in transition:
A Look at a Potential Shift
in the Hospitality Industry
Prashant Desai/Radhika Gupta/Sangyoun Lee
ID 533 Spring 2008
Annotated Presentation

p1
This report describes an analysis of hotel industry offerings
and customers with a particular emphasis on illuminating what
branded chains can do to offer unique experiences and spaces
much like those currently offered by the boutique hotel segment.

p2
Everyone seems to disagree on the subject of boutique hotels: on
what is and what is not; on where they are to be found and where
not; on their best pricing policy and the true economics; on their
fashion status or long-term promise. In particular, on what to call
the market sector.
“The Boutique Hotel: Fad or Phenomenon” The Locum Review

introduction p3
average annual change in performance ratio from 1995-2000
10%
On two issues, most
commentators agree. 8%
So-called boutique hotels
look in better commercial 6%
shape than traditional
4%
chain hotels.
Locum Consulting
2%
0%
-2%
Occupancy Room Rate Supply Demand
Total US
Boutique Hotels
All Other Luxury Hotels
“The Boutique Hotel: Fad or Phenomenon” The Locum Review

p4
The hotel market position map on the following page highlights
an apparent clustering on both extremes of the spectrum, ranging
from branded chains to one of a kind hotels.

hotel market position map p5
Because of boutique hotel success, major
hospitality corporations, like Marriott, are
moving towards embracing boutique hotel
sensibilities, and are beginning to explore
the development of options in the middle
upscale ground between branded chains and unique
one-of-a-kind boutique hotels.
Ritz Carlton
Waldorf Astoria
Four Seasons
luxury St. Regis Grammercy Park
Le Meridian W Hotel
Mandarin Oriental Sofitel
Soho Grand Delano
Marriott Hyatt
Ian Schrager and Tribeca Grand
Hilton Omni Hotel
upscale Marriott Royal Palms Savoy
Embassy Suites
Bryant Park White Hall
Sheraton Westin
Walt Disney
Courtyard Marriott James Hotel Victor Hotel
Out Rigger
Garden Inn Radisson
upper midscale Club Med Hard Rock Hotel
Wyndham
Hotel 71 Hotel Sax
one-of-a-kind
branded-chain
Hampton Inn La Quinta
midscale Best Western
Days Inn
Motel 6 Budget Inn
economy Red Roof Inn Econo-Lodge
Extended Stay America
economy
www.marketmetrix.com

p6
St.Regis
W Hotels
“This new brand is something neither of us
could have done on our own, the scale of
this brand requires the reach, resources,
and expertise of a global player while the
innovation necessary calls for the experience
Hotel 71
and originality of the categories more accom-
plished entrepreneur: Ian Schrager”
Sofitel
— JW Marriott

p7
With the current economy making it challenging for corporations
to develop and launch all together new hotel brands-our analysis
explores potential opportunities for these large scale, cookie-cutter
branded chains to do something new and different with their
existing space.
Where does this opportunity lie?

p8
In order to identify where this opportunity exists, a
thorough understanding is required of the typical hotel
guest and boutique hotel guest user journeys.

user journeys_a comparison of a typical hotel user and a boutique hotel user p9
typical hotel user
? ?
travel
assessing researching booking prepare arrive & stay at check out & book next
needs reservation for trip check-in hotel travel home trip
boutique hotel user overnight guest short-term guest
? ?
travel
check out & book next
assessing researching booking prepare arrive &
needs travel home trip
reservation for trip check-in
stay at
hotel

user journeys_a comparison of a typical hotel user and a boutique hotel user p10
typical hotel user
? ?
travel
In addition to overnight guests,
boutique hotelsresearching bookingthe
also attract
assessing prepare arrive & stay at check out & book next
short-term or walk-in guests
needs reservation for trip check-in hotel travel home trip
interested in amenities such as
the spa, restaurant or bar.
boutique hotel user overnight guest short-term guest
? ?
travel
assessing researching booking prepare arrive & check out & book next
needs reservation for trip check-in travel home trip
stay at
hotel

p11
The user journeys provide a general understanding of
the types of hotel guests.
Based on some 90 survey responses, informal interviews,
and secondary research, an exhaustive list of features,
amenities, and hotel guest types were developed and
analyzed through an insight matrix.

understanding user needs p12
Sorting this matrix yields 5 main clusters:
Being Pampered, Added Bonus, Just For
Me, Boutique Fans, and Frequent Traveler.
s
st
e
gu
of
s
pe
ty
hotel features + amenities user preference groups
}
being pampered This is a cluster of true indulgence and a way to
make travel as hands-free for the user as possible.
Indulgence
Worry-Free Travel
}
added bonus There are elements and details in a
hotel that people are not necessarily
Progressive
actively searching for, but appreciate
Portable Entertainment
and take note of for the future.
}
just for me This cluster represents the bare minimums that
people expect with a hotel experience. The features
The Bare Minimum
are also items that are used personally by the user
and are things that resonate with them based on
individual preferences.
}
boutique fans Being one of the smallest clusters here, this shows that
the Boutique Fans are truly a small niche. These hotels
Aesthetically Inclined
set out to target a set audience.
}
frequent traveler People who need not only the
basics, but also are using the space
Pure Business
for specific professional needs fall
into this category.
User survey, January 2009

p13
The following 5 personas are an extrapolation
of the user preference clusters.

personas p14
being pampered added bonus just for me boutique fans frequent traveler
pampered pamela bonus bernice just josie boutique bella business bob
“I’ve been to boutique hotels, “The hotel is affordable, looked “I need a get-away. It has to “I have a big deal to close
“I prefer to stay at well known
which I like, but I need much good on the site, and is easy to be in a great location so that so I need to have wireless
luxury hotels where I know
more than that. I am very get to by public transportation. I can get to all the stores and access and a conference
I’ll be looked after. Wherever
environmentally conscious They have all the things I restaurants. I really want to room. I need to be close to
I stay, it’s crucial that my
and I now look for those will need so I don’t have to see how Ian Schrager has the client because I am going
comfort is a top priority of
amenities and don’t mind pack them.” handled this one!” to have a lot of late nights.”
the hotel staff. I typically stay
paying for it.”
at the Ritz Carlton or the
. average gal who is not put . keen aesthetic sense . professional
Four Seasons because I know
. looks for green design into a box . knowledge of high style . has specific needs to be met
I’ll have access to the top
. notices subtle product . chooses what she likes and and design
amenities, like butler service.” . needs technological amenities
placement uses it . looks for luxury, fashionable,
. values hotel points
. chooses well known . it’s a bonus that I can walk . appreciates small touches but and indulgent qualities
. location, location, location
luxury hotels out to the beach would not knowingly pay extra . strives to uphold image
. appreciates frills but does
for them
. expects butler service . expects and looks for
not seek them out
. notices personal amenities special touches
. appreciates luxurious
and thinks about purchasing
amenities . location, location,
them for herself
location
. enjoys being
. appreciates the
attended to . sees the lounge as a
home away from
social option
. requires personable
home quality
customer service
in a hotel
. Doesn’t worry
about bags
User survey, January 2009

personas p15
In order to concentrate on the most
being pampered added bonus just for me boutique fans frequent traveler
pampered pamela bonus bernice just josie boutique bella business bob
relevant demographics,“I’ve been to boutique hotels,
extreme “The hotel is affordable, looked “I need a get-away. It has to “I have a big deal to close
“I prefer to stay at well known
niche hotelsafter. Wherevereliminated fromII need much
which I like, but good on the site, and is easy to be in a great location so that
luxury groups were so I need to have wireless
where I know
more than that. am very get to by public transportation. I can get to all the stores and access and a conference
I’ll be looked
the analysis.that my environmentally conscious They have all the things I restaurants. I really want to room. I need to be close to
I stay, it’s crucial
and I now look for those will need so I don’t have to see how Ian Schrager has the client because I am going
comfort is a top priority of
amenities and don’t mind pack them.” handled this one!” to have a lot of late nights.”
the hotel staff. I typically stay
paying for it.”
at the Ritz Carlton or the
. average gal who is not put . keen aesthetic sense . professional
Four Seasons because I know
. looks for green design into a box . knowledge of high style . has specific needs to be met
I’ll have access to the top
. notices subtle product . chooses what she likes and and design
amenities, like butler service.” . needs technological amenities
placement uses it . looks for luxury, fashionable,
. values hotel points
. chooses well known . it’s a bonus that I can walk . appreciates small touches but and indulgent qualities
. location, location, location
luxury hotels out to the beach would not knowingly pay extra . strives to uphold image
. appreciates frills but does
for them
. expects butler service . expects and looks for
not seek them out
. notices personal amenities special touches
. appreciates luxurious
and thinks about purchasing
amenities . location, location,
them for herself
location
. enjoys being
. appreciates the
attended to . sees the lounge as a
home away from
social option
. requires personable
home quality
customer service
in a hotel
. Doesn’t worry
about bags
User survey, January 2009

user group mapping p16
conscious
choice
boutique fan
boutique bella
The three main personas are
frequent traveler
business bob plotted on the position map
to the left which compares
motivations and preferences
function form
when deciding on a hotel. The
size of the plot indicates the
just for me
size of the niche relative to the
just josie
others based on the survey data.
serendipitous

user group mapping p17
conscious
choice
the basics individualistic
These quadrants abstract
function form
to four main user groups.
aesthetically
indulgence
inclined
serendipitous

user group mapping p18
conscious
choice
the basics individualistic
The data shows that the “just josie”
group has aesthetic inclination as well
as interest in individual hotel qualities
like theme and decor.
function form
Additionally, “just josie” has “walk-in”
potential and would not be opposed to
just josie using non-lodging hotel features (spa,
restaurant, lounge).
aesthetically
indulgence
inclined
serendipitous

p19
The cookie-cutter hotel chains need to invest more in
understanding and designing for the “just josie” group.
This group has the greatest potential to naturally embrace
boutique hotel qualities.
An opportunity exists in designing a transition for this group.

the opportunity p20
The qualities vital to this
boutique bella business bob
transition of designing for
. keen aesthetic sense . professional
the “just josies” are:
. knowledge of high style and design . has specific needs to be met
. looks for luxury, fashionable, . needs technological amenities
. friendliness
and indulgent qualities
. values hotel points
. less elitist
. strives to uphold image
. location, location,
. more comfortable
. expects and looks for location
special touches . aesthetically pleasing . appreciates frills
. location, location, but does not seek
. providing the boutique
location them out
hotel experience in a
. sees the lounge as a more affordable way
social option
“I have a big deal
. more accessible,
to close so I need
less niche
to have wireless
“I need a get-away. It
access and a
has to be in a great
conference room.
location so that I can
I need to be close
get to all the stores
to the client be-
and restaurants. I
cause I am going
really want to see
to have a lot of
how Ian Schrager has
late nights.”
handled this one!”

p21
Who needs to be working together to create the best
hotel concept and experience for “just josie”?

p22
The answer to that question lies in understanding the
industry network of both cookie-cutter and boutique
hotel entities.
Which participants need to combine their efforts in
creating a unique offering for “just josie”?

hotel network diagrams p23
design branding user operations
travel agent
website
magazines
event planners
ad agency/
developer
investors marketing
portals
chef
(o
nl
y
in
ce
rt
ai
n
branding
contractor
ca
architect
se
firm
s)
restaurant
guest hotel
management
co-branding
interior
engineers bar
partners
design
These are the key players that need to work together.
(See appendix for entire network diagram.)
sub-
As you can see, therecontractors assortment of players in
are a wide spa
industrial
design
design, branding and hotel management in this industry.
furniture
maintenance
lighting
textile
staff
legend of relationships
service inspirational
ideas

p24
The next few slides identify which players could work
together to create a unique and preferable experience
for the “just josie” group at an existing branded chain.

the user journey for our opportunity area p25
? ?
travel
assessing researching preparing arrive & check out & book next
needs booking reservation for travel check-in travel home trip
stay at
hotel
At the research and booking reservation stage,
it is important for the hotel to exhibit less elitist ad agency/
marketing
qualities and promote accessibility. portals
Advertising agencies can reach the “just josies”
through commonly known reservation sites and
secure her business by offering attractive incen-
tives that promote internal hotel amenities such
as the spa, bar and restaurants.
guest
bar
spa

the user journey for our opportunity area p26
? ?
travel
assessing researching preparing arrive & check out & book next
needs booking reservation for travel check-in travel home trip
stay at
During Josie’s preparing fro travel stage, an opportunity
hotel
exists for hotel management to offer her more personal-
ized and guest specific correspondence.
portals
guest hotel
management

the user journey for our opportunity area p27
? ?
travel
assessing researching preparing arrive & check out & book next
needs booking reservation for travel check-in travel home trip
stay at
hotel
From arrival to checkout - friendly customer service, helpful
restaurant
attitudes, and personalized preference specific attention from
hotel management and staff could go a long way.
guest hotel
management
bar
spa
staff

the user journey for our opportunity area p28
? ?
travel
assessing researching preparing arrive & check out & book next
needs booking reservation for travel check-in travel home trip
stay at
hotel
Concept, design and theme are highly valued.
ad agency/
marketing
Design and branding firms can work together to implement concept and design
aesthetics that appeal to the ‘just josie’ target group. This collaboration can create
a unique and affordable boutique hotel experience at existing branded chains.
branding
architect
firm
restaurant
guest
bar
spa

Thank You.

Appendix

a1
Appendix: table of contents
network diagram: Entire network of the hotel industry.
era analysis: This tool was utilized to gain understanding of the hotel
industry history. It allowed us to identify key differences among eras,
show change over time, and determine future possibilities.
survey data questions and results
sources

hotel network diagrams a2
design branding user operations
travel agent
website
magazines
event planners
ad agency/
developer
investors marketing
portals
chef
(o
nl
y
in
ce
rt
ai
n
branding
contractor
ca
architect
se
firm
s)
restaurant
guest hotel
management
co-branding
interior
engineers bar
partners
design
sub- spa
contractors industrial
design
furniture
maintenance
lighting
textile
staff
legend of relationships
service inspirational
ideas

era analysis: the modern hotel concept a3
the big boom struggle to stay alive brand dilution segmentation customer centric
1920 1930 1940 1950 1960 1970 1980 1990 2000-2009 2009-beyond
Hypothesis:
key event Recovery Major decrease (9/11)
Growth of hotel chain Growth of franchising Prosperity & Recession:
Unprecedented building Great depression WW2 Growth of motel chain
Increase in US tourism
-Product segmentation - Hesitation to travel
& occupancy Expanding M&A
85% of hotels in 93% occupancy Pent up demand Market segmentation
-Over expansion Return to prominence
Recovery began
BOOM PHASE 1 liquidation after WW2 Hotels specific to
No materials for (the US becomes a
Mergers & Acquisitions (2004~)
Transportation business travel
expansion due to competitor again)
Brands become hotly
manufacturing improvements
traded commodities
sector focusing on Desire to travel
war supplies BOOM PHASE 3
BOOM PHASE 2
Eco-friendly
design + brand Resurgent need for Brand dilution with Brand & Design More inventive Incentive programs Focus on comforts
Opulence Design & Brand Design is stagnant in
Personalized
consideration hotel business design & aesthetics the proliferation of considerations are marketing to target begin [hold on to valued & security
(private bathrooms) considerations not
chain hotels specific to target specific clientele customers through
of importance Hyper Consumer-centric
Innovative ways to
audience [Business loyalty campaigns]
Stressed affordability supply hotels [due to
travelers]
& price resources going to war]
Renewable resources
[i.e. solar]
technology Wireless Internet
The first property Central building
Hot+cold water Absence of innovation Air Conditioning Advent of cross- Holiday Inn Reservation Electric cash register
Ubiquitous computing &
management systems management system
available in rooms continental flights + System with centralized LEED Certification
Point of sale systems Ambient technology [the
transatlantic travel (‘58) computer In-room guest check out On-demand movies
In room telephone room is alive]
Keyless locks
Electric Elevator Telephone In-room personal Interactive video games
In room radio Color TV standards
message lights computing
Free television Interactive guest room
In-front office Call accounting systems shopping
computer systems
Interactive guide to
hotel facilities & activities
Interactive weather
reports, visitors guides
Internet reservations
The future leaders and
innovators will be the
first to collaborate and
innovators + Ian Schrager Ian Schrager
Conrad Hilton Kemmons Wilson Chains:
co-create to explore fresh
leaders “Bankers Mentalilty” [Holiday Inn] Quality Courts Starwood Hotels & new capabilities, functions
[reinvesting income] Resorts worldwide
Best Western and features.
Waldorf Astoria Hyatt
Howard Johnson
Marriott
Thinkers:
Hyatt Von D
Jay Pritzger
Jack D. Crouch

survey data questions and results a4

survey data questions and results a5

hotel network diagrams a6
If you have stayed in a boutique hotel, how would you
describe your experience? Which characteristics stood
out in your experience?

hotel network diagrams a7
Describe the most amazing hotel experience that
you’ve ever had. Why was it so amazing?

sources a8
Building a Better Boutique Hotel The boutique hotel. fad or phenomenon?
http://lhonline.com/news/building_better_boutique_hotel_0901/ Locum Destination Review
Developers Check into Boutique Hotels http://www.4hoteliers.com/4hots_fshw.php?mwi=3208
http://nreionline.com/mag/real_estate_developers_check_boutique/
The Boutique Hotel - Sort the Boutique Wheat from
Boutique Hotels: Good for the Good Times the Boutique Chaff
http://www.hotelexecutive.com/bus_rev/pub/003/591.asp Michael Cullen; Tuesday, 29th July 2008
Boutique Hotels Fact Sheet Market Metrix Hospitality Index - Brand History Tool
http://www.boutiquehotelsandresorts.com/index.cfm?page=factsheet http://www.marketmetrix.com/mmhibrowser/
Boutique Backlash: Rethinking Ultra-Chic Hotels Word-of-mouth should be top-of-mind for hotel operators
http://online.wsj.com/article/SB117133158539706668.html http://www.marketmetrix.com/en/default.aspx?s=research&p=research1
Hotel Innovator Ian Schrager and Marriott International To Hospitality Index
Create Next-Generation Lifestyle Boutique Concept http://www.marketmetrix.com/mmhibrowser/
http://www.marriott.com/news/detail.mi?marrArticle=174362
Top hotel restaurants, room service and lounges
Generation X and the Hotel Industry: How Hotel Brands are Changing http://www.marketmetrix.com/en/default.aspx?s=research&p=research10
Erin Knapp
The History of Hotels: From Economic To Extravagant
Hospitality / Tourism Industry Brand Management http://www.searchandgo.com/travel/hotels-history.php
Dr. Christopher Muller; June 20, 2005
Photography and Illustration
Understanding the value of Boutique hotels http://www.gettyimages.com
By Daniel F. Wheeler, IV http://istockphoto.com
Radhika Gupta
Hotel brands break the chain Respective Hotel websites
Rob Mitchell; Brandchannel.com
Hotel giants seek refuge in niches
Reuters; Monday, 19 January 2009

:)