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Luxury Hotels March 2013

Boutique hotels

In the November 2012 report, we provided an overview of the luxury hotel sector in China that discussed the huge growth and importantly that luxury hotels are a place to entertain and relax, as much as to stay. F&B represents approximately half of the revenues of the sector. What is also important to note is that Chinese luxury consumers have over the past five to ten years expected hotels to be new, city centre, marble clad palaces and not older buildings with history and character that of course affected their choices when staying overseas.

Over the last few years however, we have seen a growth in the development and popularity of boutique hotels that we expect to expand significantly over the coming years. This increase is driven by a rapidly changing consumer attitude and expectation, and as importantly to a need to escape from the pressures of business, and a need to relax.

The definition of a boutique hotel in China

Boutique hotels in China are regarded as those with strong local cultural characteristics that provide a unique historic connection. The concept originated in 1970s Europe was introduced into China in the 21st Century. Compared to chain star graded hotels in China, a boutique hotel is full of personality, small in size and beautiful in appearance, many of which have been rebuilt on the basis of their historic architecture. In terms of service, most of boutique hotels in China deliver butler service, and the ratio of guest rooms to service staff is 3:1 or 4:1, whereas a normal star graded hotel will be 1:1 or 2:1.

Chinese guests in a boutique hotel are a specific group of customers with high incomes and individual taste, who prove to be very loyal and are originally attracted through word of mouth rather than mass marketing. These hotels are often operated by individual organisations rather than large hotel management groups, however, the latter have recently started to develop their own boutique hotels brands here, changing the previous operational model. According to the sales director of The Shanghai Langham Yangtze Boutique Hotel, Fan Mengfei, ‘it is very important for a boutique hotel to have its own characteristics and personality, rather than just being small scale’.

Development of the boutique hotel in China

According to the Boutique Hotel Union of China, there are over 200 hotels across the country within this category, and in the past three years, the number of boutique hotels in China has increased by 200%. As a result of this new category of hotel, and in recognition of the growing importance of boutique hotels within the sector, the latest Chinese standard of “Classification of Star Hotels” issued by the State Tourism Bureau enables a luxury boutique hotel to apply for 5 star grading immediately, rather than work its way through the grading levels before attaining this important status.

Currently in the Chinese hotel market, there are three recognised operational models applicable to the boutique hotel. First is the individual boutique hotel, operated by an individual organisation whose principle business may not be hotels or hotel management. The second is a hotel group that specialises in boutique hotel development and management, such as the Banyan Tree, and AMAN groups. The third is an international chain hotel group that has a specific boutique hotel division; This latter group would include Starwood, Accor and Marriott.

The pattern of market growth

In the early stages of boutique hotel development in China, understandably hotels were concentrated in city centres, but in the last few years, they have developed different forms. Currently, boutique hotels in China can be classified into three different categories, historical and cultural, resort, and city hotels. Other than those developed by international hotel groups, most of the boutique hotels in China are individually owned and managed, and as a generalisation, the boutique hotel in China is still very much in its infancy. Having made this point, the developments within the sector are moving very fast, and by way of example, the following are hotels within the three categories.

The historical and cultural boutique hotel

Anman at Summer Palace Beijing

Close to the East Gate of the Summer Palace grounds lies the Aman at the Summer Palace.It is housed in a series of pavilions designed like those of a period that date back over a century and would originally have been used by guests of the Palace awaiting for an audience with the Empress Dowager Cixi. A city retreat, with peaceful internal courtyards featuring traditional Chinese architecture, there is a library and cinema and the hotel provides easy access to cultural landmarks such as the Great Wall, The Temple of Heaven and the hutongs, as well as Beijing’s restaurants, art galleries and other city features.

The resort boutique hotel

Amanfayun, Hangzhou

Set in a traditional Chinese village, Amanfayun is made up of stone pathways, shaded courtyards, and quaint restaurants. Situated on the west of the West Lake, it is a UNESCO World Heritage Site on the outskirts of Hangzhou, and consists of 47 buildings surrounded by tea fields, natural forest and bamboo groves. Guests can explore the region’s ancient Buddhist temples, botanical gardens, vast wetland areas, pagodas and Hangzhou’s famous silk and shopping streets. The hotel resort features the original village layout, with a 600-metre main thoroughfare, the Fayun Pathway.

City boutique hotel

The Puli Hotel

The Puli Hotel and Spa is the first luxury hotel of its kind in China that blends the immediacy and convenience of being at the heart of Shanghai with the peace and quiet that is found in the hotel. There is a library and SPA, 209 rooms and 20 suites.

Chinese boutique hotel guests

A 2012 survey of boutique hotel guests indicated that 40% of guests, and even 60% in some hotels are currently from overseas. Although the volume of domestic guests is not high and mainly made up of wealthy Chinese consumers, boutique hotels have expanded their reach into the middle class sector in coming years. The Sales Director of the hotel department from the Chinese travel company Citrip indicated that, ‘with more and more experience and knowledge of international business and lifestyle amongst the middle class, they are now looking for a more personalised stay experience beyond that offered in standardised chain hotels.’ Hence, the boutique hotel as an exclusive, unique and modern place of relaxation and has become a crucial leisure and tourism lifestyle choice for them in the coming years.

According to the head of China Tourism Academy Dai Bin ‘not only are the customers now selecting this style of hotel, but they are also looking to stay where others with a similar social status, belief and common interest will be.’ Therefore, marketing to the same consumer demographic helps boutique hotels build a strong sense of belonging amongst their customers, for whom the hotel is not just a place for accommodation and dining, but a destination to deliver a personalised lifestyle and contact with those of similar mindset and background, and important factor in Chinese culture that cannot be ignored.


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