NEW YORK — The decision to invest starts with an informed or instinctual confidence in future positive returns. Showcased at the 2019 Stay Boutique Investment Conference, there are abundant reasons to believe in the fast-evolving community of boutique ideas, products, and services. Held on June 5that the Times Center in New York City, the seventh annual edition of the one-day event, produced by the Boutique and Lifestyle Leaders Association (BLLA), was as fearless and disruptive as the boutique space itself.
Heralding the boutique movement as “a new cultural renaissance and reimagination of tradition,” BLLA co-founder and COO, Ariela Kiradjian, emphasized the critical role of education in understanding the multi-pronged investment opportunities under the boutique umbrella. There was much to learn.
As the playbook on backing boutique continues to develop, the overall prospectus, founded in the fun and innovation of hotels and hospitality and now branching out into a wider sphere, offers plenty to inspire smart investors. Diverse exhibitors at the event, including accountants, credit card providers, law firms and bedding companies, demonstrated how boutique attracts attention.
Most compelling was the insight provided by the day's panelists and speakers. From leading hoteliers and hospitality consultants to lifestyle company founders and CEOs, this boutique brain trust shared authoritative accounts of why and how to invest in boutique.
Headlining the powerhouse speakers list was the “Godfather of Boutique,” Ian Schrager. Having pioneered the boutique concept with late partner Steve Rubell in the 1990s, Schrager, returning after speaking at not only the inaugural Stay Boutique Investment Conference in 2013 but for five
of the seven years following, exemplified the conference's high-grade appeal. Schrager was acknowledged for his strong support of BLLA and Stay Boutique over the years during his interview by Jonathan Falik.
Smart money is one play. In the boutique world, however, savvy capital also goes into people, culture, community, experience and emotion, producing a robust mix of tangible and intangible returns. Exciting, too, is how proven ideas from hospitality and hotels synergistically apply to the wider marketplace.
BLLA Founder and CEO, Frances Kiradjian, stated: “We are gathering together to continue our theme of being unapologetic for heralding the attributes of the boutique community at the same time as we celebrate the term that we coined, The Modern Renaissance of Boutique.”
A Sense of Arrival, A Sense of Place, A Sense of Belonging
With 35 years of global experience in opening and repositioning luxury hotels and resorts, Jean-Luc Naret, CEO of Paris-based La Réserve Hotels and Spas, reaffirmed key fundamentals for investing in boutique hotels. Referencing the brand's palatial La Réserve Hotel and Spa Paris,
which in reviving a Napoleanic-era mansion awakened a once “dead” neighborhood to world-class acclaim prioritizes location, personalization, and uniqueness. Citing Schrager's example, Naret believes in being “a bold pioneer” in targeting locations yet to come into vogue. Invest in a distinct identity and don't be a copycat — customers want original concepts. “Cheap becomes expensive” when you inevitably must fix under-investing in high-quality décor, linens, and amenities. “Be memorable and Instagrammable,” said Naret. “Done well, a boutique property will stay relevant and stand the test of time.”
In the increasingly noisy boutique hotel space, a well-planned, well-curated F and B program offers the most tangible reach to customers. Scott Gerber, principal and CEO of NYC-based hospitality Gerber Group believes that boutique hotels need to keep the scene's pulse active. “Today, if I blindfolded you and put you in a hotel room, you would have no idea what brand you were in,” he said. “Bars and restaurants become a differentiating factor.” F and B also serves the critical quotient of “localizing” a boutique space.
Julia Heyer, founder and managing director of NYC-based Heyer Performance, said that investing in a restaurant concept should establish a unique story for the brand in its market while also attracting locals because “people who stay in boutique hotels usually want to go where the locals go.” Local examples include the NoMad and Ace Hotels, which “changed the landscape and attracted a local following” to a formerly forbidden stretch of Broadway in Midtown Manhattan.
Another arbiter of cultural times and tastes is Charles Khabouth. Founder in 1982 of Toronto-based INK Entertainment, Canada's leading lifestyle and entertainment company, Khabouth's ever-evolving lifestyle enterprises including nightclubs, F&B and festivals. In crossing over into hospitality with his smash hit Bisha Hotel, which like La Réserve, became the “heart and soul” of its Toronto neighborhood, Khabouth figured locals in the equation. “You don't want to be shunned by locals,” he said, “and so it's crucial to invest in being seen as being part of your destination.”
Guy Masnik, L.A.-based partner and vice chair, JMBM's Global Hospitality Group, knows from experience that failing to invest in people is a certain misfire. “It starts in the underwriting process,” said Chris Green, CCO of third-party operator Chesapeake Hospitality, interviewed by Masnik at the event. “When building the asset, you always look at the hard costs, but what people really don't spend enough time on, which we've spent our (61-year) history on, is the soft side. Making sure that people are not only connected to the process, but they are well trained to do what they have to do, understand why we are doing what we have to do, and the outcome that is expected for that service, and how they benefit that outcome.”
Investing in people takes many forms. When Hurricane Irma slammed the Turks & Caicos Islands in 2017, Mark Durliat, co-founder and CEO of Grace Bay Resorts, raised funds to help employees of the luxury all-suite Grace Bay Club repair their homes. Earlier, Durliat had committed to supporting a school on a remote nearby island and helping to grow the local tourism economy. “We are a hand-made company,” said the globetrotting industry veteran.
From investors and suppliers to staff and customers, “managing relationships” is priority one. “We look for like-minded people to join us and help nurture the brand.” It's an ethos that is expanding the boutique universe. Inspired by the “human connection” she experienced in hotels, Michelle Cordeiro Grant, founder and CEO of Lively, “reverse engineered” the creation of her innovative lingerie line by directly involving women in building the brand. “While we are a digital company in the boutique space, we started with human connection and human impact,” said Grant. “And we stick to our core value and purpose, which is to inspire women.”
Platforms for social good and social responsibility are finding rich cultivation in the boutique ecosystem. Examples include London-based Inhabit Hotels, conceived by third-generation hotelier Nadira Lalji based on wellness and sustainability principles for restoring both people and the planet.
Alchemy, Not Algorithms
In line with BLLA's definition of “boutique” as “any brand whose products or services are centralized around experience and cultural development,” the field thrives on emotional connections that enhance customer engagement while also driving the bottom line.
In a time of increasingly savvy and aware consumers, the bar for “experience” keeps rising. Rosie Toumanian, senior trend analyst with global innovation tracker TrendWatching, described an “Expectation Economy” in which best-in-class companies like Amazon and Venmo have “heightened all customer expectations for authentic local experiences for all boutique brands.” This is creating “expectation transfer that crosses price points and borders regardless of industry.”
While this acts as competitive pressure, boutique brands have room for experimentation and even failing. As several speakers noted, this is a distinctive advantage over branded hotels, which are driven by stricter productivity and efficiency standards.
Industry veteran Richard “Boz” Bosworth, general partner and CEO of JC Hospitality, LLC, is spearheading the complex relaunch of the Hard Rock Hotel & Casino Las Vegas into the Virgin Hotels brand. For him, “no stop signs” is the most significant difference between corporate and boutique business structures. “The fun of the boutique space is the flexibility and control you have over your asset,” said Bosworth. “I believe that the boutique space really defines possibility.”
Boutique drives innovation. Nathan Kivi, CEO of HotelierCo, is pioneering a crowdfunding model for the development of boutique hotels. Absolut Art is “democratizing” the art buying process by lowering the bar to entry and price points, helping hotels and other brands to invest in this signature element for cultural programming.
Experiences, above all, must be authentic. “That's our core value proposition,” said Tom Lewand, CEO of Shinola, whose “multi-concept” expansion of the boutique goods brand includes the new Shinola Hotel in Detroit.
For Ian Schrager, current as ever with his Edition and Public hotels, creating “the magic” defines boutique. “It gave me a leg up with Studio 54, and I rely on that same approach today,” said the inveterate innovator and provocateur, who believes that booking a hotel room “should be like
ordering an Uber.” He is bullish on boutique. “Hospitality is permeating every aspect of business, from commercial office space to living space,” said Schrager. “We were the inspiration for WeWork, for example. Like Facebook, your business is not just the hotel, it's the customer, and everything the customer does, wants and purchases are part of that elevated experience. It's pervasive, it's ubiquitous, and I find it very gratifying.”
That sounds like high investor confidence which can equate to believing in the here, the now and the future of boutique!