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Boutique vs 5-star hotels: What are the key consumer segments?

When was the last time you walked into a crowded hotel lobby, hearing jazz music play in the background as you are greeted by a joyful lobby manager? For all of us here at Quilt AI, it sure has been a long time (and we can’t wait to go back!).

The hospitality sector in the United States lost 498,000 jobs in the month of December alone due to the COVID-19 pandemic, and there seems to be a long way to recovery for the entire industry. A drastic reduction in business and leisure travel as a consequence of safety-related concerns and lockdowns has put pressure on hotels to reinvent themselves to adapt to new challenges.

To understand the main consumer segments visiting hotels in these pressing times, we segregated hotels into boutique and 5-star entities, and ran related hashtags through our Culture AI (over 1000 posts).

We analyzed tags such as #hyattnewportbeach and #marriottmiami for the established brands, and tags like #hotelsanjose and #surfjackhotel for boutique hotels in order to decipher the type of consumers that are going to these places.

A map depicting 5-star and boutique hotels in NYC

We used our word cloud tool to identify the most used words in users’ Instagram posts across the two categories. For boutique hotels, we noticed a cluster of terms relating to having local and immersive experiences, such as “enjoy fresh home cooking”, “local hospitality”, and “painting workshop”. This goes to say that the factors of appeal for customers to visit these places are the surrounding activities and cultural affairs, as opposed to the impeccable luxury or services offered.

The uniqueness of the stay is another factor resulting in the popularity of boutique hotels. We detected words relating to the interiors and intricate designs of the hotels, like “simple nz design” and “century modern design”. Guests visiting these properties are intrigued by the unique experiences they offer and appreciate their distinctive architectural and aesthetic appeal.

On the other hand, words relating to 5-star hotels such as Hilton and Marriott tie into special occasions such as weddings, birthday parties, and other events. We noticed words such as “wedding coordinator”, “Indian wedding planner”, and other phrases associated with photographers, makeup artists, and DJs. This highlights the fact that one of the primary reasons that people visit 5-star hotels is for the ease of hosting events, wherein the location, accommodation, food, and other logistics are all taken care of and they can have a hassle-free experience.

Through our Culture AI analysis, we also identified three primary consumer segments for each category.

Who are the consumers staying at boutique hotels?

Architecture and interior design admirers

This group of customers has an eye for distinctive architectural structures and designs, and is therefore on the constant lookout for unique stays. Small and chic boutique hotels are often home to antique furniture, tiled archways, reclaimed wood structures, and engraved ceilings. The charm of spending the night in these places lies in their quirky heritage.

An essential factor of appeal for this particular segment is the local focus of boutique stays, and their ability to shape their aesthetic to their surrounding region. Many of these hotels imbibe the local culture and ambiance of their localities into their structural designs, creating an authentic experience for architecture and design connoisseurs.


Nature enthusiasts

More often than not, a getaway doesn’t feel complete unless it’s out in nature. Being locked up at home for months at a stretch, this category of people are looking for hotel options that are located in the midst of beautiful landscapes. Many boutique stays are built in and around offbeat environments such as beaches, forests, and mountains, and these outdoor spaces tend to have a positive impact on people’s physical and mental wellbeing.

For this group of travelers, open-air activities like trekking, biking, kayaking, and bird-watching are vital to their stay experience because they make them feel rejuvenated and at peace. It therefore comes as no surprise that their first pick of accommodation would never be a concrete 5-star structure in the middle of a city.


Couples seeking unique experiences

One of the most appealing aspects of staying at boutique hotels is the local experiences they offer (as also detected by our word cloud tool). Couples that are looking to reignite the spark in their relationships are, in particular, intrigued by the plethora of activities offered by these hotels and look forward to bonding over experiences like cooking, wine tasting, pottery making, and even yoga.

These couples are generally well-traveled and have done their research on accommodation options that will give them a different experience than usual. Luxury may not necessarily be the primary determining factor in selecting the hotel, and is less significant as compared to the holistic experience they are on the lookout for.


Who are the consumers staying at 5-star hotels?

Luxury seekers

Unlike the consumers visiting boutique hotels for a local experience, those leaning towards 5-star hotels have the simple intention of indulging in luxury. Whether it is leisure travelers looking to experience high-quality service through spas, fine dining restaurants, and rooftop bars, or business travelers looking for a comfortable stay during their company conference- the root desire for luxury is a common factor.

This segment of travelers enjoys being pampered, and their idea of a vacation involves ultimate quality and comfort. Often, this category consists of families and couples with high disposable incomes.


The perfectionists

This is the group of people that needs every part of their stay to be taken care of. From impeccable rooms to varied amenities and top-quality service- they would not want any part of their vacation to be compromised.

This segment generally comprises families with little children, where a seamless experience with minimal hassle is a requirement. These individuals need the hotel to organize their day-to-day activities and excursions such as sightseeing tours, taxi transfers, and external activity bookings.

Even though they would prefer to have a pre-planned itinerary, they also want to have the flexibility to modify daily plans with maximum ease. Therefore, the concierge service and tour operator connections of 5-star hotels become a significant determinant in choosing these properties over boutique stays.


The honeymooners

Unlike couples visiting boutique hotels, the ones that choose to stay at 5-stars want their special day to be perfect. Newlyweds that spend their vacation in luxurious properties are looking for a seamless experience where they can enjoy themselves to the fullest without having to plan much. Couples’ spas, bike rides, and candlelight dinners are just some of the honeymoon-specific activities offered by 5-star hotels that are appealing to this segment.

Often, couples celebrate their big day at the hotel and decide to continue their honeymoon festivities at the same location as a matter of convenience. After all, what better way is there to commemorate new love?


Deciphering popularity through search behavior

In order to understand ongoing consumer trends relating to these two categories, we studied search behavior to break down demand.

While it goes without saying that searches for both hotel types fell in the past year as a result of Covid-19, those for boutique hotels fell by far lesser and seem to be bouncing back at a faster pace as compared to 5-star hotels. Keywords relating to boutique hotels fell by -6% in the year leading up to March 2021, while those attributing to 5-star hotels fell by a whopping -30% in the same period.

This data highlights the fact that boutique and experiential stays are growing in popularity and are here to stay for the long run. The pandemic has had an adverse impact on physical and mental wellbeing, which is why people are actively seeking getaways where they can indulge in unique experiences and feel rejuvenated.

With the travel industry changing course every few months, it is possible that the consumer segments of the two categories will merge over time as 5-star hotels start offering the same ambiance and experience as boutique hotels in order to revive business and stay relevant.

Write to anurag.banerjee@quilt.ai for a full report.



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We are a culturally rooted, AI powered insights firm that converts millions of data signals into human understanding. Visit us: https://quilt.ai