A
study from The Highland Group also found that while most boutiques are in urban
centers, there is also increased demand in tertiary markets.
NATIONAL REPORT — Boutique hotels are achieving higher RevPAR
and ADRs than the same classes of other hotels in the U.S., according to a new
study by Atlanta-based The Highland Group, Hotel Investment Advisors Inc.
The data in The Boutique Hotel Report 2024 found that some
segments — upper and upper upscale — were higher by a large margin, while
luxury boutique hotels still finished strong with stabilized rate growth.
The report found that although this type of hotel has a
relatively higher concentration of rooms in urban centers, there are increasing
opportunities for boutique hotel development in tertiary markets.
One developing trend is the number of small,
suburban town centers exploring adding a boutique hotel to entice consumer
appeal for their immediate area.
“A well-done boutique hotel, while serving a town with
unique accommodation, offers a sense of place if adeptly immersed into the vibe
and history of the local community, and provides an appealing location for
guests and locals to gather,” said Kim Bardoul, partner at The Highland Group
and author of the report.
Almost 70% of all boutique rooms listed in the report are in
the upscale and upper upscale segments. According to STR/CoStar data through
January 2024, only two classes reported RevPAR growth compared to the same
period in 2023: upscale, at +1.6%, and upper upscale, at +3.1%.
The report found that new boutique openings continue.
Independent boutiques’ supply increased at a compound annual average of 3% from
2018 through 2023, while soft brand collections have grown at 4%. The largest
increase was in lifestyle hotels, which have grown 11% annually over the past
five years.
Boutique hotel segments in the table below ranged in
occupancy from 59% to 69% in 2023, while comparable class U.S. hotels ranged from
66% to 67% in occupancy. ADR in the boutique samples ranged from $150-$457 in 2023,
while comparable class U.S. hotels ranged from $134-$349.
The report divided boutique hotels into three segments:
independent (original boutique hotel), lifestyle (boutique but affiliated with
large franchises), and soft brands (retain name but benefit from franchise
affiliation). It also disclosed detailed financial reports from 2022 for the
three segments.
Independent boutique hotels received 12.1% of their revenue
from F&B, had a gross operating profit of 38.8%, occupancy of 63.2%, ADR of
$194.17 and RevPAR of $122.63. In terms of expenses as a percentage, those
hotels had administration and general expenses higher than their counterparts
(13.1%). They spent more on property operation and maintenance (5.1%) than
lifestyle and soft brand segments. Independent boutique hotels also spent a
higher percentage (4.9%) on management fees. Their EBITDA/net operating income
(26.6%) was also the highest of the three segments.
Lifestyle boutique hotels received 22.2% of their revenue
from F&B, had a gross operating profit of 37.6%, occupancy of 68%, ADR of
$249.51 and RevPAR of $169.56. In terms of expenses as a percentage, those
hotels had administration and general expenses of 9.6% and spent 4.1% on
property operation and maintenance. Their EBITDA/net operating income was
27.7%.
Soft brand boutique hotels received the highest percent of
the segments (31.7%) of their revenue from F&B, had a gross operating
profit of 30.4%, occupancy of 63.3%, ADR of $269.89 and RevPAR of $170.71. In
terms of expenses as a percentage, those hotels had administration and general
expenses of 9% and spent 4.4% on property operation and maintenance. Their
EBITDA/net operating income was 22.2%.
The report also showed that food and beverage
(F&B) could provide significant revenue for independent and soft brand
boutique hotels that utilize rooftop bars. The nine hotels included in the
study with rooftop bars collectively achieved an ADR of $292 in 2023, with
average beverage per room revenue at 24%. F&B contributed $171 per occupied
room, with beverage sales equaling $58. The total room revenue for these hotels
was 60%, with F&B producing 35% of the revenue.