Best of Both Worlds: The Rise of Soft Brands in Hospitality

Couple enjoying a meal at a boutique hotel while on vacation
Culture

Best of Both Worlds: The Rise of Soft Brands in Hospitality

July 16, 2019

The world has gotten smaller. Today’s traveller, once tied to the emotional comfort and perceived safety of international hotel chains, has begun to seek immersive cultural, entertainment, and dining experiences while on the road. For an ever-increasing segment of frequent travellers, this thirst for unique and life-enriching travel moments has led them away from the bigger hotel chains and towards more singular, one-of-a-kind experiences. For many, this translates into a preference for boutique and soft branded hotels. 

Hottest Segment in Hospitality

Catering to travelers’ preferences, boutique hotels offer personalized and localized experiences. Without the burden of the design style or programming of a major brand, these hotels are able to build authentic touchpoints and take advantage of local talent and sourcing — leveraging design inspiration from local culture, serving food from local providers, or hiring local artists for unique and bespoke artwork. And the demand in this segment is growing — boutique and soft branded hotels represent the fastest growing segment in the hospitality industry. For the past five years, boutique hotel development has grown 7% annually (compared to a 1.8% annual growth rate for the hospitality industry as a whole) and room revenues for boutique hotels increased at 5% year over year in 2017.

Soft Brands Adding to Growth

Fueling growth in this segment is the rise of the soft brand. A ‘soft branded’ hotel is a fully-realized, independent, and completely unique hotel product that leverages the distribution systems and infrastructure of the larger hospitality brands. By plugging into the reservation systems of these global powerhouse companies, these small independent hotels get an enormous amount of visibility within their market — driving rate, occupancy, and market share. The majority of large hospitality companies have a collection of soft brands including Marriott’s Autograph Collection, Hilton’s Tapestry Collection, and Hyatt’s Unbound Collection, and are seeing major returns. Soft-brand collections have increased in supply at a compound annual average of 3.4% year over year since 2012, while demand has increased 4.4% year over year. 

With Great Freedom Comes Great Responsibility

Creating a successful boutique hotel requires an immense range of creative operational experience as well as design expertise and coordination. From market research and food and beverage programs to interior design and brand vision, boutique hotels require a slew of services to create a one-of-a-kind hotel that prospers in the industry. Streetsense’s new boutique hospitality division offers boutique and soft brand hotel developers the expertise, vision, and know-how to deliver a truly unique hospitality experience from the ground up.

 

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By Jay Coldren, Managing Director, Eat + Drink