Investor Bullishness in Boutique Hotels Comes With Caveats
Photo Caption: A guest room at the Marram Montauk, a boutique hotel in Montauk, New York. Source: Marram Montauk.
Skift Take
Investors in boutique hotels believe that booming leisure demand for upscale properties will last through at least 2023. But several factors paint a mixed picture for longer-term strategies.
Boutique hotels remain a relatively preferred asset for investors in real estate. But in the past few months, it's become tougher to close deals, and some types of projects are winning more favor than others.
"For boutique hotels, we're really positive about the outlook," said Amanda Hite, president of hotel data tracker STR, when speaking on Wednesday at the Boutique Hotel Investment Conference by BLLA in New York.
Many boutique hotels have seen their profitability surpass 2019 levels. In April, U.S. boutique hotels had an average gross operating profit per available room of about $113 — or 19 percent above the level of April 2019, according to STR data.
"Even if there's a recession, you have business travel coming back and layering into boutique hotel performance," Hite said. "You also have a recovery of international travel. Both will support the segment."
Hite also dismissed worries that rising gas prices would chill demand.
"We have more than 30 years of data showing no correlation between rises in gas prices and demand for hotels,
