create stronger campaigns.
"Also, Smallbone Kitchens are opening a showroom in the Middle East, so we're planning to install one of their kitchens in one of our Middle East villas and get celebrity chefs to deliver gourmet cookery experiences."
Too big for boutique?
Traditionally, boutique properties have either been privately owned or part of a very small group and consequently this market segment has remained relatively under-exposed. Broadly speaking, the "muscle" that the larger brand operators can bring to the boutique market has been welcomed. They bring with them a wealth of experience and resources that boutique operators have been unable to access. Ultimately, this increased competition should be beneficial to the Middle East's hospitality industry and consumers.
"Big brand operators can bring back-of-house operating efficiencies and economies of scale to this new category of boutique properties," explains Jumeirah's Brown.
"These efficiencies can cover areas from procurement to reservations, from sales distribution to loyalty platforms and recruitment. Bigger brands also have the opportunity to attract investor interest and related capital to this segment."
Despite the mammoth advantages of these operations, some commentators are concerned that the rigidness of these systems may have a negative affect on the branded boutique concept.
"The danger lies in the standardisation that these efficiencies of scale often bring," says Podaras.
"It is inevitable that certain aspects of the operation will have to be kept separate. For example, the customer facing staff will need to be trained in a completely separate way to maintain the brand's uniqueness."
"Big brand operators are well-positioned to bring their huge marketing budgets, extensive local connections and robust operational procedures, but I think this all adds up to a regimented, controlled environment," adds Carson.
"This is not what the boutique experience should be about. The clever hoteliers and marketers are already moving the goal posts to maintain their advantage." Independence!
The relationship between the operator and the individual properties is arguably the most important factor in the development of a branded boutique concept. If the boutique brand can simultaneously leverage the resources of the parent company and maintain its independence, then the brand is primed for success.
"At Andaz, we're in a win-win situation because Hyatt wanted an independent feeling brand but also understood the importance of putting a robust support network behind it," explains Frolich.
"If we were an independent operator, we could never have developed the software for our mobile tablet computer system because it cost a lot of money. We also have the support of Hyatt's global reservation system and sales team."
Although Andaz has maintained its independence, it has really benefited from being part of Hyatt's corporate structure and has been able to utilise large teams to model and develop the concepts that drive the brand - from food and beverage to room design.
This idea of an independent, individual product also informs Jumeirah's own approach to its boutique Madinat Jumeirah property in Dubai.
"Consistent individuality is a viable position to take," says Brown.
"This commitment reflects our guests' desire to be recognised as individuals and engages them in real-life personal experiences. True luxury is emotional, memorable and above all personal and this is what we believe today's sophisticated luxury traveller relates and responds to."
Making financial sense
Primarily, the growing interest in branded boutique concepts has been driven by the evolving needs of sophisticated travellers. However, these types of properties also have the potential to be resilient business models in the current economic climate.
"It's easier to fill a 40-room property than a 300-room property," says Carson.
"In the current economic climate there's a definite financial incentive for the big brand operators to jump on the boutique bandwagon. Boutique properties have been around for well over a decade, so why jump on the bandwagon now? That boat has sailed."
In the current economic climate, operators are likely to be attracted to a business model that combines higher revenue per room, smaller properties with less rooms to fill and economies of scale savings from utilising existing resources.
"Life is becoming increasingly difficult for the investor - even before the credit crunch," adds Podaras.
"Rising costs have seen returns dwindle and payback periods grow longer. Therefore, it makes sense to optimise the revenue potential at the upper-end of the market which entails evolving five-star ‘all things to all men' properties into more specialised products."
As the market becomes more competitive, brand operators need to differentiate their products and exploit niches in the market. In this sense, the developments of budget and boutique properties share the same market drivers - it is simply a natural step in the maturation of the Middle East's hospitality landscape.
"I believe that as the big brands introduce their boutique concepts, they will be superceded by newer and more innovative developments by the likes of Philippe Starck," concludes Podaras. "As soon as the big names roll out their branded products, the market will be looking for the next big thing - and so, evolution continues."For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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