Running a hotel is never easy, especially at times when globally there is a decrease in spending over luxury. Even as large chain groups are facing a lot of challenges at a time when there are a lot of changes in consumer behavior, traveling habits, food habits, as well as labor laws, Independent and Boutique hotels too are facing their share of challenges.Before we go deeper to understand what the challenges they face are, let us quickly look at what Boutique hotels mean so that we can relate these issues to them better.A Boutique hotel is a relatively new concept. Crudely put, it is a cross between luxury hotels and budget hotels. As such, these hotels are smaller, and generally located in urban settings. Boutique hotels are cost-saving in essence, but comfortable and upscale in their appearance. These hotels are meant for quick, short stays rather than for a long, luxurious getaway.
Here are some features that distinguish a Boutique Hotel from other types of hotels:
- These hotels are more contemporary and modernistic than historic, traditional or rustic ‘old school’ in ambiance.
- These hotels are usually independent. Boutique hotels that are part of a conglomerate often form a separate, ‘Boutique’ wing of that group. Autonomous functioning is its hallmark.
- Boutique hotels are usually small. These hotels have a maximum of around 100 rooms and are not properties that sprawl over acres of land.
- Boutique hotels are very contemporary and more casual in operation as well. That’s why many boutique hotels will even allow their guests to carry their pets with them.
- Policies are less rigid, and the environment is more open, friendly and free unlike luxury hotels that demand a very sophisticated code of etiquette and conduct.
There are of course always exceptions to the above features and no hotel fits 100% to this description. However, this will give us a framework to understand the challenges and problems faced by these hotels better.
- Market presence: Boutique and independent hotels do not have the benefit of being identified as a group. Boutique hotels mostly stand alone and have to achieve success by themselves. Making their presence felt in a market is always one of the biggest challenges that the management of a Boutique has to face.
- Too many functions: The management of a Boutique hotel has its focus on too many functions. Large brands and groups have separate wings that focus on the management of the hotel, the operations and the administration. Every function, such as Human Resources, is specialized. In independent hotels, however, all functions have to happen in that hotel itself. This places a lot of pressure on the management.
- Drawing a luxury-budget balance: The promise to offer upscale comforts at budget prices is a very ambitious challenge to fulfill. While the cost of operation is on a sharp and ever-progressing rise, charging the guests too much can easily drive them away to other hotels.
- No market dominance possible: The many, many different classes of hotels and the innumerable hotels available in each class have made it almost impossible for Independent hotels to establish market dominance. As such, Independent hotels easily fall prey to market and demand fluctuations and changes in consumer trends. In other words, although they are supposed to be autonomous, Boutique hotels are constantly dependent on the changing market environment.
- Labor: In a chain of hotels, there is rarely ever a dearth of employees because the shortage in one hotel can always be balanced out by the surplus of another. Besides, Hotel Management graduates are more willing to join big chains rather than Independent hotels because job security is higher. Besides a limited supply of labor, there is also a problem of leaves and holidays because the work done by one employee cannot be substituted by another. The work nature of an Independent hotel is always one that follows the “All hands on deck” principle.
- Personalized service: Although every guest demands special treatment in all kinds of hotels, the success of a Boutique hotel is more contingent on personalized services than in any other hotel. Personalized service can make all the difference for the hotel – either drive it to phenomenal success, or cause utter failure. The one-on-one interaction makes it easier for guests to discover both – great as well as poor service quality of the hotel in minute detail.
- No corporate support: Independent hotels have to bear the burden of their losses and expenses by themselves. In chain hotels, the pool of profits collected from different hotels helps the properties that are not doing very well to go continue functioning until such a time that the market situation turns in their favor. Independent hotels have no choice but to close down if they are not making enough profit to surplus their expenses.
- Easily affected by negative ratings: Boutique hotels are more easily affected by negative ratings and reviews than are hotels that belong to large groups. In the case of large groups, the brand name often overshadows negative feedback received by on their hotels. People often tend to trust a hotel that is part of a big group. On the other hand, a hotel that stands alone suffers a lot when it faces negative reviews, even if the complaint is not entirely the hotel’s fault!
- High risk: Needless to say, Independent hotels face a high risk. There is absolutely no way of predicting a safe future for Boutique hotels. The lack of a corporate management that can cushion its falls makes such hotels easily susceptible to closures and heavy losses.
- Competition from chains: If the only competitors for Boutique hotels were other Boutique hotels, smart management strategies would suffice to safely pull them through to success. However, chain hotels are now posing as competition to Boutique hotels, and are seizing the market by offering more for less – something that Independent hotels simply cannot afford to do!