As more hotel chains realise the strength of the boutique and release their own lifestyle brands, InterContinental Hotels Group (IHG) has revealed plans to drive this buoyancy further by targeting the Millennials.
The hotel group, which has a $1.8bn turnover (approx £1.2bn), says that boutique hotels make up around 7% of about 1,200 in its global pipeline and with the lifestyle space becoming the fastest growing area in the sector, IHG’s Hotel Indigo brand is aiming to get a slice of the revenue pie.
The rise of the Millennial traveller, expected to be the biggest group of hotel customers by 2020, has sparked major development plans for the big brands, including IHG, as more hotel chains create tailored arms to tap into this market.
Usually defined as people who reached adulthood around 2000, Millennials use online travel sites that aggregate thousands of hotels and make choices based on peer reviews, according to leisure-and-hospitality industry advisors Grant Thornton.
They want to feel like locals in a bar or lobby where they can hang out with people from the neighbourhood, plug in and work over a coffee, or tuck in to locally-sourced food.
The Millennials’ demand for an individualised experience is already well served by the ‘community feel’ of web-based site Airbnb and independent chains such as Citizen M, and with big profits on the horizon, the pace of expansion for all sectors is quickening.
The latest results from IHG demonstrate the market’s strength as well; at IHG’s Hotel Indigo, revenue per available room was $122.73 last year versus $75.72 for its Holiday Inn Express arm in Europe.
"The lifestyle space is the fastest growing area within hospitality, globally and in Europe, so I am very excited about it," IHG’s Europe CEO Angela Brav told Reuters, predicting that Indigo will eventually cover most of the world.
IHG’s $430m acquisition of US operator Kimpton Hotels last year made it the leader in the boutique space when combined with Indigo and another boutique brand, EVEN.
Stripping out furniture, such as desks and wardrobes, and replacing them with hooks, wall-mounted TVs and iPads, while leaving out conference rooms, mean boutique developments can often be simpler and cheaper to build and operate.
One important factor in the look and feel of lifestyle hotels is the building, with hotel groups looking to convert properties with character.
For example, IHG’s Hotel Indigo Kensington in Earl’s Court was once four Victorian mansion houses.