Boutique hotels topple bigger rivals as travellers seek more than a bed

Boutique hotels are applying the blowtorch to the traditional big-name brands as travellers seek out more experienced-based holidays in smaller, more intimate properties.

While boutique hotels have traditionally achieved lower occupancies, room rates and revenues than their larger, international rivals the tables have turned according to CBRE Viewpoint, which highlights a significant shift in domestic travel demand.

Guests are increasingly seeking a highly personalised and hybrid approach to their hotel stay experience.
Guests are increasingly seeking a highly personalised and hybrid approach to their hotel stay experience.

Boutique hotels offer a wider range of experiences from produce from the surrounding restaurants to free bicycles to explore the areas, communal hubs and bars for work and leisure and retro fun furnishings. Visitors feel more “immersed” in the hotel than just getting a comfy bed and shower.

CBRE’s Australian Head of Hotels Research Ally McDade said an analysis of market performance showed that boutique properties had outperformed ‘big box’ international hotels since the 2020 onset of the pandemic across all three key performance indicators – occupancy, Average Daily Rate (ADR) and Revenue Per Available Room (RevPar).

On a RevPar basis, the basket of boutique hotels studied by CBRE performed over 50 per cent better, with occupancy rates and ADR being 21 per cent and 27 per cent superior to the luxury international hotels in the analysis.

Sydney’s TriO Capital, the investment and asset management business of independent lifestyle hotel group Ovolo, is taking advantage of the demand and is selling The Woolstore 1888 boutique designer hotel in a move to recycle capital to fund the group’s continued growth and expansion.

The 90-room Woolstore 1888 by Ovolo is being sold, but Ovolo will retain the management rights post-sale. It occupies one of the oldest surviving sawtooth roof woolstores in Sydney, with the Pyrmont building in Darling Harbour, converted into a boutique hotel in 2013.

TriO managing director Tim Alpe said, the sale forms part of its strategic plan to recycle capital to further grow the Ovolo brand throughout Australia, New Zealand, and selected Asia Pacific target markets.

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“We have tripled our room count in the past five years, including adding two assets during the pandemic, and are looking to more than double our network via hotel management agreements, acquisitions, joint ventures and investment partnerships,” Alpe said.

CBRE Hotels’ Wayne Bunz and Michael Simpson have been appointed on the sale and said it is expected to generate significant local and offshore buyer interest, underpinned by the Ovolo hotel management agreement.

“More than ever, hotel investors are looking for bespoke and boutique hotel offerings, and this opportunity will appeal to a broad range of prospective purchasers,” Bunz said.

TriO Capital is selling The Woolstore 1888 by Ovolo in Sydney.
TriO Capital is selling The Woolstore 1888 by Ovolo in Sydney.

He added that over three years on from the pandemic, many resulting trends are here to stay, with remote working, bleisure travel, staycations and the continued growth of social media use, having shifted guest preferences towards a highly personalised and hybrid approach to their hotel stay experience.

In Sydney’s Surry Hills, the Cienna Group and manager La Vie are opening the Adge Hotel and Residences next year that sits alongside the former Cambridge Hotel, which will also rebrand the Adge as part of a $65 million transformation of the site.

Jerry Xu, chief executive and founder of La Vie Hotels & Resorts, said Adge was designed in collaboration between Tzannes and Team 2 Architects with interiors by SJB and will “mirror the unique spirit and energy of Surry Hills through bold colours, eclectic furnishings and plenty of personality”.

More than ever, hotel investors are looking for bespoke and boutique hotel offerings, and this opportunity will appeal to a broad range of prospective purchasers

CBRE Hotel director Wayne Bunz

InterContinental Hotel Group (IHG) is expanding its boutique Hotel Indigo brand with two new sites coming to Melbourne, and in Sydney there is one at Potts Point opening later this year and one in the new City Tattersalls Club redevelopment in Pitt Street.

IHG is also operating the new Hotel Indigo at the under-construction City Tattersalls Club in Pitt Street.

Pro-invest Group owns the Hotel Indigo Sydney Potts Point and will look to open in later this year. It has undertaken a multi-million-dollar transformation of the former Larmont Sydney by Lancemore into a Hotel Indigo marks a new chapter in the property’s history – and will be the brand’s debut in the city.

Jan Smits, chief executive Asia Pacific, Pro-invest Group, said they purchased this property knowing “we had the opportunity to bring it to life in a whole new way for guests and the local community”.

Travellers are turning away from big-name hotel brands as they seek more immersive experiences.
Travellers are turning away from big-name hotel brands as they seek more immersive experiences.Credit: iStock

“The hotel’s location puts it front and centre of Sydney City council’s revitalisation programme and the re-energising of the areas’ 24-hour economy. The resurgence of this neighbourhood promises to revive the energy it’s been so famous for, and our team can’t wait to be a part of that.” Smits said.

Matt Tripolone, managing director – Australasia & Pacific at IHG Hotels & Resorts, said IHG is enjoying its largest-ever period of growth in the region, with numerous openings under brands including InterContinental, Kimpton, Vignette Collection, voco, Crowne Plaza and the Holiday Inn brand family.

McDabe said the continued recovery of corporate travel and international arrivals, coupled with more Australians travelling abroad, will broaden the mix of hotel business demand and ultimately moderate the exceptional outperformance that has come from the boutique sector in the past two years.

“The continued growth of boutique hotels in Australia will rely on their ability to deliver a personalised offering, while capitalising on new and emerging travel trends such as bleisure, where a leisure component is added to a business trip; workations, where some work is tacked onto a holiday, and dog-friendly travel such as Ovolo’s V.I.Pooch stays.” McDabe said.

In Sydney’s west, Accor Pacific is opening the Pullman Sydney Penrith and Western Sydney Conference Centre (WSCC) to cater for the growth in the area and the new airport.

Located at the foot of the Blue Mountains, Pullman Sydney Penrith is the area’s first five-star hotel and a new state-of-the-art conference centre with 153 rooms and suites.

Pullman Sydney Penrith will service the WSCC, which is adjacent to the hotel. The WSCC features dynamic and sophisticated flexible conference spaces which span over 1,250 square metres.

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Source: Thanks smh.com