Insights into Boutique hotels industry in Europe and the Mediterranean region

Insights into Boutique hotels industry in Europe and the Mediterranean region

The Boutique Vibe run a series of interviews with hotel owners and other hospitality experts to better understand the challenges of small independent hotels. The report analyses the boutique hotels industry with a focus on the Mediterranean countries. Here are some interesting insights:

  • There are more than 147,000 hotels in the region of which 87% are independent and offer 65% of the rooms available in the market
  • Independent hotels in the region are small, with an average size of 35 rooms
  • The average room rate was over 185 USD per night.
  • Almost 3/4 of our respondents get the majority of their bookings through third-party sources (primarily Online travel agencies)
  • 78% consider major  Online travel agencies commissions too high but 59% are satisfied or very satisfied with their services
  • When it comes to eCommerce, over 50% are redirecting bookings to an external booking engine.

Download in the full report here


insights into the boutique hotel industry

Hospitality dynamics around the Med Sea

The Mediterranean region is a dynamic tourism hotspot. The 24 Mediterranean countries attract up to 50% of the international arrivals. 2018 has seen a positive growth all around for the Mediterranean, with an 8% increase in RevPAR across the region. Regional hospitality dynamics are heavily affected by geopolitics, as the tourist demand has been regularly redistributed between North Africa, Turkey and southern European countries.

The Mediterranean hospitality offer is mainly driven by independent hotels. More than 150,000 hotels are present in the region, of which 87% are independent and offer 65% of the rooms available in the market(1). Nevertheless, there are important regional disparities, as countries like Spain or Croatia are dominated by large hotel chains, while Italian and Cypriot independent hotels cover more than 80% of their local rooms capacity.

While the offer of the hotel chains focuses mainly on resorts and large hotels, the independently-managed hotels in the region are primarily small properties, with an average of 35 rooms per property. Moreover, our study shows that the higher quality of service the hotels offer, the fewer rooms they offer, as the high-end hotels propose only 20 rooms on average.

Seasonality and operations

The offer of the Mediterranean hotels is traditionally built on the combination of sea and sun, driving a strong seasonality pattern. The region has a high summer activity with approx. 40% of the total tourist arrivals at the very peak of July and August months. The hoteliers are trying to follow a diversification strategy to steer away from the concept of seasonal resorts.

As a result, recruiting and retaining talent is a challenge for hoteliers in the region.

With its unique positioning, the boutique hotels industry is less impacted by the seasonality, as only 9% operate exclusively in summer, and only 23% suspend their operations during the winter season.

Hotels distribution value chain

With the digital innovation disrupting the hospitality industry, most small and independent hotels follow the trend to use a variety of distribution channels, including online & offline. However, they don’t have the adequate tools to assess the effectiveness and real return on investment of each channel. The upscale hotels are also still relying on traditional channels, with specialized travel agents and DMCs.

The Online Travel agencies (OTAs) are a key channel to reach the customers, especially as 80% of the travellers spend significant time on multiple channels (OTAs, blogs, articles, etc.) before booking [Source PWC]. As a result, OTAs are the main booking channel, channelling the majority of booking to 63% of the independent hotels. Hoteliers acknowledge the great services and convenience provided by the OTAs in terms of support to connect their inventory, technical support, and, most importantly, access to a worldwide potential clientele. However, the hoteliers still feel “hostages” of the OTAs, as small properties don’t have the bargaining power to negotiate lower commissions (which can be as high as 20% to 25% of the booking fee).

Professionals of the Boutique Hotels industry are aware that the high dependency on major OTAs results in an increasing loss of direct contact with their guests, rendering their loyalty more uncertain.

More insights and analysis in the full report here

Hospitality Technology: Issue or solution?

The independent hotels can’t compete with the large hospitality actors in terms of budgets allocated towards their marketing and sales. However, technology offers independent properties key support to manage their operations, enhance their distribution, and build their brand.

A large array of new hospitality tools are available including for the boutique hotels industry: from Cloud Channel managers, Property Management Systems, online marketing tools and new generation optimized websites, to Online Reviews and Reputation Management tools. This ecosystem of tools and software can easily turn into a nightmare for an independent hotelier owner, who’s fulfilling most of his property’s daily requirements.

It has become very difficult for a hotelier to prioritize the technology areas to invest in, and to select the most appropriate tools and software providers for their needs.

Implementing a new IT system requires a sizable investment in terms of money, effort and time. This transforms into a triple challenge for independent hoteliers, as they manage a very tight budget, and spread effort and time into wearing multiple hats during a typical working day.

More insights and analysis in the full report here