The rise of the boutique hotel market

Australia’s boutique hotel market is booming amid increased demand for unique and personalised stays.

While large hotel chains have traditionally achieved higher occupancies, room rates and revenues than the smaller competition, a recent report by CBRE Viewpoint shows the tables have turned in favour of boutique players in recent years.

It found boutique properties have outperformed ‘big box’ international hotels since the 2020 onset of Covid across all three key performance indicators – occupancy, average daily rate (ADR), and revenue per available room (RevPar).

On a RevPar basis, the basket of boutique hotels studied by CBRE outperformed more than 50%, while occupancy rates and ADR was 21% and 27% superior to the luxury international hotels.

CBRE’s Australian head of hotels research, Ally McDade, attributed this major swing to the decline of corporate travel and international visitors in favour of the ‘local traveller’, which in turn has made way for a new post-pandemic visitor economy largely driven by domestic, leisure-based tourism.

“The growth of this local traveller has resulted in demand for a curated hotel offering, which is being met by Australia’s new wave of boutique hotels that blend intimacy and sophistication, and authentically resonate with the feel of the city being visited,” Ms McDade said.

A home away from home

As per the prevailing market trend, Debbie Garske, owner of 28 Degrees Byron Bay, has witnessed a stark shift in her clientele since the pandemic.

“Before Covid, it was quite a lot of visitors from Europe and the UK. Now we’re finding our guests are mainly from Australia,” she said.

Debbie Garske is the owner of Byron Bay boutique hotel 28 Degrees. Picture: Supplied

Ms Garske said a comfortable bed and room service is simply not enough to satiate the new breed of traveller that stays at her hotel these days.

As such, her charming 12-room boutique hotel provides guests with everything from in-house meditation to cooking classes, craft workshops and wine and cheese nights curated by local Byron producers.

“Guests require a far more personalised level of service these days,” she explained. “I’ve curated a whole itinerary for people that have stayed here who don’t really know the lay of the land in Byron.”

“And because we are akin to a small family business, that kind of thing is really not too hard for us to do.”

The 12-room boutique hotel offers in-house meditation, cooking classes, craft workshops and wine and cheese nights. Picture: 28 Degrees Byron Bay

An interior designer, Ms Garske crafted 28 Degrees as a stylish “home away from home” as far removed from the vibe of a large hotel as possible.

“Because we are a small operation, I can afford to put luxurious items in all of the rooms, like Italian linen sheets, beeswax candles and beautiful bespoke furniture,” she explained.

Capacity is set to double with an additional 12 rooms being built this year. Picture: 28 Degrees Byron Bay

Given the current demand for this personal style of accommodation in the Byron region, 28 Degrees is in the process of expanding.

“I’ve got seven rooms that I’m currently building and I’m going to be opening another five by Christmas,” Ms Garske explained.

“So we will eventually have another 12 rooms available by the end of this year.”

The best boutique hotels on the market

Think you’ve got the chops to be a boutique hotel boss? Here are three highlights for sale across the country.

Luxe Suites (Hobart, TAS)

Price guide: Circa $3 million

Located in the heart of Hobart CBD, the Luxe Suites is described as one of the most unique boutique hotels currently on the Tasmanian market.

Currently for sale, Luxe is Hobart’s only boutique hotel offering an onsite holistic day spa. Picture: realcommercial.com.au

Recently refurbished and furnished to the most exacting of standards, the accommodation is comprised of three distinct and luxurious apartments.

It’s one of the most unique boutique hotels currently on the Tasmanian market. Picture: realcommercial.com.au

Alan Clark, Head of Commercial Sales & Leasing at Salamanca Realty, said the hotel’s versatility appeals to all three sectors of the ‘short-stay’ market –  romantic, corporate and urban style.

Currently professionally managed, Mr Clark added the hotel has the potential for even greater returns if self-managed, with ample opportunity for a new owner to live and work onsite.

Ultra boutique, the hotel has three distinct and luxurious apartments. Picture: realcommercial.com.au

It is also the only boutique hotel in Hobart that offers a holistic onsite day spa experience.

The Charrington Hotel (Sydney, NSW)

Price guide: $9.95 million

A mere stroll to the bustling Sydney metropolis of Chatswood is The Charrington – 3.5-star Victorian hotel brimming with old world charm.

Full of charm, the 32-room hotel has been under the same ownership for over 40 years. Picture: realcommercial.com.au

Built in 1958 and run under the same management for the last four decades, its idyllic setup includes a spacious lounge and reception area, two communal kitchens, and 32 self-contained rooms with ensuites and all with either a private balcony or courtyard.

Located a 400m stroll to Chatswood’s busy shopping precinct in Sydney’s exclusive North Shore. Picture: realcommercial.com.au

There is also exceptional upgrade scope to further maximise occupancy and the hotel’s future profitability.

Both the land and business is for sale. Picture: realcommercial.com.au

A successful ‘ready-to-go’ opportunity with a proven track record of secure cash flow from the last six financial years, the hotel will be sold under two separate contracts: one comprising the business and inventory, and a second contract for sale of the land.

Blue Mountains boutique hotel (Katoomba, NSW)

Price guide: Accepting offers

If crisp mountain air with a dash of history is more your vibe, then you might consider this stunning freehold Art Deco hotel in the NSW Blue Mountains.

The building has functioned as a hospital, grand private residence and hotel throughout its life. Picture: realcommercial.com.au

Built in the early 1900s, the building was formerly a grand residence known as ‘Wahgunyah’ and also served as a private hospital once upon a time.

Holding a valuable 1,558sqm corner position, the hotel boasts 34 impressive bedrooms and brand-new facilities that include a commercial kitchen, large ground floor restaurant and conference space.

Located in a thriving tourist destination with 34 impressive bedrooms, a new owner could establish a thriving boutique hotel business. Picture: realcommercial.com.au

Despite its regal history, the building is not heritage listed, leaving it open for future upgrades.

Full of character, the freehold is currently accepting offers. Picture: realcommercial.com.au

It’s also a short walk to Katoomba CBD and only 60 minutes from the new Western Sydney International Airport.