The Advantages of Owning a Small Hotel

How hands-on operations, a personalized approach, and shifting market dynamics are making boutique hotels a compelling investment.

In an era where personalization and authenticity are paramount, small hotels are emerging as the crown jewels of the hospitality industry. Owners of boutique properties are uniquely positioned to offer something that larger brands often can’t—a hands-on, deeply personal guest experience. During the Boutique Hotel Owners Conference by BLLA, industry leaders Kimberly Walker, Moody Nashawaty, Alex Kirkwood and Ariela Kiradjian dove into the advantages of small hotel ownership, sharing their own experiences and insights into why this model is so attractive in today’s market.

The Power of Hands-On Experience

One of the greatest benefits of owning a small hotel is the opportunity for direct involvement in every aspect of the business. Moody Nashawaty, Founder of The Yara Hotel, shared how he and his wife took a hands-on approach to their first property, learning everything from renovation to daily operations. “When you’re self-operating, you have the ability to make real-time decisions, influence the guest experience directly, and truly understand the nuts and bolts of the business,” Nashawaty explained.

Kimberly Walker, Creative Director of Nomada Hotel Group, echoed this sentiment. Having started her journey in the hospitality world after acquiring and renovating her first property, the Granada Hotel and Bistro, Walker noted that self-operation allows owners to stay nimble. “You can immediately respond to challenges and opportunities, which is crucial when you’re operating a smaller property,” she said.

The Financing Challenge: Shifting Lender Preferences

Financing can be a major hurdle for small hotel owners, but there’s a noticeable shift in how lenders view boutique properties. Alex Kirkwood, Founder and CEO of Kirkwood Collection (a BLLA member collection), shared his experience securing financing for his first property back in 2013. “Back then, lenders were hesitant to back boutique hotels,” Kirkwood recalled. “Now, however, the market has changed. Lenders are more open to financing these properties, particularly as the demand for unique, experiential stays has skyrocketed.”

Still, challenges remain. Nashawaty recounted his experience with refinancing, highlighting the complexities of navigating rate increases and finding the right lender. He noted that many lenders initially asked if his property would be flagged by a large brand, underlining the persistence of traditional mindsets. “It’s about getting the appraiser on board with the concept and proving that a boutique hotel can offer tremendous value,” Kirkwood added.

The Self-Operation Advantage

Owning a small hotel often means being directly involved in operations—a key advantage for those willing to get their hands dirty. Nashawaty’s journey from owning Airbnbs to managing his first hotel during the pandemic gave him invaluable insights into every facet of the business. “You learn to be creative with managing expenses, maximizing your staff’s efficiency, and ensuring guests receive the best experience,” he said.

Walker emphasized that this level of involvement allows owners to offer something genuinely unique. “It’s not just about running a hotel, it’s about curating an experience,” she explained. Walker’s ability to stay deeply connected to the operations of her properties ensures that each guest experience reflects the personality and charm of her boutique hotels.

Navigating Unionization and ADA Concerns

Smaller properties also face fewer challenges when it comes to unionization and ADA compliance. While larger hotels often grapple with union demands and ADA lawsuits, smaller hotels have more flexibility. Kirkwood noted that while the potential for unionization exists, it typically doesn’t affect small-scale operations to the same extent. On the ADA front, he and Nashawaty emphasized the importance of staying proactive to avoid costly legal battles, particularly with website accessibility issues.

Third-Party Management: A Double-Edged Sword

While self-operation provides control, some owners consider third-party management to help scale their businesses. However, as Kirkwood and Walker explained, this isn’t always a straightforward decision. “Third-party management can be beneficial, but only if you’re aligned with your operator,” Kirkwood said. “They need to think like an investor and have some skin in the game.”

Walker agreed, adding that the right partnership can make all the difference. “If you don’t have the right operator, or if they’re not fully invested in the success of your property, it can be a challenge,” she noted. BLLA’s COO, Ariela Kiradjian, added that “for a new property, it can be highly beneficial to self-operate during the first year. This hands-on, grassroots approach allows you to deeply understand the unique needs of your hotel before considering third-party operators. Once you have a solid grasp of your property’s operations and guest expectations, you’ll be better equipped to select the right management partner.” The conversation made it clear that while third-party management might ease operational burdens, the decision must be made carefully, ensuring alignment in both vision and execution.

The Impact of Food and Beverage

For small hotels, the food and beverage (F&B) component can either be a key differentiator or a potential headache. Walker discussed the importance of considering F&B as either the “heartbeat of the hotel” or a necessary evil, depending on the property’s target market. In some cases, as Nashawaty shared, offering just a strong beverage component rather than a full-service restaurant can be enough to create a memorable atmosphere and boost occupancy.

Kirkwood, who owns properties with Michelin-starred restaurants, emphasized the importance of F&B in creating destination-worthy experiences. “A great restaurant can become a magnet for both hotel guests and locals,” he said. For boutique hotels, F&B is often integral to the overall brand experience, but it requires careful planning to ensure it aligns with the property’s goals.

Scaling and Managing Growth

As boutique hotel owners expand, the challenges of managing multiple properties can mount. Walker described the rapid growth of her portfolio and the importance of building a dedicated, talented team to support that growth. “Having the right people in place is key to being able to scale,” she said. Kirkwood agreed, stressing that a strong pre-opening team is critical to the success of a new property.

For new hotel owners, Nashawaty offered advice on avoiding common pitfalls, such as missing key opportunities or underestimating operational complexities. “Make sure you’re prepared to handle multiple roles, especially in the beginning,” he said.

The Boutique Advantage

At the end of the day, owning a small hotel offers unparalleled opportunities for creativity, flexibility, and personal connection. Walker, Kirkwood, and Nashawaty all emphasized that while the challenges are real—particularly around financing, operations, and scaling—the rewards are equally great. Owning a small hotel allows operators to create a truly unique experience, stay agile in a fast-changing market, and, ultimately, offer something that no large chain ever could.

As Kiradjian wisely noted, “You have to ask yourself—do you want to be a commercial real estate owner, or do you want to be a hotelier?” For those with a passion for hospitality and a hands-on approach, the answer is clear.

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