Until quite recently there were only a handful of boutique hotels on the islands. There are now 13 applications for new ones to be built in Valletta alone, and a number of others are already well established.

But the enthusiasm to create a new niche product needs to be complemented by a touch of pragmatism, according to the company running Palazzo Prince D’Orange.

“Not every building can be turned into a boutique hotel and not every boutique hotel will be profitable. Only the strongest will survive,” director Frankie Spiteri warned.

“It is all about finding the right place, at the right time and being able to offer the right skills.”

Mr Spiteri’s thesis was about niche tourism and he is a firm believer in the need to focus on higher-end tourists rather than on volume, which he believes will eventually start to level off and perhaps even decline. These will want something new and exciting.

“We talk so much about product ... Boutique hotels and corporate hospitality fill an important gap in the market,” he said.

Mr Spiteri and his partner Jankarl Farrugia had worked together at the Corinthia head office, with the former bringing experience in IT for the hospitality industry and the latter insight into destination management, among other things.

They decided to set up Hospitality Ventures and trade under the brand of Hotelogique, focusing on small but high-end properties. Valletta was the natural place to start.

The palazzo, their first property, demonstrates some of the issues that they highlighted for others interested in this segment.

“It had been bought and done up by a Dutch couple and was origin-ally going to be a hotel. However, we felt that it would be better to go for short lets, as the units are large suites, with their own kitchens.

“But we also realised that the ‘hotel’ approach had many benefits and kept a concierge who could help the guests with everything that they required, whether a yacht charter, a personal chef service or wedding registrar. The units also have housekeeping services with full turn-down,” Mr Farrugia explained.

One of the main factors to bear in mind is that there is a huge difference between short lets in real estate and short lets in hospitality.

“The former think in terms of a few months while the latter is about days. And then there is another entirely different sector to be considered by the property owner – corporate housing, which caters for foreigners here for finite projects or awaiting their permanent housing,” Mr Spiteri said.

The palazzo was entrusted to them 18 months ago and it has proved to be a great success, with the owner investing further to add a spa and gym, with more refinements planned in the future – including a communal breakfast area to complement the impressive piano nobile with its Chippendale chairs and open fireplace.

The management concept was a win-win situation, and one that they strongly recommend.

“It is tempting to try to run a hotel yourself, but the skills you need for a boutique hotel are perhaps even more sensitive than for a large hotel,” Mr Farrugia said.

“There is a very fine line between profit and loss as the overheads are spread across fewer units. You have to juggle between offering expensive services and keeping the price right.”

The first approach is always an objective one: is the property suitable for a boutique hotel or for short lets?

“It is important to carry out a feasibility study if you want to ensure success – and banks want to see that people have done their homework,” Mr Spiteri said.

“It is pointless investing in something that will not give you a return. The idea is to improve the asset. But not all properties will give a good- enough return. It depends on their location and on numerous other factors like the finish, the amenities and so on. We have actually turned down a property as we felt that long lets would actually give a better return to its owner.

“And you have to consider how many units you could have. A serviced apartment would need to be around 60 square metres, while hotel room sizes have to be economically feasible.

The decision to offer short lets of 3-5 days was based on corpor-ate executives who tend to travel often and relish the personalised feeling of the units. However, they were pleased to see a considerable number of leisure travellers too, from America, Australia and Britain.

“Boutique hotel rooms or units like these offer a welcome relief after anonymous hotel rooms,” Mr Farrugia said.

Hospitality Ventures is already expanding rapidly, with a new chain of boutique hotels, to be branded Quaint Boutique Hotels, opening in Nadur, Xewkija, Għajnsielem, Sannat and Sliema. A property offering 14 luxury suites will also open next year in St Julian’s.

The more there are, the better. Conference and incentive travel is getting more and more anxious to find something special. If there are enough boutique hotels in a location, it means that the delegates could be spread among them, for a more personalised experience

“Location is very important. In Gozo, we realised that there are the top-end hotels and farmhouses but little in-between. And we also realised that the appeal of Gozo lies in the villages. So all the hotels will be in the core, right on the piazza,” Mr Farrugia said.

The properties there belong to developer Joe Portelli, who brought Hospitality Ventures in at the very start – which they believe is a crucial factor in their eventual success.

“The earlier the management team is brought in, the better, as there are a number of decisions that need to be made at the planning stage. For example, do you need an exit strategy? If the owner might want to change the use of the building in the future, that could have a bearing on whether to have en suite bathrooms and kitchenettes, which limit you to hospitality and make it hard to revert to a real estate proposition,” Mr Spiteri explained.

The proliferation of boutique hotels will ultimately create a momentum for this niche that one or two hotels alone could never do – and with so much focus coming Valletta’s way when it is the Europ-ean Capital for Culture in 2018, the capital city will be able to offer a wide range of options.

“The more there are, the better. Nowadays, conference and incentive travel is getting more and more anxious to find something special. If there are enough boutique hotels in a location, it means that the delegates could be spread among them, for a more personalised experience.

“And once we can offer Gozo too, then it means that there will be a twinning option,” Mr Spiteri said.

“Marketing boutique hotels is difficult because the cost has to be recouped through such a small number of rooms. It helps to work with someone who already has extensive contacts across the industry,” Mr Farrugia said.

Hospitality Ventures is at a crossroads as it will soon have to scale up to cope with the new properties in its portfolio.

“We are already working with four different owners and we will definitely continue to grow,” Mr Farrugia said.

www.hotelogique.com