Independent and Boutique Hotels Gain Mainstream Acceptance

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What Ian Schrager and Bill Kimpton started 25 years ago on opposite ends of the country in gateway cities like San Francisco and New York has now met in the middle. Independent boutique hotels can work — and thrive — in cities like Milwaukee, and developers at the fourth annual Lifestyle/Boutique Hotel Development Conference in Miami this week talked about projects in faraway places like Montana, Kentucky and Tennessee.

The segment has reached mainstream acceptance by consumers, investors and even the hotel franchise companies.

Jay Coldren, vice president of lifestyle brands for Marriott International, said it’s because of a generational — and transformational — shift happening as Gen Y consumers and their preference for lifestyle hotels take over buying power from the Baby Boomers in the next five years.

Coldren heads Marriott’s fast-growing Autograph Collection, a pseudo-brand allowing owners more independence, yet a connection to the powerful Marriott system. Other hotel franchise companies have similar offerings, like Choice’s Ascend Collection, and more will follow in the next five years, said Jeff Low, CEO and founder of Stash Hotel Rewards.

Investors and lenders are also taking notice. Neil Shah, president and chief operating officer of Hersha Hospitality Trust, said in some markets independents have recovered faster than their branded-counterparts and are trading at similar or even premium levels, in part because they are unencumbered of a franchise or management contract. He also added that during the last cycle there were many lenders who were only interested in branded properties. “Not anymore,” he said during a general session at the Fontainebleau Thursday. “That’s changing. More investors are interested in independents.”

The general acceptance of the segment and success stories like the Iron Horse in Milwaukee have helped open the door to new development in secondary markets. Patrick Goddard, president of Trust Hospitality, said his company even targets some of those non-gateway cities. “There are different prices, investments and it may be harder to get financing, but it can be done,” he said.

When this conference began three years ago we talked about the “burgeoning” lifestyle and boutique segments. They’re now booming.

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