LOS ANGELES—“I think back to when Bill Kimpton first started Kimpton Hotel Studio years ago and coined ‘boutique hotels,’” recalled Leanne Harwood of IHG Hotels & Resorts. “That was the start of the journey for the boutique and lifestyle property (categories), and they have expanded over the years.”
Harwood’s words underscored the evolution of luxury hospitality in the last few decades, along with two major takeaways from the Ownership: Luxury & Lifestyle breakout session at the Americas Lodging Investment Summit last week:
- There are many four- and five-star properties that check all of the luxury boxes and yet are clearly not “your mother’s luxury grand hotel,” though these also have their own sub-category.
- The proliferation of sleek, contemporary, experiential and eco-friendly properties enabled “lifestyle” to evolve into its own lodging category.
Moderator Andrew Wharton, managing director, REH Capital Partners, LLC, cleverly used personal anecdotes from his recent travels to propel the discussion about how both “luxury” and “lifestyle” categories are broadening the horizons of the hospitality industry as travelers expand their with more personalized wants, needs and desires when choosing the perfect hotel.
This dovetailed into the panelists elaborating on the opportunities and challenges presented by these two ever-expanding categories. In addition to Harwood, IHG’s SVP and managing director, luxury and lifestyle, it included Carolina Bernal, senior director at JLL; David Duncan, president and CEO, First Hospitality; Miranda Mancuso, head of development, Standard International; and Jan Hazelton, vice president of development at Kerzner International.
While each company plays different roles in property acquisition, development, investment and management continuum, the common thread running through the 45-minute session was that what started as a single category is now two with new subcategories rapidly budding and growing.
“We have to keep up with the times and with needs of the consumers,” Harwood affirmed. “The modern luxury lifestyle traveler is looking for something new, special, and something that they can talk about with their friends.”
She explained every property under IGH umbrella with her six brands, whether purchased and refurbished or built around a specific location, was designed in a way driven by location and what would draw a given traveler to it.
“It’s a particularly a bespoke approach across our brands...everything from Hotel Indigo and its ‘neighborhood’ approach all the way to Six Senses which is all about sustainability in the country. (Staff and management at each brand) targets and looks after each one of those individual guests and their appropriate needs.”
“The luxury and lifestyle sectors are really evolving and they have been on a continuous trajectory over the last number of years,” said Hazelton, who concentrates on hotel investment, development, and “seeking one-of-a-kind opportunities” for Kerzner brands One&Only, Atlantis, SIRO and Rare Finds. After projects go into development, she explained there was a responsibility ensuring each new luxury hotel or resort has a captivating storytelling element that speaks to distinctive market dynamics, location, and design. While the wellness and longevity trends are front and center, there’s added incentive to keep those ideas consistently relevant.
“While current trend is about well-being and longevity, wellness is now a way of life,” Hazelton said, highlighting Kerzner’s and other companies’ expansion into the entry-level luxury lifestyle sector as well as high-end vacation rentals and ultra-luxury property.
“We believe it’s the new normal, not just for our guests, but also for all of (Kerzner’s) brands. Some challenges (include) securing great locations because the industry is growing and everybody in this room is probably looking for and trying to secure a site. One of the things that we’re proud of is unlocking new destinations. Rather than being part of a trend, we feel that we can set trends. We're continuing to find ways to have our consumer embrace the product through experience instead of just through the walls of the property.”
Bernal, who concentrates on national investment sales and strategic initiatives, explained how COVID-19 and the post-pandemic years brought about a shift that drove up demand for luxury, ultra luxury, and certain lifestyle-driven hotels and resorts above and beyond the general public’s desire to travel once it became safe once again. She detailed that rates for rooms and suites increased by 20 percent year over year, which was initially unexpected.
Furthermore, she added these rates are not likely to go back down. While price increases are moderating in 2025, the fact is that high net-worth consumers will pay whatever it costs to get the experiences and the high level of service they expect from the exclusive brands and boutique properties they love.
The topic of buying an existing property versus building from the ground up was also in play, and Duncan, whose firm First Hospitality focuses on third-party management and investment, said the many possible avenues of growth a property owner or investor could take regarding a new build or a renovation depends on the location and attributes appealing to the consumer. Decisions should also be contingent on if an independent hotel or a branded property will appeal to consumers heading to a certain market.
“We look at real estate as a very local undertaking, and the Hutton Hotel in Nashville is a good example,” he said. “It has been an independent hotel for quite some time. We're sort of reinventing it with a fair amount of capital expenditure. Inbound travel to Nashville is quite high, and we judge the view on its brand in that particular location relative to the trade-offs on residual variation and the type of its potential customers. But in other locations, we would say a property does need a brand. For us, it is an interesting puzzle. What is the hotel brand flexibility for that location? What are the brand offerings in terms of customers, percentage of travelers from the brand family, and so on.”
Through a legal lens, Mancuso encourages prospective investors and owners to examine what they hope to achieve with a property and who the most strategic partnerships would be, whether it’s a brand, artist, celebrity, or restaurant operator to earn cache among the targeted customers. She points to the Standard brand as a successful example of a pioneering lifestyle property that has gone the distance and stayed relevant.
“We’ve been doing this for 25 years, and (the industry) is going to continue to grow,” said Mancuso. “The Standard properties did things out of the box 20 years ago, and we’re continuing to see growth. I think it is going to continue. We’ve had tremendous success with some of the (hospitality brands) we worked with over the years and brought new things to new places in the process.”
Across all categories and genres, the panelists assured attendees that there is tremendous opportunity as at all price points because the consumer is aspirational regardless of age, budget and interests, and the most successful brands speak to that.