Independent hotels are riding a peak of prosperity. A recent Lodging Magazine article by STR showed that independent properties were universally outpacing their brand competitors in 2015.
Although the majority of the country’s lodging industry is dominated by well-known chains, independents are attracting more and more travelers who want remarkable, locally-inspired and authentic experiences. And, travelers aren’t the only ones who are favoring unbranded hotels. Owners and investors are showing an increased interest in boutique properties and independent hotels.
We chatted with Patrick Goddard, President and COO of Trust Hospitality, whose extensive hospitality management portfolio includes boutique gem, Hotel Mela in New York City and the new luxury stunner, Zemi Beach in Anguilla, to find out why independent hotels are such appealing assets for owners:
1. Cost Savings, Less Hurdles
The value proposition of independent properties is undoubtedly alluring. Owners will find more nimble operations, lower management fees and more flexible contract terms. “Generally, independents can be executed for less money and with less roadblocks,” Goddard said. "However, it is dependent on the target demographic, the market and the composition of the supply. Plus, owners will have more flexible sale options that are unencumbered by a brand or franchise contract.”
2. Freedom and Flexibility
Owners and operators of boutique hotels have control and freedom to think outside the box, test different tools and exercise creative solutions. “Independent hotels are more fun, cheaper and allow you more flexibility,” Goddard states. “However, it makes management more complex and there is more ‘grey’, instead of black and white.” In comparison, chains are easier to manage because your success relies on following a manual that has already been tested and proven.
3. The Customized Approach
Rather than cookie-cutter templates that franchisees are beholden to, independent properties rely on strategies and plans custom-tailored to their specific property, market and destination. “Hospitality is still both art and science. Just because independent hotels have more interesting art, doesn’t mean we ignore the science,” Goddard pointed out. “In fact the science of independents is more disciplined because much of it needs to be rewritten for each hotel, versus following a template.” This personalized approach is well received by modern travelers, who prefer unconventional experiences over those that are mass-produced.
4. Lifestyle Experience versus Loyalty Programs
One of the major differences between franchise and independent properties is that chains have large sales and distribution systems, and coveted loyalty programs, which undoubtedly give chains an edge depending on the positioning, location and product. Without those in place, boutique brands instead have to put their efforts in creating a provocative brand and lifestyle. Goddard calls it “a holistic process involving interior design, F&B concepts, entertainment, music, and integration of the community.” It’s that distinct brand and lifestyle that creates demand, combined with innovative marketing campaigns. The good news for independent owners is that their marketing budget actually goes towards their own hotel, compared to big brands, whose owners pay hefty fees to finance the marketing of the overall chain.
5. Profits Are Driven by Product Perception
Goddard explains that in the end, the perception of your boutique hotel will drive its rate and its success. “Today’s traveler values product perception very highly and will pay a premium for a well-planned hotel with a well-articulated brand strategy and story.” If a hotel’s story is well told, executed creatively, and shared widely, it can “achieve higher than market rate over its comp set.” While chain hotels often have more resources for marketing implementation and outreach, they usually face an uphill battle in trying to stand out in a crowded “sea of sameness.”
As traveler preferences have progressed over the last several years, guests are showing their desire for boutique hotels and local experiences, while revealing a declining interest in reliable and predictable experiences associated with “big box” chains. Rather than investing in a major branded hotel, owners are turning to boutique and independent properties as profitable assets that deliver more control, less contractual hassles, more of an ability to express themselves and often, more ROI.