Boutique fatigue?

Today’s Wall Street Journal (subscription required) has an article named “The Downgrading Of Business Travel” that focuses on “skyrocketing” hotel rates around the world and quotes companies that are “clamping down on spending” with “business travel becoming increasingly bare-bones, even a tinge humiliating”. With rates on vertiginous climb from Bombay to Boston it is unsurprising that companies are resorting to a range of budget tightening measures from the stark step of banning stays in pricey boutique hotels to paying for two nights of lodging when employees double up leaving employees with the prospect of having to pay for a room out of their pockets if they choose to stay in a room by themselves. Some companies such as Honeywell have gone so far as to switching “to more limited-service hotels such as Courtyard by Marriott and Holiday Inn from full-service Marriott, Hilton, and Hyatt hotels in cities employees travel to most often”.

The cost cutters have boutique hotels in their sights. The Journal article notes one instance where “Jennifer Jones, a marketing and communications manager in Chicago, usually stays at luxury boutique hotels such as Kimpton Hotel & Restaurant Group LLC’s Alexis Hotel in Seattle, where rooms are $389 a night. But for a recent conference, her employer put her up at the Sheraton New York Hotel & Towers, since it was more cost-effective for a group of employees. Her room, she says, “was coffin-sized”.

Interestingly, a similar paring down of expenses occurred in the immediate aftermath of 9/11 but the upswing in the economy since the end of 2004 threw that model out of the window and developers jumped wholesale into the boutique bandwagon. However, service in many of the 400-thread-count sheet hotels with duvet pillows and a range of spa amenities ranged from patchy to indifferent with a few notable exceptions. While moves to tighten the budget in today’s strong economy is unusual it is indicative of the whiplash the many new entrants to what has been perceived as a latter day klondike are likely to feel when the economy dips. Lessons to be learned for developers, operators from what could end up being a trend away from fluff to substance include shoring up service standards and an accelerated renovation program that ensures value for money in today’s times and a fresh face when rates and occupancies dip in response to a downturn.

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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