Full-Service Boutiques Delivering More Growth Than Brands

Conversely, the full-service properties earn a greater percentage of their food and beverage revenue from banquet business. This can be attributed to the larger size of the full-service properties (248 rooms) versus the boutique hotels (137 rooms), and subsequent orientation toward group demand. At traditional full-service hotels, revenue from banquet food and beverage, meeting room rental, audio/visual, and service charges equaled 58.8 percent of total department revenue during 2014. This compared to 42.7 percent at the boutique hotels.

Given the higher percentage of banquet related revenue, full-service properties achieve greater efficiencies in the food and beverage department. In 2014, the traditional full-service hotels earned a food and beverage department profit margin of 24.7 percent versus 23.5 percent for the boutique properties.

Beyond the numbers, the emergence of several new lifestyle brands also shows the creativity that exists within the lodging industry. However, most of that creativity has been directed toward optimizing branded chains that offer limited amounts of food and beverage service. If you are a creative hotelier with an affection for food and beverage, and desire to operate outside the mandates of an international chain, the opportunity exists to invest in an independent boutique hotel. However, before entering this segment of the industry, people must have a clear understanding of the financing, development, and operational challenges that exist.

About the Author
Robert Mandelbaum is director of research information services for CBRE Hotels Americas Research. Go to store.pkfc.com/custom-financial-benchmarking-reports to benchmark the financial performance of your hotel against comparable properties.

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Robert Mandelbaum is Director of Research Information Services for CBRE Hotels Research. CBRE forecast and financial benchmarking reports can be found at pip.cbrehotels.com.