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This paper is a research on the factors that have influenced growth in the boutique hotel sector, demonstrating that boutique hotels have become a popular alternative to five star properties. The study methods included a review of the literature and surveys of boutique hotel guests.
Location, high quality, uniqueness, services provided and the personalized levels of service offered the top five attributes attracting guests to these hotels. The growth of the boutique hotel sector may be because of hotel clients looking for alternatives to standard and more traditional accommodation. This paper will investigate the growth of the boutique hotel sector and the factors that influence the consumers’ decision to purchase this type of accommodation.

Introduction. Origin of boutique hotels.

1980’s were the time of the construction boom in the hotel business. Thus, only during 1980-87, the number of hotel rooms in the USA increased by 40%. Economic globalization has not bypassed the hotel industry: nowadays, mergers and acquisitions no longer involve just individual hotels, but the entire hotel chains. Huge international hotel groups are created, such as “Bass Hotels & Resorts”, “Starwood Hotels & Resorts”, and “Carlson Hospitality Worldwide” (Keeps 2006).
At the same time, hotels are becoming more and more comfortable, offering guests new services that previously simply did not exist or were accessible only to guests of 5-star hotels – spacious apartments, cable TV, high speed internet access, recreation complexes, and guaranteed security. But it turns out that the modern consumer is not enough satisfied with what traditional hotel give him; he needs now more than reliability and the program of “earning points” (Bender, 2009).
While the giants of the hospitality industry excelled themselves in the struggle for the customer, constructing mega-hotels – the most spacious, highest, most expensive, with a set of all conceivable service, they have lost the most perspective clientele: relatively young business travelers aged 25-45, rich and tending to everything unusual. Hotel giants are now challenged by small privately-owned hotels, each of which has its own unique style. By analogy with small shops, selling things from well-known designers, these hotels received the name of “boutique hotels” (Bender, 2009).
The first hotel of this format appeared only in the early 80-ies of the 20th century. It is believed that the first boutique hotels – sometimes referred to as design hotels (design hotels or lifestyle hotels) – opened their doors in 1981 on two continents simultaneously: “The Blakes Hotel” was opened in London, South Kensington, sponsored by a former actress, now a famous designer and hoteliers Anouska Hempel, and “Bedford” in San Francisco, located on Union Square. Subsequently, this hotel has become a part of a network of boutique-style hotels exclusively under the administration of one of the most famous players in the market – Kimpton Hotels & Restaurants (Boutique Hotels On The Rise).
In 1984, three years later, the first object named “Morgans” which officially gained the status of a boutique hotel was opened in New York by the famous hotelier, developer and designer Ian Schrager, who is now considered a trendsetter on the market of boutique hotels (Bell 2008).

Definition and Features of a Boutique Hotel

A boutique hotel is a type of accommodation which can be called the embodiment of a design idea of modernity. Taste, luxury and exclusivity are the basic ingredients for the success of a boutique hotel. Further, the paper covers the main components, making up the notion of a boutique hotel (Boutique Hotels Defined).
First of all, a boutique hotel is usually a small hotel, the number of rooms in which rarely exceeds one hundred. The average number of rooms usually reaches 20-30 apartments. According to some experts, the maximum number of rooms in a boutique hotel should not exceed 150, because only in this case, the service may be personalized. They believe that the main feature of a boutique hotel is its chamber character and some mental connection between the clients of the hotel and its staff (for example, in some hotels the staff should know all the guests staying at the hotel by name). Others, including the founder and CEO of “Ian Schrager Hotels” Ian Schrager, believe that the key to the boutique hotel is not a small number of rooms and personified service, but the opportunity to involve the guests into a special atmosphere, influencing all their senses through architecture, design, colors, light and music. For example, these are the main peculiarities of Schrager’s boutique hotels “Paramount Hotel” (597 rooms) and “Hudson Hotel” (1000 rooms) (Bell 2008).
The word “boutique” also determines the degree of comfort and uniqueness of the hotel service. A boutique hotel is primarily a unique interior design. A boutique hotel is not necessarily trendy, but is always stylish. The design of a boutique hotel is often strictly kept within one theme: English aristocratic gloss of the late 19th century or ultra-minimalism, for instance. Nowadays, certain interiors for boutique hotels are developed by the leading representatives of the world’s design art, from Philippe Starck to Christian Lacroix (Craig, 2010).
Special services offered today by boutique hotels form another quality that makes them special. Services provided by various boutique hotels are typically exclusive. For example, the boutique hotel “Benjamin” in New York takes care of guests’ domestic animals; “Manor at Ngorongoro” at the foot of the volcano Ngorongoro in Tanzania offers an exciting excursion to Maasai tribe’s encampment. Classic services of VIP-tourism and boutique hotels also include helicopter transfer or jacuzzi with champagne. The main task of a boutique hotel lies in bringing individuality, sometimes at the maximum level. The style, intimacy familiar to the guests, and palpable contrast to other hotels – these are the characteristic features of a boutique hotel, which is an ideal place for customers looking for a hotel where they can relax and all their wishes will be fulfilled quickly and accurately (Craig 2010).
That is why sometimes boutique hotels are based on old castles or old hotels, i.e. places which have their own history and heritage, providing special individuality of boutique hotels. For the same reason, boutique hotels can often be located in places not originally intended for tourists. Today, they are opened on the territory of former factories, abandoned farmsteads and even aircraft hangars. At the same time, while creating a hotel, designers often try to preserve the atmosphere of the previous premises in order to make the guest feel special. Thus, the customer of a boutique hotel can feel like a character of a fairy-tail, adventure novels, detective or love story (McIntosh & Siggs, 2005).
All the boutique hotels in the world can be divided into 2 groups: urban and resort hotels. Having much in common, these groups still have significant differences. For example, in urban boutique hotels, one of the key factors for success is the location. The hotel must be located in a “landmark” city and preferably in the most popular part of it. The location is determined not only by the concept of convenience, but also by the presence of stylish and trendy neighbors. That is why lots of boutique hotels are located in cities like New York, Miami, London, Paris, and Los Angeles, although recently there emerges a trend of opening boutique hotels in smaller cities with the great potential for future development (Hachisu 2008).
Another situation concerns resort boutique hotels. The hotel’s location is also important here, but fashion placements are often hidden from prying eyes and seek to create a chic and exceptional comfort far away from the civilization, e.g. on remote islands or in wild jungle. Moreover, the more difficult is the road to the hotel, the more stylish and fashionable it is considered. While urban boutique hotels are often full of technical gadgets, from banal DVD-players to exotic electronically controlled beds, resort boutique hotels tend to provide recreation in isolation from technologies; and the lack of phones or TV-sets in the room is not some sad omission, but the deliberate technical asceticism. And this is not a complete list of differences (Lim & Endean 2009).
Another feature of a boutique hotel is that its main target audience is represented by people aged 20-50 with average or high income. The cost of living in a boutique hotel due to its uniqueness is often really quite high. Typically, each room of a boutique hotel is unique and each one has its own price. Today the lowest level of prices per room in a boutique hotel is about 200 Euros per day. This price level is valid for the boutique hotels of Europe, particularly Paris, Barcelona, Florence, Moscow, Istanbul or Rome, as well as for hotels in New York, Mexico City and Buenos Aires (Aiemens 2008).
Thus, by analogy with the trading format, a boutique hotel should be small, should offer high quality services, and provide individual service. Therefore, it should be classified as a five-star or luxury hotel. In addition, such hotels, obviously, should be unique and have impressive interiors. At the same time, there are no single international standards managing the procedure of designation of an object to the class of boutique hotels, so each operator interprets the word in its own way. Today, one can find five-star (ecological “Vida Sol e Mar” in Brazil) and three-star (“Rockhouse” villas in Jamaica) hotels, as well as hostels (“Rooms Deluxe” in Valencia, Spain) among the “boutique” hotels (Parker, 2006).
However, there still exist some characteristics allowing hotel owners to refer to the status of “designer” or “boutique” hotel. For example, when selecting objects for the “Mgallery” network, the hotel chain “Accor” outlines the following conditions: 1) the building and (or) the hotel should have its own history, 2) it should have an outstanding location, known for its unique concept, 3) it should be exclusive in its interior design and (or) the exterior (architecture), 4) it should prove personalized services (The Complete Guide To: European boutique hotel).
It seems that the absence of strict standards, allowing the inclusion of an object to the “boutique” format, opens up great opportunities for operators. Each hotel with small number rooms and apartments should strive to become a boutique hotel, which would sound nice and expensive. In addition, the “individuality”, which is perhaps the only more or less general criterion for this format, can hide the mismatch with the classical standards of hotels in relation to the amount of apartments and range of services (The Complete Guide To: European boutique hotel).
But for some reasons, the hoteliers do not hurry to declare their objects as “designer” or “boutique” hotels. In fact, the status of a boutique produces too many obligations, and it is sometimes easier to position the hotel as a mini-hotel and get free of special obligations to guests. In general, it is rather expensive to build a boutique hotel and it is rather difficult to create a special atmosphere. Thus, boutique is a complex of feelings the hotel wants to give to its guest. The service and staff form the desire to always return to this hotel. At the same time, every privilege entails responsibility (Parker 2006).