William Huston, AIF®, AIFA®

Boutique Hotel Investing

Within the travel and hospitality industry, boutique hotels have grown to become a preferred accommodation option, giving larger luxury hotels a run for their money. That is because more travelers are prioritizing unique experiences and intimacy over sheer luxury. As a result, more investors are choosing to invest in smaller, independent boutique hotels with the aim of catering to the needs of guests seeking customized and niche experiences.

If you're an investor looking to invest in hotel real estate, here is a guide to help you navigate boutique hotel investing.

William Huston, AIF®, AIFA®

William Huston, AIF®, AIFA®

Key Takeaways
  • The demand for boutique hotels is on the rise with more travelers opting for unique, intimate and personalized experiences over luxury.

  • A boutique hotel refers to a small, stylish and intimate hotel that offers its clients unique and intimate guest experiences. Typically, boutique hotels have less than 100 rooms to allow for a more personalized level of service.

  • For investors looking to get into boutique hotel investing, some important factors to consider include the location of the property and integration of the community and local culture.

  • If you would like to venture into the Portugal hotel industry, invest with Bay Street through our Alt Path Hotel Fund. For more information on the fund, schedule a call with us today.


The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on investing here.

Venture into Portugal's Hotel Market Today

Portugal is among the top tourist destinations with a thriving hotel industry. For investors seeking to venture into Portugal's hospitality industry, Bay Street's Alt Path Hotel Fund can give you an entryway with four approved hotel projects in Portugal.

The firm is working on developing and managing boutique hotel projects that have an estimated IRR of 18.87%. In addition, the firm has also secured 45-55% cash back incentives from the Portuguese Government. Investing with Bay Street can also enable you to land a Portuguese Golden Visa with the help of our team of investment experts.

Take advantage of our expertise and book a call with our investment team today.

What is a Boutique Hotel?

hotel resort

A boutique hotel is a small, stylish and intimate hotel that offers its clients unique and intimate guest experiences. Unlike larger chain hotels, boutique hotels have fewer rooms, typically less than 100 in total to allow for a more personalized level of service.

Among the features that distinguish boutique hotels from large chain hotels include their architecture, interior decor and amenities that reflect the local culture. Boutique hotels have existed as far back as the 60s, but it is one Bill Kimpton who brought the idea to the US in 1981 after visiting Europe and staying in such establishments. As much as he's the one who introduced the idea, Ian Schrager, the founder of Morgans Hotel Group in 1984 in New York, is the one who popularized the concept of boutique hotels in the US.

Are Boutique Hotels a Great Investment?

beautiful hotel swimming facility

Depending on your investment goals, boutique hotels can be a great investment for individuals in the hospitality industry. According to Statista, the global hospitality market generated $4.7+ trillion in 2023. It is also reported that the global boutique hotel market size stood at roughly $99.7 billion in 2023 and is projected to reach $179.7 billion by 2032. Based on these facts, it is evident that boutique hotels made a significant contribution to the total revenue generated by hotels in 2023.

As a hotel investor, here are some key things to note that can drive the success of your hotel.

Location of the property

The success of most boutique hotels is highly dependent on their location. As an investor, it is important that you do comprehensive market research so as to identify areas with high demand for accommodation for tourists and business travelers. In Portugal for example, some top tourist destinations where investors should consider setting up boutique hotels include Lisbon and Porto.

If you're an individual looking to get into hotel investing in Portugal, Bay Street's Alt Path Hotel Fund offers you a great opportunity to tap into the thriving hotel market in Europe. With the help of our investment experts, investors can also acquire a Portugal Golden Visa via investment. To learn more about this investment opportunity, schedule a call with our team today.

Unique selling point
hotel upselling

A key aspect that differentiates boutique hotels from other lifestyle hotels is the level of personalized services offered to each guest. Typically, boutique hotels offer accommodation services to fewer guests and this enables the hotel staff to pay more attention to guest needs and offer them customized services. As a result, this can create customer loyalty and drive repeat business. Also, due to the unique services that boutique hotels offer, hotel operators can justify higher room rates which is good for business.

Integration of the community and local culture

Many individuals who travel to other countries are usually in search of new cultural experiences. A lot of small boutique hotels have done a great job of integrating the local community and culture into their hotel projects. As an investor of an independent hotel, you can collaborate with the local community by hiring local staff members, working with local artisans and businesses. By doing so, the establishment not only contributes to the local economy but also enables its guests to fully immerse themselves in the local culture while still experiencing luxury services and amenities.

Architectural design of the property
hotel beach front

Most boutique hotels feature architectural and interior designs that reflect the culture of the surrounding community. This is an aspect that investors can use to differentiate their property and attract a niche group of clientele who value authentic, cultural but still modern hotel experiences in a small boutique hotel.

Financial considerations

Setting up a boutique hotel requires adequate capital as the focus for many hotel investors is on incorporating cultural elements in the property and offering guests unique and personalized services. Therefore, it is important that investors run their numbers to see how much it would cost them to finance, properly staff, maintain and market the hotel. This will help in accurate projection of cash flow and total revenue.

Potential Challenges of Owning a Boutique Hotel

Owning a boutique hotel can be a rewarding venture, but as with any investment, it comes with its own fair share of challenges. Here's what you should be aware of as an investor.

High initial capital investment: Building or acquiring a boutique hotel can be an expensive venture due to the customizations made as well as the quality of service provided by the hotel staff. Therefore, investors need to do a proper financial analysis and work with a qualified investment advisor in order to make the best investment choices.

Complexity of hotel operations: Managing a boutique hotel can be more complex than large chain hotels as the focus is on offering guests personalized and quality services. This may require hiring and training staff who can deliver a high level of customer service consistently. This might come at an additional cost to the hotel owner or operations manager.

Competition from popular chain hotels: In popular tourist destinations, smaller boutique hotels can face major competition from larger luxury hotels. Therefore, boutique hotels need to implement effective marketing strategies and maintain a strong online presence so as to attract their target clients and maintain them.

Fluctuations in revenue: Due to the seasonality of the hotel and tourism industry, the revenue generated by boutique hotels is highly dependent on travel seasons. As such, it is important for investors to capitalize on these high seasons and put in place measures that would also attract business travelers during low seasons. This will help in maintaining cash flow and increase profitability.

Sustainability practices: Over time consumer preferences have changed and many modern travelers prefer staying in hotels that are environmentally friendly and have incorporated sustainable practices like use of renewable energy and water conservation. For boutique hotel investors, it is essential to find ways to incorporate these sustainable practices into your property.

Get started on your hotel investing journey in Portugal today

Boutique hotel investing can be a profitable venture if the investment strategy is properly executed. For investors looking to venture into the Portugal hotel industry, consider doing so through Bay Street's Alt Path Hotel Fund. Don't wait, get started today!

Schedule a meeting with our team of investment professionals and start your hotel investment journey in Portugal.

For more information on hotel investing, read more here.








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