Dive Brief:
- U.S. boutique hotels saw strong year-over-year performance growth as of June, with RevPAR returning to 2019 levels, according to a 2023 midyear report by The Highland Group obtained by Hotel Dive. As of June, RevPAR across all boutique classes increased by 7.4% year over year.
- Occupancy and ADR for boutique hotels were also up at midyear, the report details. Occupancy across all boutique segments increased by 4.2% from June of last year to June of this year, while ADR for all boutique segments rose by 0.4% during the same period, increasing from $261.67 to $262.93.
- Bolstered by strong performance fundamentals, the report predicts the current number of branded boutique hotel rooms under construction — 19,001 rooms — is expected to nearly triple by 2028, meeting increased demand for the category.
Dive Insight:
On the heels of increased revenue across all segments, the boutique hotel category is expected to grow by approximately 40,900 rooms through 2027, increasing branded boutique hotel room supply by 29%. This predicted supply growth comes after boutique hotels saw annual average new room growth of 11% from 2017 to 2022, the report details.
The supply growth through 2027 will meet heightened demand for the category, up 8% year over year in June, according to the report. The lifestyle upper upscale-luxury segment saw the highest demand growth year to date, up 12.4% year over year in June.
Heightened demand for the luxury lifestyle space was prevalent in the first half of this year, as several major players claimed stake in the increasingly popular segment. In June, Kirkwood Collection acquired three luxury boutique hotel properties in Palm Springs, California. That same month, property management company Pyramid Global Hospitality expanded in the luxury lifestyle space, adding four boutique hotels to its portfolio.
According to Highland Group’s report, the luxury and lifestyle segments performed particularly well in terms of occupancy within the past year, with the lifestyle upscale-upper midscale and the lifestyle upper upscale-luxury segments outpacing others year to date in June.
The lifestyle upscale-upper midscale segment led other segments in RevPAR growth in June, increasing 13.4% year over year.
