US boutique hotels market expecting to see revenues increase

The US boutique hotels market is expected to see revenues increase at a compound annual growth rate (CAGR) of 7.7% over the five years to 2017, to reach an estimated market value of $7.2 billion.

The US boutique hotels market began its recovery in 2010, having suffered badly in 2009 when revenues fell 12.8%, due to declines in travel spending. A rising number of travellers have grown tired of staying in large, cookie-cutter hotels geared toward a mass audience, and have begun migrating toward new and more intimate types, including boutique hotels.

Numerous factors are contributing to the growth of the industry, including; the emerging trend of 'experience' or 'adventure' travel, an increase in disposable income in conjunction with the largest sustained period of economic growth in US history, and the desire for more personalised service.

Additionally, technological advances like online booking, travel websites and mobile applications will make it easier for consumers to make reservations.

The number of establishments within the US boutique hotels market is anticipated to increase at a CAGR of 6.3% to reach 2,645 hotels by 2017. Over the same timeframe, employment is predicted to grow at a CAGR of 6.5% to reach 78,290 employees in the industry.

The US Boutique hotels industry has a low-level concentration, with the top four players expected to account for less than 25% of the available market share in 2012. However, start-up costs can be high, although lower than chain hotel start-up and operating costs.

Boutique hotels benefit from being able to convert buildings not normally suitable for hotel use, smaller spaces and using cheaper luxurious materials (e.g. slate instead of imported marble).