The globalization of hotel chains has several pluses, such as the standardization of services and the development of reservation systems. However, the unification of standards and designs adds convenience but reduces originality. As a result, designer boutique hotels are becoming popular around the world with people seeking to avoid the predictability of chains. However, these “uncommon hotels for uncommon people” have yet to take hold in Moscow.

Boutique Hotels in Russia

In Russia, the boutique hotel format is just beginning to gather momentum. In Moscow, there is only one hotel that positions itself as boutique – the Golden Apple, located at the Dmitrovka metro. Likewise, in Sochi, the 40room “Rodina” hotel was recently built, which experts are also inclined to label as a boutique hotel. In the opinion of Mikhail Getsa, vice president for strategic development at the company Blackwood, several existing hotels in St. Petersburg can also be considered boutique, including the Golden Garden (part of the chain Boutique Hotels & Resorts International, with 24 suites – note of CRE) and Alexander House.

At the current moment, several boutique hotels in St. Petersburg have been announced, though these projects are at varying stages of realization. The hotel chain Azimut Hotel Group, for one, has announced plans to develop boutique hotel projects. According to Sergey Lysenkov, general director of Azimut Hotel Group, the details of the projects in St. Petersburg have not yet been determined. However, what is known is that a boutique hotel will be built in the Istrinsky neighborhood in the Moscow oblast on a plot of 100 hectares owned by the company. The construction of the complex, which will include two villas, is scheduled to be completed between 2009 and 2010.”

A lucrative financial strategy?

Boutique hotels are often positioned as alternatives to traditional chain hotels. “A boutique hotel is a specialized product, difficult to identify as some definite type of hotel,” reckons Marina Usenko, senior vice president at Jones Lang LaSalle Hotels. “People who stay in such hotels subconsciously expect something out of the ordinary. Boutique hotels ought to surprise.”

Experts note that boutique hotels each have their own particular features, the foremost of which is a unique design. “A hotel ought to have a striking design style that unifies all parts of the building,” argues Maxim Golovach, general manager of the Golden Apple boutique hotel. “Naturally, the style of the Golden Apple hotel was built around the ‘apple theme,’ starting with the bench in the shape of a golden apple, located in the hotel’s central hall. Since the walls of the hall are transparent, the ‘golden apple’ serves as the center of gravity of the building. The apple motif is further developed in the hotel’s suites.”

Another characteristic of boutique hotels is the intimate atmosphere. “The term ‘boutique’ is applied to small hotels, which usually have up to 50 rooms, with a 100150 room maximum. As such, by virtue of its size, the boutique hotel is exclusive,” considers Marina Smirnova, executive director of the valuations and consulting department at Colliers International. Likewise, Damir Kaftaranov states, “One of the main requirements for boutiquehotels is intimacy. Spacious conference halls, appropriate in fivestar hotels, do not figure into the concept of boutique hotels, where it is more sensible to create rooms for discussions and a small business center with office equipment. Moreover, exclusive amenities, such as cigar lounges or game rooms, are welcomed in boutique hotels.”

The third element of boutique hotels is the special attention that is given to each guest. “We know all our regular clients by name,” says Maxim Golovach. “We can personally welcome them when they register and we know their tastes and culinary preferences. Every guest in our boutique hotel receives personal attention, which is not possible at a big hotel.”

At the same time, it is nave to believe that boutique hotels are exclusively cultural phenomena, as they are also lucrative business ventures, with high possible profits, especially when there is a deficit of hotel space. In is not a secret that a significant share of the profits of large hotels is generated by the business zones, such as conference halls. In smallsized hotels, however, all the weight of the investment return is shifted to profits generated from rooms. “Boutique hotels are the hospitality market’s solution to the growth in the price of land and real estate that is suitable for hotel projects,” asserts Marina Smirnova. “If the area of the hotel is small, then the sole way to make a return on investment in an acceptable time period is to increase the price of a room. To do this, you must have a good reason. An exclusive design and highquality room decorations can serve as this ‘justification.’ As such, boutique hotels are positioned in the topprice segment, but differ from traditional deluxe hotels by the small number of rooms and the limited set of additional services.”

A special place

The particular atmosphere of a boutique hotel is also largely connected to its location. Boutique hotels are usually located in the historical or quiet corners of cities, optimally in buildings of architectural value. “Since boutique hotels optimize their profit by raising the price of rooms, they ought to be located in areas where there will be a demand for expensive rooms. In cities, this would usually be the historical center, while in resorts, it would be beachfront property,” states Marina Smirnova.

It follows to note that in European countries, there is no lack of small historical buildings suitable to accommodate boutique hotels. “In many developed European countries, such as France, Germany and Spain, there are a great number of enterprises that generate income by possessing small historical buildings,” notes Alexander Zakharov, general director of HotelTechnology. “Following proper market research, such real estate may be used as boutique hotels.”

On the other hand, practice shows that in certain cases, the originality of the product may be as an integral part of its appeal as is an advantageous location. Mr. Zakharov brings to attention one instance in Hamburg, where there are several popular historical hotels located in the very center of the city. But, at the same time, there is the Louis Jacobs, located away from the center but still considered to be a fivestar boutique hotel. Due to its quality of services, its high price of room and image on the market, the Louis Jacobs is among the best hotels of the city, regardless of location.

The special attraction of a hotel may also be its restaurant: if you come to an unfamiliar country and want to taste its national dishes, then a restaurant at a boutique hotel can satisfy your culinary hunger. “At the Morgans Hotel Group, for example, special attention is given to the restaurant, which provides a significant part of its profit, as people stay there on account of the food,” says Marina Usenko.

The location of the hotel can also determine its organization and design. “In St. Petersburg, for example, work has begun on a boutique hotel along the Nevsky, near the Hermitage. The hotel’s proximity to the museum gave it its central design idea – fine arts. As far as I know, the organizers plan to include an art gallery in the hotel, and the hotel rooms will be outfitted by famous designers and artists,” states the general director of the company CityHotel, Damir Kaftaranov.

Not a hotel for all

Due to its nonstandard product, qualifications, accepted on the hospitality market, “do not work” with boutique hotels. Thus, it is incorrect to believe that any small hotel located in the center of the city can be called a boutique hotel. “It is necessary to uphold three main criteria – a unique design, impeccable quality of service and an intimate atmosphere. Only then can a hotel be considered as boutique,” states Maxim Golovach.

As to be expected, such hotels are usually targeted a very select and demanding audience. “Boutique hotels are very luxurious, but still offer a certain format of accommodation and guest services that maintains the requisite intimate atmosphere. This usually entails minimal public spaces, rooms of the highest quality, exclusive dcor, a small elite restaurant and personal services,” states Mikhail Gets.

Boutique hotels are in all the major cities in the world, including London, Paris, New York, Madrid, etc., proving that there is steadfast interest in this format. Who then are the potential clients? “The core clients of boutique hotels are welloff and often public figures who are attracted to the secluded atmosphere of the hotel, the small elite restaurants and personal services,” states Damir Kaftaranov. “Many of our clients are creative people, such as businessmen, musicians, writers, designers and architecture,” adds Maxim Golovach.

“Also among the clients of the hotel are people for whom the image factor is very important and who don’t want to be like ‘everyone else,’” notes Marina Smirnova. “This can include public figures who want to advertise themselves by showing off their lavish lifestyle. This type usually heads to most exclusive boutique hotels that are run by famous owners. The ‘everyday’ business visitors are usually found at the more ‘common’ hotels.”

Room 402

The interior design theme of boutique hotels varies: one hotel may be decorated according to a historical period with antique furniture, while another may have an ultramodern design.

The architect for the Golden Apple project was Rafael Shafir. The interior abounds in glass and mirrors, which help to visually expand the small areas, while a system of nonstandard partitions divide the building into zones to make the space more functional. The interior of the lobby is quite simple and discreet. The singular bright color spot is a large golden apple that serves both as an advertisement for the hotel’s motif and a couch. Furthermore, every guest floor of the hotel has its own color: red, orange, yellow, green, dark blue and violet. When you go up to the second level, for example, you are on the yellow floor, complete with yellow upholstered furniture, lamp shades, carpets and other interior objects.

The Golden Apple hotel has 92 rooms, one of which is particularly special. “The building of the Golden Apple hotel was earlier a boarding house, and between 1899 and 1990, an apartment in the house was rented by Anton Chekhov,” recounts Maxim Golovach. “As a tribute to the great playwright, we decided to decorate one of the hotel rooms – number 402 – in honor of him. In the guest area of the room, for example, is perched a small metal sculpture of a seagull, symbolizing Chekhov’s theatrical legacy.”

A boutique country

In the opinion of experts, a hotel format that is “not for everyone” has good prospects in Russia. “In Russia, like in other countries, all formats, from budget to de luxe, can be potential prosperous. We are following the same path that many other countries have already followed, only we are doing it faster. Everything depends on how wellconceived the concept is and the choice of location. If you build a boutique hotel in Cherepovtsa, it is doubtful that it will be in demand,” argues Sergey Lysenkov.

Experts predict that the presence of a large number of boutique hotels will occur after the demand for traditional hotels is satiated. The company CityHotel estimates that current major projects for luxury hotels will be realized by 20082009, including the already built and working Ritz Carlton, hotels for Hilton, the Four Seasons and two projects for InterContinental Moscow. The total numbers of rooms in these hotels exceeds 1,600. Moreover, by 2011, a fivestar hotel is scheduled to open in the place of the Central Hotel (with over 500 rooms). “The launch of these hotels and other projects will certainly create competition, which is still absent in the highend segment. As a result, hotel operators will have to actively compete to offer exclusive services and create unique offers,” states Damir Kaftaranov. “I think that at the moment, the number of boutique and apartment hotel projects will sharply increase. A similar trend will occur in the rapidly prospering Russian regions. The saturation of the luxury segment will spur the presence of more unique offers on the market, such as designer boutiquehotels. This will occur first in the popular tourist destination, such as St. Petersburg and the Krasnodarsk region. Later on, it is possible that boutique hotels will appear in the major industrial cities, such as Novosibirsk and Yekaterinburg. However, the creation of a boutique hotel can be a laborintensive and complicated process, especially when it comes to getting permits. Many building located in the center of the city are architectural monuments, and in Moscow, for example, obtaining approval for a reconstruction projects can take several years.”

Moscow, St. Petersburg and Sochi are the three cities that experts consider the most suitable for the construction of boutique hotels. “For hotels of this level, it is necessary to determine the type of clientele; such hotels are usually oriented towards a trendy audience from the major cities. I would be surprised if such hotels began to open outside of Moscow and St. Petersburg,” considers Marina Usenko.

One more factor to take into account when discussing the development of the hospitality industry in general and boutique hotels in particular is the infrastructure of Russian cities, which at the current time leaves much to be desired. “I don’t see a good argument for building a large number of boutique hotels in the northern capital,” argues Sergey Lysenkov. “Although it would not be difficult to build another 100 hotels of different formats along the banks of the Neva, the infrastructure of the city, including airports, trains and roads, which always have traffic jams, is not ready to handle such a number of visitors. The solution to the situation will require teamwork between investors and city authorities. This is not only so in St. Petersburg, but in all cities of Russia.”