Amenities, Growth Help Kimpton Carve Boutique Niche
Kimpton Hotels & Restaurants president and CEO Michael Depatie recently spoke with BTN hotel editor Michael B. Baker about the boutique chain's role in the meetings industry and growth plans.
Business Travel News: How has the economy affected your different business sectors?
Michael Depatie: Group is definitely down. Leisure's up, and business transient is down. It's pretty typical for the industry. Leisure is holding up because people think it's their God-given right to take that vacation, but business is cutting back on travel for sure.
BTN: What is your sales strategy during a down economy?
Depatie: We try to provide more value, so we might offer more things included in the price than we would have before. We try not to just drop rate but to give them more value for the same price. That being said, people are looking for a better deal.
BTN: What effect has the economy had on your group business?
Depatie: There's more attrition in the groups. Whatever they booked, they don't all show up. There's been a shortening of the booking windows, more cancellations and the renegotiation of rates. This is starting to firm a little, but it still has a little ways to go.
BTN: How key are meetings to Kimpton?
Depatie: About 40 percent of our business is group, so it's certainly significant for us.
BTN: Has the economy slowed down your growth plan at all?
Depatie: We're still really active. We're lucky right now that we have a lot of access to capital, which is unusual in the business. We raised a $246 million fund through college endowments and investors a couple years ago, and we have $200 million left. With that, we should be able to add another eight or 10 hotels over time. We just opened our 46th hotel, the Kimpton Palomar hotel in midtown Atlanta. We've got five other hotels under development right now. In New York, the Hotel Eventi is under construction at 29th St. and 6th Ave. and will open sometime next year, and we'll have another in Hell's Kitchen. We will open the Hotel Monaco in Baltimore in the fall, and we have the Palomar under construction in Chicago, which will open in January or February next year. We're also active acquirers.
BTN: What kinds of acquisitions will you make?
Depatie: We like to buy existing hotels that we can convert to a Kimpton. There's more of those today. Inexperienced guys have built a hotel, not realizing there's a whole science to it. We can come in and hopefully fix the bank's problem. We have a hotel in Philadelphia that's going to be a Palomar. We took an old building, what was the Architects Building, built in 1926, and we gutted the inside. It'll be our first one in Philadelphia.
BTN: What markets are you concentrating on when you're developing your growth plan?
Depatie: The markets we like the best are the high-rated major urban markets like Los Angeles, New York, Chicago, Washington, D.C.—one of the strongest markets in the country—Boston, Baltimore, Philadelphia, and in time, we could do something in Denver, Seattle and San Francisco. We're also looking at resort markets. We're not looking to build a resort. We're looking at being the hotel in the resort location.
BTN: Why build hotels in resort locations?
Depatie: It's a market that's currently in disarray because of what's going on in the economy. A lot of those hotels relied on incentive group business, which really dropped off. There's probably a major acquisition opportunity to buy some of those hotels, so we'll be looking at that as an opportunity.
BTN: What are the key amenities that are requested for business and group travel?
Depatie: Internet is pretty important. As you go down the tiers, it's free. There's going to be a time when people think the Internet's just a utility. They don't want to be charged to put a plug in the socket. If you're in our Kimpton rewards program, you get free Internet. If you're not, we charge you for it, but we give you a chance to sign up for the program when you're prompted to pay for the Internet. It's a way for us to get more members in the program and give away the Internet for free.
BTN: Are there any amenities you offer that set your brand apart?
Depatie: We do something unusual at our hotels: We have our wine hour every night. People on the road are lonely, and they want to go someplace and gather and have a glass of wine. From 5 to 6 p.m. every night, we serve wine, and everybody gathers in the lobby. It's a community thing. Our hotels also have a wellness channel, where we have free yoga, Pilates and meditation in 24-hour loops, and people like that too. Those are the more distinctive things we do.
BTN: With all the brands that are out there, how do you stay above the fray?
Depatie: Every hotel is its own brand and has its own little story. Every one is unique, like a box of chocolates. They all have the core philosophy and amenities, but they all feel a little different. It's all about being an emotional engagement, a welcoming place that's fine and whimsical, and makes the traveler feel good.
BTN: Are you seeing that meetings and business travel buyers are finding more use for boutique-style hotels?
Depatie: There's more demand for boutique hotels, and yet corporate travel buyers don't want to have to negotiate a deal with all these companies. They want to find one to do one deal with. That's us. We have a much better chance to be on the corporate approval list, so a lot of good things happen when you get to be our size.
BTN: Is the drive behind that trend generational?
Depatie: The older business travelers are more transactional. They want something efficient: to get in, get out and for every hotel to look exactly the same. The younger ones want to enjoy themselves. They have a different kind of an attitude that will allow the boutique hotel segment to grow substantially.