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Boutique Hotel Companies Follow Cluster Strategy
June 6, 2008

Ever notice how boutique hotel companies often start out with a cluster of hotels in one city or region, and then when they expand, follow the same strategy--clustering in other cities or regions?

The reason for this is simple: lower risk and better operating efficiencies, according to Kimpton Hotels & Restaurants COO Niki Leondakis.

Kimpton is the prime example: a small boutique company that started with hotels strictly in San Francisco, and is now nationwide, with the cluster strategy also employed in markets like the Washington, D.C. metro area (10 hotels) and Chicago (where the company just announced plans for a fourth hotel).

And Leondakis says markets like South Florida, New York and Los Angeles also are attractive for clusters going forward. 

In Florida, Kimpton just announced a Key Largo property and plans to open another in downtown Miami this fall, with plans for two additional properties in the Miami area by 2010.

And in addition to two existing properties in New York City, the company will open a Hell's Kitchen hotel late this year, and plans a Chelsea-area 6th Avenue property a bit further down the line.

Another boutique hotel company that has held clustering close to its heart and has seen success following this strategy in New York and Florida in particular is Morgans Hotel Group. Former CEO Ed Scheetz noted that these markets have "depth of demand" and that by "providing alternate options at various price points, we capture a greater share of the market."

Finally, Joie de Vivre Hospitality is yet another San Francisco-based boutique operator that is following the cluster strategy as it expands Southward into new California markets such as Los Angeles/Orange County and San Diego over the next few years.

Posted by Derek Gale on June 6, 2008 | Comments (0)