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Why smaller boutique hotels can rebound faster

Thanks to the COVID vaccination, the travel industry is finally able to look forward to a second half of the year with optimism. According to recent studies two-thirds of Americans plan to travel this summer, and the same amount said they planned to travel more than they did pre-pandemic. But the way people are planning to travel has changed.

Contributed by Alex Kirkwood, founder and CEO, Kirkwood Collection, Beverly Hills, California

A year of being hyper-focused on avoiding crowds, keeping our distance from others and vigilant sanitization has created a traveler who is eschewing large resorts and all-inclusives for the perceived safety of smaller, boutique hotels.

This preference in travel came to light during the appraisal and underwriting process for an upcoming acquisition for the Kirkwood Collection in a California coastal market. The challenge we faced was the subject property did not subscribe to STR and the re-stabilization timeline was calculated based on a resort-level, higher key-count competitive set that the subject historically tracked against at near 100 RGI (RevPAR Generation Index) for 2018 and 2019. This would lead an analyst to believe that the recovery timeline would be similar for the subject and the comp set.

Kirkwood Collection Hideaway Santa Barbara, California
Kirkwood Collection Hideaway Santa Barbara, California

However, we knew internally, based upon our boutique portfolio performance against our own competitive sets, that smaller luxury hotels in vacation destinations recovered faster after the first COVID lockdown was lifted and then again after the second lockdown was lifted on January 25, 2021. With this qualitative analysis in-hand, we enlisted STR to prove it statistically for the specific markets we were analyzing.

An analysis of the STR report of small boutique properties in Santa Barbara, Monterey, Carlsbad and La Jolla, compared with resorts in the area shows how in these California markets traveler preference is impacting its hotel industry, with boutique hotels under 30 keys outperforming hotels and resorts over 100 rooms. Below we see the preference reflected in RevPAR.

The STR analysis of occupancy of the two types of hotels continues to bear out the notion that small hotels are rebounding faster post pandemic.

What is really fascinating and telling is when ADR is compared between smaller boutique hotels and larger resorts. Prior to COVID we saw amenity driven resort properties outperform smaller boutique hotels that inherently have less onsite facilities like a large spa, multiple restaurants or extensive pool and water amenities. However, post-pandemic we see ADR almost even between the two groups. Travelers are prioritizing less guests, direct room access and increased privacy on property over traditional amenities.

Because of the increase of ADR for boutique hotels, these smaller properties are now enjoying far higher RevPAR than resort counterparts.

While smaller boutique hotels are currently reaping a post-pandemic surge, smart hoteliers can compete against their own comp set by implementing differentiating points of service.

How tech helps

Technology in the hospitality industry is everywhere, both behind the scenes and front of house. In a post-pandemic world technology can help your hotel offer customer service in the new contactless way travelers now prefer.

Contactless check-in and Zingle SMS guest communication allow a property to offer a high level of service, without a high level of touch. In your F&B outlets, QR codes eliminate the need for communal menus or the waste of paper menus.

Technology can also aid the new, more robust cleaning protocols customers are expecting. Tools like CLEANtracker monitor staff to make sure all sanitization processes are followed, UV lights can be incorporated into daily cleaning, and air purification systems can all aid hotels in keeping clean.

Reconfigure spaces

Boutique hoteliers can adapt to our new reality by looking at their property and see where spaces can be reimagined to make travelers more comfortable.

In large public areas like the lobby, reconfigure seating to create multiple, intimate vignettes with appropriate spacing within the grouping. In dining areas consider reducing tables or using some type of divider between tightly grouped seats. Invest in creating and maximizing outdoor space by adding outdoor seating and dining areas that encourage guests to be outside.

Marketing opportunities

Promoting your hotel and what you’re doing is more important than ever post pandemic.

Develop new promotions built around the COVID friendly changes the hotel has made. For example, a resort credit for alfresco dining or free parking for guests who use the contactless check-in provide value-add and highlight what sets your property apart from the competition.

With travel anticipated to accelerate during the second half of 2021, hoteliers of smaller boutique properties can expect to capitalize on their inherent selling points as traveler’s tastes gravitate towards privacy and smaller hotels as they dip their toe back into vacationing.

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