Boutique hotels thrive as chain hotels decline

As we know, the hospitality sector has been turned on its head by Covid-19, with many pivoting and scrambling to survive. But even before the impact of the pandemic, the hospitality sector was undergoing various shifts as customers’ expectations evolved.

One thing, in particular, we were seeing was a decline in mid-range hotel chains, as tourists increasingly sought out more unique and personalised experiences.

The growth of boutique hotels and platforms like Airbnb highlight this, with the latter growing from an unknown startup to a $30bn business in just 11 years. Further reflecting growth in this area, our management platform which caters to small to medium-sized accommodation providers, has grown by 94 percent since March 2020.

In the US, the Boutique Hotel Report 2020, revealed that boutique hotels had been the fastest-growing sector of the hotel industry for the third year running, outpacing extended stay and upscale hotels, traditionally the leading segments in American hotel development. Through anecdotal evidence and conversations we’re having with customers, it’s clear we’re seeing a similar situation in Australia.

So, boutique hotels are thriving, but why? Let’s take a look.

Rise of social media and personal travel experiences

In recent years, the explosion of digital content and social media has given rise to a desire for more authentic and experimental travel experiences, particularly among younger demographics. In short, the holidays their parents or older peers may have taken will no longer cut the mustard. Package deals and inclusive resorts are holding less sway. Instead, the travellers of today are valuing experiences more than ever.

Here, boutique hotels have been quick to recognise this trend, making sure to market themselves in ways that highlight their idiosyncrasies and the local regions they are situated in. Hinging their offering on a unique location gives their hotels a specific flavour guests can’t get anywhere else.

Boutique hotels have also taken advantage of social media in promoting themselves as must-stay destinations. As a result, we’re now seeing that being chosen as a hotel clearly depends more on the ability to provide a superior guest experience, rather than solely the location and popularity of a property, the price of rooms, or even the technology provided onsite.

For example, Preno’s customer the Pink Hotel uses their Instagram to reveal true customer experiences. When guests post stories, they reshare them to their platform highlighting their guest’s superior stay – unedited. They also utilise their Instagram as a tool to stay connected with their guests, reach new clientele and provide updates on sales, which often converts to direct bookings.

The role of tech

Beyond social media, other forms of tech, mainly automation of mundane and unfulfilling tasks, is enabling boutique hotels providers to provide better than ever guest experiences. Rather than having to undertake much of the manual admin work that comes with running a hotel, hoteliers can instead focus on providing that superior guest experience.

Furthermore, accommodation booking engines such as Booking.com or Airbnb have revolutionised customers’ access to boutique accommodation, having multiple platforms to choose from.  Operators can also take advantage of high affinity on Airbnb and Booking.com  to connect with a broader, more engaged customer base.

The impact of Covid-19

The pandemic, in many ways, has accelerated the rising popularity of boutique hotels. According to a report by the hotel benchmarking firm ST, home rentals have outperformed hotels in 27 global markets since the onset of Covid-19 for a number of reasons.

In the short-term, the various border closures have encouraged Australians to holiday at home, seeking out previously unexplored places in their backyards and luckily for boutique hoteliers, this has led to increased bookings.

During the coronavirus pandemic, with movie theatres closed and no restaurants to dine in, Aussies have been spending 30 percent more of their lives online. Boutique accommodation has benefited from this shift as people are scrolling and discovering more unique places to visit for their next holiday.

With international travel paused, people aren’t bound to the familiarity they relied upon when travelling overseas. Chain restaurants and hotels provide a sense of security for holidaymakers as they know exactly what to expect when travelling in unfamiliar or intrepid places. Comparing this with domestic travel we know people are less afraid to go out of their comfort zone and try something new, given they’re still in their home state or country.

Additionally, going by feedback we’ve heard from property owners, many guests are preferring to stay in smaller properties to keep their own pandemic worries in check. Smaller properties reduce the chances of interacting with too many other people, compared to larger hotels with multiple guests and staff that carry a higher risk of infection.

Following so much disruption over the past few months, boutique hotels now have an opportunity to take advantage of an evolving approach to travel and tourism. Increased online activity and restricted movement have left the door open for boutique hoteliers to appeal to a changing breed of traveller. As a result, hoteliers that are able to showcase and provide a unique and experience-led stay will win out over larger chains that are failing to inspire.

Amelia Gain, co-founder and CEO of hotel management tool Preno

Amelia Gain

Amelia Gain is CEO and co-founder of hotel management platform, Preno. She started in tech, before operating a world-leading hotel. During this time running a hotel, she became passionate about hotel operations and the guest experience but noticed the amount of manual work that was involved. This led her to the concept of Preno, which is a core tool for hotel operators with a mission to make their lives easier, so they can focus on what’s most important: the guest experience.