NEW YORK CITY — In early June, the Boutique & Lifestyle Lodging Association held its Annual Boutique Hotel Investment Conference in Manhattan, a one-day gathering of owners, developers, investors, lenders and advisors focused on the boutique and luxury segments of hospitality.
Over the course of a single day, attendees heard from experts on a range of topics affecting these segments, from financing to operations to overcoming challenges in sales and marketing.
Redefining Investment in Boutique & Luxury Hotels
The morning’s Redefining Investment in Boutique & Luxury Hotels panel featured Glyn Aeppel, president and CEO of Glencove Capital; Elizabeth Mullins, COO at Flâneur Hospitality and MD at The Fifth Avenue Hotel; Sarah Eustis, CEO of Main Street Hospitality; and Jim Butler, partner and chairman of the Global Hospitality Group.
Aeppel emphasized the need for owners, who she described as “the visionary executives, the team leaders, if you will” and the operating company to “work well together and have an alignment of vision.” Aeppel said she looks “intensely” at whether or not the individuals or the company behind an asset has both vision and focus. “A lot of people have vision, but they're unfocused with how they're going to execute that vision,” she said.
Mullins agreed, emphasizing that not only should the visions be aligned but calling for “synergy” between the two, calling such cooperation “underrated and extra powerful.” With synergy, she added, “you actually gain momentum, and momentum is everything.”
Aeppel, in turn, noted that investment in the boutique space can be risky, especially when the project is not connected to a brand. “People are less willing to be flexible in terms of deal structure,” she said. To that end, commercial property-assessed clean energy—a financing structure in which building owners borrow for energy efficiency, renewable energy or similar projects—is increasingly popular. Another option is mezzanine financing, a hybrid of debt and equity financing that lets a lender convert debt to an equity interest in a company in cases of default. This, she cautioned, is “very, very expensive,” so owners following this route should refinance as soon as they are able.
While earnings and profits are important, Mullins noted that effective sales and marketing are crucial to reach those financial goals. “And sales and marketing aren't the same thing,” she added. “And then you need to bring that promise that you're making to the consumer from sales and marketing to life through your operational team. … You've got to actually rank well in your advisories and your surveys. You have to be showcasing the fact that you're touching not just the mind but the heart of everybody that walks into your door.” This, she said, will drive repeat business for a property.
Pitching Investors
The presentations also included pitches of new hotel concepts to a panel of investors, not unlike TV’s Shark Tank. Aileen Canta announced University Hotels, a new brand that would provide upscale accommodations along club membership with health and wellness elements in university and hospital communities. Club members would have privileged access to the hotel when needed.
The concept—which Canta said would work for conversions and new-build projects—is structured as a joint venture so that the communities can contribute real estate assets in exchange for equity in the hospitality venture. The first Club is set to open later in 2025 and the hotel is slated open the following spring.
Aaron Ammar, co-founder of SPA Property Group, already has the 23-room Horton Hotel in Boone, N.C., under his belt, and is looking to grow one property into a brand. “We’re trying to take this model from the beautiful Blue Ridge Mountains of North Carolina two hours down the road to the beautiful city skyline of Charlotte, N.C.,” he told the attendees.
Ammar and his partners—Sean Sassano and Paul Pessina, whose initials make up the company’s name—have a 19,000-square-foot building under contract, he said, and plan to convert the structure into a 50-key boutique hotel with a rooftop bar and a street-level lounge.