Neighbourhood Hotels Reinvent Urban Hospitality

Boutique hotels are not a new concept, but the drive to create hotels that integrate with the community is gaining momentum. The rise of “neighbourhood hotels” ties into broader trends of adaptive reuse and smarter investment in a market where new assets must outperform in room rates and yields to offset high construction costs. Speaking at The Urban Developer ’s Urbanity conference earlier this year, Fraser &amp; Partners director Callum Fraser outlined how the team was working on the redevelopment of The Spit on the Gold Coast after the launch of the Mondrian this year . “There are a couple of really great hotels up there,” Fraser says. ▲ The Mondrian Gold Coast. Main image: Hotel Indigo Adelaide Markets. “[They will deliver] a really rich vein of neighbourhood hotels, which are intensely original, local experiences, and part of the local community but doing their own thing for tourism. “Watch this space, because the Gold Coast is a place to reinvent that model.” However, from a developer and operator perspective, it is currently a difficult environment to get new hotel developments to stack up, IHG director of development Australasia Pacific Cameron Burke says. “From a feasibility perspective, we are seeing more owners pivot not only in their investment, but also their development strategies,” Burke says. “We’re going to see a lot more value-add investment opportunities explored by investors and developers looking to acquire existing assets and then reposition, leveraging more elevated brands to unlock latent value.” Making boutique work For major brands such as operator IHG, which has 64 hotels and 13,382 rooms under management in Australia and New Zealand, taking on the boutique-style hotel subsector may seem a contradiction. But in a challenging environment, its Hotel Indigo brand is making waves, combining the intimacy of a niche hotel with the scale of a global chain. “The traditional notion of the small and independent boutique hotel is now being fundamentally challenged by macroeconomic-led feasibility constraints and distribution limitations, which opens up opportunities for IHG and its lifestyle suite of brands to capture that white space which has been created,” Burke says. The shift is driven in part by scale. Independent operators often struggle to compete, while the likes of IHG can draw on a loyalty base of 145 million global members, not to mention its supply chain clout. “That powerful distribution channel is simply something which the independent, small, boutique operators cannot compete with,” Burke says. “And in this market, where construction challenges are very real and that there are feasibility hurdles that we need to overcome, that advantage matters.” Boutique, neighbourhood-focused hotels can also command higher room rates. ▲ Hotel Indigo Potts Point in Sydney’s inner east. “Travellers are prepared to pay a premium for a more aspirational experience, and being able to yield a higher rate means that we’re able to optimize our owners’ return on investment,” Burke says. With 300 of its Hotel Indigo brand open or in development around the world, the concept is catching on. “Hotel Indigo spans across multiple different types of design typologies and locations. “The whole essence of Hotel Indigo is bringing the neighborhood story to life, leveraging the hotel’s location and individuality to shape designshape design, hospitality and guest programming, to create something which is truly unique for that location and that pays tribute to the nature of boutique hotels, but at scale.” Neighbourhood character Burke says every neighbourhood has its own story. “These hotels allow us to showcase the very best of that neighborhood. “It might be an interior design choice. It might be how the cocktail menu is curated. It might be the way that the staff engage with the patrons who come through to the hotel.” And importantly, it taps into a really lucrative guest segment: the lifestyle-led traveler. ▲ Hotel Indigo Brisbane City. “What we’re seeing is guests that are prepared to spend more for a highly localised experience,” Burke says. “They want to feel immersed, and that their hotel stay means something more than just a night on a pillow. “With a rising middle class in Australia, there is also a propensity to spend more on socially visible experiences. “It’s created a whole new travel market prepared to spend more for elevated experiences. “For owners, this is particularly appealing because it optimises their return on investment by virtue of the fact that we can yield a really strong rate.” Beyond the ‘cookie cutter’ hotel This neighbourhood-driven approach has already influenced projects, including the Fraser &amp; Partners-designed Mondrian on the Gold Coast, owned by major hotelier Accor. As designer of the Mondrian hotel, Fraser &amp; Partners tapped into the community of the Gold Coast. “The Gold Coast produces a very particular architecture that comes very authentically from its community,” Fraser says. “People say it’s the architectural equivalent of the bar scene from Star Wars, which might be a little unkind... “Our interest is more enmeshed in the local thinking and culture. We talk about the Gold Coast dreaming, which provides an intense relationship between place, environment and culture.” ▲ The Mondrian taps into its coastal, eclectic surroundings at Burleigh, with a seafood restaurant and bio-wellness spa. For Fraser, this community mood provides a unique inspiration for design. “The Gold Coast doesn’t care what you think—it’s a place where you can be yourself, take risks and be brave. “That’s what’s so thrilling about working there. And that’s our goal with our architecture, to take advantage of our freedom and go somewhere new.” And it also means that hotel designers can move away from the “cookie cutter” approach to hotels. “It’s a mistake to generalise across property markets. Places like the Gold Coast are a start-again proposition and there’s nowhere else I’d rather be.”

Neighbourhood Hotels Reinvent Urban Hospitality

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