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Why Boutique Hotels Are Recovering Faster Than Large Resorts

Privacy, small groups, open space — these are just a few of the features that travelers are putting a premium on thanks to the COVID-19 pandemic. Now, recent research has proven that another word can be added to that list: boutique.

Kirkwood Collection, a portfolio of luxury boutique hotels in California, conducted a study with STR after the brand’s founder, Alex Kirkwood, realized that there wasn’t any data specific to the post-pandemic recovery of properties with less than 30 keys. The results of the study, which focused on the boutique hotel sector in California coastal drive markets, revealed that these hotels are recovering at a much faster rate than larger resorts, providing the first statistical proof that travelers are increasingly opting to stay at smaller properties.

In a recent conversation with TravelAge West, Kirkwood discussed the findings of the study, and what they say about travelers’ pandemic-era preferences and behaviors.

What inspired you to collaborate on this study with STR, and what did it reveal?

We are [working on] a new acquisition in Monterey County, Calif., and when the appraiser comes on site and has to estimate how quickly a given property will recover to its 2019 base line — which is effectively how properties are [currently] being valued — it’s very important that they get that right, because it affects the financing of the deal.

Historically, our properties have tracked with a larger resort-level competitive set, [meaning] we’ve achieved the same revenue per available room (RevPAR) as a much larger, amenity-driven resort property. What that tells the appraiser is whatever his assumption is for that larger property, in theory, our hotels should recover at the same pace, because they tracked at the same [RevPAR] pace before COVID-19.

But that ended up not being the case. Our smaller boutique hotel recovered at a much faster clip than the resorts. By about mid-June [2020], we were nipping at our 2019 heels on a year-over-year basis. I needed to demonstrate in the form of data that this particular hotel we’re trying to acquire will recover faster. So, we ran an analysis with STR, and it indicated that our hotels outperformed, on a consolidated basis, our competitive set. It’s the first time I’ve ever been able to indicate in data that boutique hotels in this environment recovered much faster than the competitive set we tracked with previously.

What does that tell you about what travelers want right now?

This data proves that people want smaller properties with lower key counts and less congregate settings. I think they feel that boutique properties offer a higher degree of safety. And they’re willing to pay very similar rates to the local resorts, [even though our property] doesn’t have that ocean view, a pool, the restaurants. It’s really interesting to see the traveler selection of that smaller property. I think we’re seeing a contingent of travelers who want to have a phenomenal room with really high design, a home away from home.

Do you expect this to be a sustained trend within the travel industry?

The resorts will recover to their 2019 levels, but I think it will take a lot longer. We’re back, we’re there. For April, we were well in excess of our 2019 levels, and our competitive set was not. The market as a whole (on a consolidated basis) is nowhere near 2019, but our entire portfolio is. The question is will we then remain dominant moving forward, and I don’t know.

If you look at Hideaway [the brand’s Santa Barbara property] and ask yourself, “How does this little hotel compete at the same level as [the area’s large] resorts?” that’s the ultimate question. And the realization we’re going to take advantage of as a portfolio as we continue to expand is that we’re seeing ways to compete with the majors on our smaller scale.

What are some of the selling points of the Kirkwood Collection that advisors can share with their clients?

People love our suite-like, exterior corridor entry. The properties are not motel-like, they’re very much like cottages. We really invest heavily on the front end with our design and get the details right. The interior design is first rate, to really bring that luxury home away from home experience. We also have Apple TV technology deployed, so you can stream all your existing platforms from your iPad or your iPhone to our displays and have a full movie experience in a little boutique hotel.

Travelers can go to all the best restaurants in town, because they’re all nearby. We’re not trying to be the best restaurant in town. We’re good at lodging, we’re good at guestroom design and we do a really great complimentary breakfast. We don’t try to be good at everything, because we don’t have the space to be good at everything. We’d rather be the smaller location, right in the heart of everything that our guests want to experience.

How has Kirkwood adjusted protocols for the pandemic?

One of our heads of housekeeping has worked at a hospital, and we’ve implemented hospital-grade cleaning procedures at the properties. We have remote check-in, so you can basically check in and never see a face if you don’t want to. And we communicate with our guests via Zingle, [which is] all through text message. You can walk down and talk to us or you can call us, but if you want, it can all be done through text message. We don’t force that congregate environment where you have to come to the reception lobby and pick up your key. It’s customizable depending on your level of comfort.

Is there anything else advisors and their clients should know about the Kirkwood Collection?

Everyone thinks of B&Bs as the 1970s or 80s concept where you stay in someone’s house, and we’ve basically taken it to the next level: luxury residential design in a real hotel with set standards and customer service. We are trying to define ourselves as a smaller luxury B&B boutique offering. We see a hole in the marketplace there, and we want to become that branded luxury B&B offering in top California destinations.

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