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Newport council examines hotel for City Hall site

“The numbers for [hotel bed tax] and sales tax are eye-popping,” said Councilman Steve Rosansky.

An apartment is still under consideration, however, and the council now appeared to be open to both ideas.

For either type of development, the city would essentially act as a landlord to the developer, who would sign a long-term ground lease.

While the city still plans to conduct a fiscal impact analysis, the initial study estimates that a 120-room hotel would generate $29.4 million per year in spending on shopping, lodging, dining and other visitor services. A 99-unit apartment development, by contrast, would generate about $2.9 million in retail spending.

The best type of hotel would be a 120-room boutique hotel, said the city’s hotel consultant, Bruce Baltin of PKF Consulting. He gave the examples of Shutters on the Beach hotel in Santa Monica or the Canary Hotel Santa Barbara, calling the concept for Newport “a four-star equivalent hotel.”

The study estimated that the city could receive between $476,000 and $680,000 annually in hotel bed tax.

While the sales and hotel bed tax figures are potentially much greater with a hotel, the apartments could generate a higher land value, which could mean more annual rent for the city’s ground lease.

“It would provide us the highest direct revenue,” Councilman Ed Selich said of an apartment development.

The economic analysis pegged the hotel land value at up to $5.5 million, including public improvements, while the apartments there would make worth it up to $13.6 million. The city plans to build a public plaza and a promenade that would extend to the surrounding streets.

“Money is not everything,” said resident Lori Morris. She said the hotel would “bring people to Newport Beach and really revitalize West Newport.”

Almost all of the residents who spoke at the meeting said that they wanted a hotel instead of apartments.

There’s a void in the city’s hotel market for upscale properties within walking distance to the beach, said Gary Sherwin, president of Visit Newport Beach, the city’s destination marketing organization.

The PKF study said a hotel would average about 76% annual occupancy, and that there is enough demand to support two hotels in Lido Village.

But Councilman Rush Hill said that the city needs “reliable, predictable funds,” and higher rent from an apartment project could support the development of a new West Newport community center. The city has tentative plans for a center near Superior Avenue and Industrial Way.

The council will review final economic studies at the next City Council meeting on Sept. 25, and in the meantime, city administrators are preparing to request qualifications from developers of hotels and apartments.

Twitter: @mreicher

Port Fairy riverside boutique hotel on market

LOCATED in the heart of south-west Victoria’s most popular tourist destination, the Oscars Waterfront Boutique Hotel in Port Fairy is on the market. The property was occupied as a private home before being converted into a boutique hotel for the past 12 years by present owners Richard and Sally Douglas. Oscars is on the edge of the picturesque Moyne River, overlooking the Port Fairy marina, according to Will Walton, Hocking Stuart director in South Yarra. The property has seven king-size bedrooms and en suites, a large drawing room and separate dining room to seat 20, both with gas log fires, and a 1400-bottle wine cellar.

Ten properties will be up for grabs on Wednesday when Burgess Rawson holds its 68th auction. It will start at 11am in the River Room of Crown Casino on Southbank. The properties include a Westpac bank in Drouin, a Target store in Myrtleford, a corner development site in Wonthaggi, a childcare centre in Sydenham, a two-level retail shop in Albury, a Foodworks in Travancore (Ascot Vale), an industrial site in Benalla, a Red Rooster building in Traralgon, and two properties in Tasmania and one in Queensland.

Knight Frank, under instructions from receivers and managers Taylor Woodings, will auction Shop 1, 77 Swanston Street in Melbourne’s CBD on June 7 at 1pm on site. It’s tipped to fetch more than $4.5 million. The property is located between Collins Street and Flinders Lane. The total size of the tenancy is 52.5 square metres and the property features a large double shopfront that provides tenancy exposure. The property is vacant.

A major homemaker centre in the prominent bulky goods precinct known as the ”golden mile” in Melbourne’s Nunawading is being marketed for sale by Jones Lang LaSalle. Simon Rooney is selling the asset through an expressions of interest campaign closing on June 14. The centre, near Springvale Road, is 100 per cent leased and securely anchored on long-term leases by an array of electrical and homemaker retailers, including the Good Guys, Nick Scali Furniture, JB Hi-Fi, the Sony Centre, Dick Smith and Lincraft, with Harvey Norman adjacent. The fully leased net income is estimated at $5.5 million a year.

TeskaCarson is marketing a commercial building at 207 Blackburn Road, Mount Waverley, via an expressions-of-interest campaign closing on June 14 at 3pm. Leased as three tenancies including one to the Commonwealth government, the property returns a combined net annual rental of $140,000 with the tenants paying the outgoings and GST. The estimated selling price range is $1.95 million to $2.15 million. The modern building offers a total floor area of 400 square metres.

Nearby in Carnegie, TeskaCarson’s George Takis is also selling 217-221 Koornang Road. The property, with a 15-metre frontage to Koornang Road and prized rear access, is suitable for a range of uses including commercial and residential or a combination of both. The property is for sale via an expressions-of-interest campaign closing on June 20 at 3pm. It is expected to fetch $1.6 million to $1.75 million.

In Toorak, at 475 Toorak Road, six shops on one title in the heart of Toorak Village are being sold. They will be auctioned on June 7 at 1pm on site. Tenancy details include a deli fronting Toorak Road and walkway tenancies such as the Gourmet Roast Carvery at the rear. Total estimated net income is $184,200. The price range is $3.7 million to $4 million.

Luxury Boutique Hotels In China Seize Opportunity, Encounter Growing Pains

Boutique Hoteliers Look To Buck Trend Of Chronic Low Occupancy

Amanfayun resort in Hangzhou (Image: Amanresorts)

Since China’s luxury hotel boom of 2008-2010, which saw the number of five-star hotels balloon in preparation for major events like the Beijing Olympics and Shanghai World Expo, hotel expansion in China has shown no sign of stopping. As of last year, China had approximately 2 million hotels in total — a number expected to leap to 5 million by 2016 — and at the beginning of 2012, the number of five-star hotels in the country stood at 651, with an additional 500 scheduled to open in coming years. Despite a fast-growing domestic tourism and business travel market, this rapid expansion by both Chinese and international hoteliers has, since the closing of Shanghai’s World Expo in 2010, led to chronic oversupply and low occupancy rates.

According to the Shenzhen-based consulting firm Hotelsolution, the occupancy rate at China’s four- and five-star hotels sat at a little over 60 percent for the fourth quarter of 2011. As the firm pointed out, a hotel is only squeaking by if its rate falls below 60 percent. Despite challenges like these often low occupancy rates and market saturation in top-tier cities, hoteliers at the top end of the market still see huge opportunities in the Chinese market, which in inland areas and emerging economic centers like Chongqing, Chengdu and even Kunming, has ample untapped potential.

While major international and Chinese hoteliers pull out all the stops to attract more business travelers and domestic tourists, a major development in China’s hotel market has largely flown under the radar: the growth of luxury boutique hotels. Often located outside of major cities like Shanghai or Beijing, and increasingly in areas of natural beauty like Yunnan province, China’s small, home-grown boutique eco-lodges and spa-focused getaways have, in recent years, been joined by the likes of Amanresorts and Swire’s Opposite House, much larger international brands focused on China’s wealthy lifestyle-focused traveler.

In addition to their niche status, which sees travelers come to them rather than the other way around, opening a boutique hotel in China brings with it some innate benefits, among them not having to pay franchise fees to large hotel chains, not having to build lavish restaurants, ballrooms or meeting rooms, and overall better profit margins. However, the growth of the boutique hotel industry has been accompanied by a very specific set of challenges, including cultivating consumer demand and awareness of the industry, marketing, and a very common problem in the luxury industry in China: training and staff retention.

Jing’s Residence, in Pingyao, Shanxi Province, is a perfect example of a modern Chinese boutique luxury hotel

As He Jin of Fulinlehui Resort, near Hangzhou, told China Daily this week, boutique hotel operators like himself tend to market most heavily to guests in their early 20s to mid-50s whose incomes are at the mid- to upper-level and who own their own cars. Though He himself struggles with low occupancy rates during Hangzhou’s low season, he says he prefers to keep a low profile, choosing not to cooperate with travel agencies as he worries they’ll bring large numbers of group tourists, which could diminish hotel pricing and service standards. Lu Jiangwen, general manager of Hangzhou’s Tea Boutique Hotel, agreed that boutique resorts need to resist the market temptation to grow too quickly, as it’ll only serve to alienate their target customer segments.

Still, the focus on service that successful Chinese boutique luxury hotels have centered on has been something of a double-edged sword in some cases. As Lu told China Daily, his hotel has struggled with a high staff turnover rate, as talented staff members are regularly lured away by international five-star hotels.



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Brands don’t scare boutiques in shaky economy

REPORT FROM THE U.K.—Though the broader market still remains challenging in the United Kingdom, boutique operators in the region are not deterred by the growing presence of several branded players in their sector.

The entry of brands such as InterContinental Hotel Group’s Indigo, with its seven properties in the U.K., and Starwood Hotels Resorts Worldwide’s Aloft, with its lone hotel in London, will only raise the game of existing independents—if they compete at all, sources said.

“When the big brands enter a sector, it does generally mean that the independents have to raise their game to still compete with the big brands, and thus standards are inevitably improved or ensured to remain consistently good,” said Nina Basset, proprietor of the 11-room Hotel TerraVina in New Forest near Southampton, Hampshire.

Basset, along with the rest of the sources interviewed for this report, will discuss this among other topics during the Boutique Hotel Summit, held 21-22 May at the Altitude London.

Russell Kett, chairman of HVS’s London Office

Russell Kett, chairman of HVS’s London Office, said the brand players will not water down the existing boutique stock in the region, although they will certainly increase the competition.

“However, I think by being associated to a particular brand, they will always be sort of categorized under a chain and may not be considered as a ‘true’ boutique like an operator like Firmdale would be,” he added. “I often use the epithet ‘lifestyle’ to describe those boutique hotels, which are operated by or as part of chains such as Indigo and Aloft.”

Suzie Wotton, VP of marketing for Red Carnation Hotels, does not think such “lifestyle” brands will pose a threat at all.

“The very fact that a hotel is part of a big international brand will naturally limit the hotel’s ability to operate as a true boutique hotel,” she said. “I imagine the chain boutiques offer a refreshing alternative to their own sister brands though.”

Boutique hotel performance
Performance of boutique hotels in the U.K., as with all other segments, has struggled to gain hold in recent years.

The Hotel TerraVina opened nearly five years ago just before the recession hit and has never known a prosperous period, Basset said.

“That said, last year was our best to date—until October, and then the bookings stalled and the rates people were prepared to pay were much lower, and generally this has remained the trend since then,” she said. “January, February and March were very patchy but ended better than first predicted, but as soon as the double-dip recession was announced, the phone has stopped ringing and people’s confidence has plummeted again.”

Red Carnation Hotels, which comprises 13 luxury properties in the U.K., South Africa, Geneva and Palm Beach, Florida, is reporting more favorable results as of late, Wotton said.

“Performance has been very strong this year, especially in London and despite the significant increase in available rooms/new hotels opening in the city,” she said.

George Sell of the Boutique Hotel Summit and editor of the forthcoming Boutique Hotels website said the double-dip makes it that much more important for boutique operators to work hard to satisfy guests.

“If they pay close attention to every detail of their operations, boutique hotels can excel, offering the personal touches that really make guests feel valued,” he said.

The future is promising for the sector, Kett said.

“The outlook for boutique hotels seems to be positive,” he said. “The recent demise of Von Essen hotels (which collapsed into administration April 2011) was more due to weaknesses in their corporate financing than performance, although it is vital in this sector that physical weaknesses are not allowed to mount up. Maintenance and replacement (capital expenditures) are hugely important if a boutique hotel is to maintain or improve market share.”

Changing behavior
As the hotel and wider economic landscape has evolved, so too have guests in the boutique sector.

“There has been an increasing interest from corporate guests for boutique hotels over the past few years, and those hotels associated with the chains will benefit particularly from this corporate market,” Kett said. “In general, once guests become more familiar with a destination, they will seek out ‘non-standard’ experiences; boutique hotels typically fall into this definition.”

At Red Carnation, guests are increasingly turning to social media to maintain their relationships with the brand between stays.

“Rather than a platform to promote special offers, both Facebook and Twitter have become valuable customer service tools for our hotels, and guests enjoy keeping up to date with what’s happening in the local area, the hotel and with their favorite members of staff,” Wotton said.

Not all of the changes are good, however. The TerraVina’s Basset said guests have become increasingly price-sensitive and rely almost exclusively on third-party booking engines that drive rate decreases and promotional discounts.

Still, the boutique concept is one that is showing no signs of slowing down, as guest demand grows throughout the world, Sell said.

“There is still plenty of enthusiasm for the boutique concept, from established markets such as here in London where we have several notable new openings this year, to exciting emerging markets such as China and India,” he said. “The combination of individuality, excellent service, great design and quality food and drink that a good boutique hotel offers is attractive to guests across the world, so we think the sector will continue to grow.”

High cost of running boutique hotels

<!–enpproperty 2012-05-14 07:45:09.0Wang Zhenghua in ShanghaiHigh cost of running boutique hotelsHigh cost of running boutique hotels1161355Business2@cndy/enpproperty–>


The pathway that leads to Aman Spa, a major relaxing retreat at Amanfayun resort in Hangzhou. The concept of boutique hotels, mainly popular in the West, has now moved beyond the usual design capitals of the world and is entering new markets including the Chinese mainland. Provided to China Daily

It’s not just the attention to detail but also finding the right staff, say experts

“It is one of those destinations that instantly enthralls the visitor, especially in the early morning when sitting in the courtyard of a tea plantation house, hearing the monks greeting the day in nearby temples on top of the hills. Their mantras cover the valley like a warm duvet. On such a morning one can hear the country breathe in and out – very gently, very calmly.”

That purple prose came from a review left at a boutique hotel in Hangzhou. Unlike the traditional standardized hotel, a boutique hotel – also known as a lifestyle hotel or designer hotel – contains luxury facilities of varying degrees in unique or intimate settings with the opportunity to explore the local atmosphere.

They have boomed in China’s first-tier cities such as Beijing and Shanghai and blossomed in scenic destinations, attracting customers, including 22-year-old Ye Ying, who look for something special and different.

“The hotel pays attention to detail,” the young woman said effervescently when talking about her experience with her boyfriend at a boutique resort close to the West Lake in Hangzhou last summer.

“Its dcor is very detailed – such as the balcony and curtains. The entire sense of taste is exquisite,” she said. More importantly, the hotel creates a feeling of home and is close to nature, which differentiates it from branded hotels, she added.

Ye and others like her represent a new trend – a young group seeking properties that are noticeably different in look and feel from branded hotels – when planning trips.

As such, the concept of boutique hotels, mainly popular in North America and the UK, has now moved beyond the usual design capitals of the world and is entering new markets including China.

Hangzhou is one of China’s most renowned and prosperous cities, famed for its natural beauty. Luxury brands including Amanresorts and local hoteliers have all staked their claims, establishing well-hidden facilities at remote lakeside spots or in the mountains.

In January 2010, Amanresorts launched Amanfayun, its 24th property worldwide and second in China, offering guests a unique rural retreat on the outskirts of the city.

Local providers of boutique hotels are also in on the trend. In one year, a local boutique resort brand called West Lake Reclusive Life expanded to nine outlets at scenic spots in Guangzhou. Another local group, Fulinlehui Resort, which opened last year at the city’s Xixi National Wetland Park, is planning to create more rooms.

The hotel is designed to provide travelers with a home from home to relax in, said He Jin, Fulinlehui’s owner. “I am an outdoor hiking fan and was inspired by boutique hotels in Southeast Asia,” he added.

Boutique hotels took off in China at a time when high-ranking branded hotels began to expand frenziedly despite a stagnant occupancy rate.

Official figures show that the number of five-star hotels stood at 651 in China at the beginning of this year, with 500 more scheduled to open.

According to Shenzhen-based consulting firm Hotelsolution, the occupancy rate at high-ranking star hotels was a little more than 60 percent for the last quarter of 2011. A hotel barely breaks even if the rate is lower than 60 percent.


But boutique hotels bring certain benefits in terms of operations and profitability, professionals said. Besides strong customer demand, the economics are favorable for operators. For example, boutique owners do not have to pay a franchise fee to become part of a larger chain. The hotel can survive and succeed without such costly amenities as restaurants, ballrooms and meeting spaces. However, these amenities, when styled in a boutique manner, can bring significant additional profitability to the hotel’s revenues.

Bringing a fresh concept and venturing into a new market comes with its challenges. These include nurturing the demand, defining a clear marketing approach as well as manpower constraints.

Boutique hotels generally target customers in their early 20s to mid-50s enjoying mid- to upper-incomes, hoteliers said. A key issue in marketing a boutique hotel or resort involves sending the right message to these target customers.

“We mainly target those who own private cars and prefer driving themselves as well as those on vacation with family members,” said He Jin of Fulinlehui Resort.

Official statistics show that the number of motor vehicles in Hangzhou’s urban areas – 870,000 at the end of February – is expected to surge to 1 million at the end of this year. The growth rate of those traveling in their own cars also outpaced that of ordinary tourists.

But the occupancy rate at He’s hotel is stunningly low: only about 4 percent since its opening one year ago. To survive the resort has long been relying on revenue from the catering service offered at the hotel, which brought in about 9 million yuan ($1.4 million) in the past year.

Its owner attributed its stagnant sales to the clear division between Hangzhou’s boom and slack seasons and the hotel’s insufficient publicity efforts.

“We are fully booked during high season,” He said. “But when the low season descends, we could be totally empty.”

Regarding its low profile, the owner said he declined to cooperate with travel agencies for fear of them bringing in group tourists, which can lower the hotel’s prices and service.

Marketing an independent boutique hotel can also be difficult because of financial restrictions and other resource limitations. As such He planned to add 30 more rooms when further developing the current facility.

Lu Jiangwen, general manager of Hangzhou’s Tea Boutique Hotel, said that a boutique resort has to resist the temptation to be too general in the hope of getting a larger slice of the market and should focus precisely on the target group.

In a costly move to attract the target customers, the hotel slashed the number of guestrooms and used the limited space to erect an authentic Thai-style spa and a French bar.

“To be honest, the salary paid to the therapists from Thailand accounts for a handsome share of our entire expenditure,” Lu said. “But the Tea Boutique Hotel only cares about one thing and that is providing the target customers with a genuine Thai spa and our best service.”

The French-style cocktail bar is designed with the same purpose in mind, the manager said. The costly drinks deter unwanted customers who happened to have booked into the hotel but win applause from high-end customers.

The high-profile reception, which includes presenting guests with free bottles of water collected from the local Tiger Spring, known for its premium water quality, is designed to improve satisfaction levels among the right group, he added.

The considerate service, as well as the close connection that hotel guests experience with members of staff, is what distinguishes boutique hotels from their standardized cousins. At the former, staff are instructed to remember guests’ names, something difficult to achieve in large-scale hotels.

Some boutique hoteliers struggle to find qualified service staff in an industry with a high turnover rate.

One of the problems facing the development of boutique hotels is that the most talented people have been lured by five-star hotels run by big international brands, according to Lu.

The personnel wanted by his hotel must have work experience at international brands while at the same time accepting the core values of boutique hotels. “Neither can be dispensed with,” Lu said.

Boutique resorts also differ from regular hotels in terms of team management, the manager added. Because of their small size, a role played by up to a dozen staff at starred hotels only requires two or three at boutique hotels, greatly reducing the flexibility in deployment of manpower.

“Workers’ loyalty and their mentality are more important at boutique hotels. The human resources staff have a lot to do regarding issues involving workers’ motivation, evaluation and loyalty,” Lu said.

Mubarak Abulimit contributed to the story.


A guest suite at Amanfayun resort in Hangzhou. Amanresorts International Pte launched Amanfayun in the city In January 2010, its 24th property worldwide and second in China. The resort offers guests a unique rural retreat on the outskirts of the city. Provided to China Daily

(China Daily 05/14/2012 page15)