REPORT FROM THE U.S.—Most small towns have a story to tell. Lynchburg, Virginia, is one of those towns.
Before the Depression and World War II, travelers came to the small Virginia town bordered by the Blue Ridge Mountains and overlooking the James River for weddings and parties, staying at vivacious, prosperous hotels. But after the war ended, the downtown area was abandoned as people started to migrate out of the rural mountain area to the suburbs, explained Hal Craddock.
Craddock is owner of the Lynchburg-based Craddock Cunningham Architectural Partners, which specializes in architecture, planning and interior design, most notably the 44-room Craddock Terry Hotel—a hotel that is given credit for revitalizing Lynchburg as an attractive destination for travelers.
Although Craddock is a Lynchburg native, he wasn’t motivated to get into the boutique developing arena until he spent time at the Brookstown Inn Hotel in Winston-Salem, North Carolina. Inspired by the hotel’s unlimited avenues of success, Craddock begin plotting. The pervasive history, the small-town allure and the natural landscape were all qualities Lynchburg had in spades.
Craddock concluded this hotel must be making money not in spite of, but because of, its location.
“We were trying to think of a game changer that would quickly be a renaissance to downtown,” he said about the conception of the Craddock Terry. Upon his return to Lynchburg, he found an old tobacco and shoe factory and converted it into a boutique hotel that opened in 2007.
“This was a no-brainer,” he said.
The hotel jumpstarted the downtown area, giving birth to a vivacity Lynchburg hadn’t seen since the beginning of the 20th century.
Experience trumps all
Haddock’s journey to establish the Craddock Terry as a linchpin in the city was fraught with obstacles, each one hinged upon him convincing investors that the hotel would be good for the city, and that it wouldn’t lose money.
There’s whimsy there, said Kimberley Christner, president and CEO of Cornerstone Hospitality, who was hired as a development and operations consultant on the project and now manages the property. “It’s an anchor of the area.”
Cornerstone is working on three more boutique hotels in historic Virginia towns.
Small-town boutique hotels are “more of escape” than anything else, said Chris Plummer, GM of Nemacolin Woodlands Resort, which includes the 42-room Falling Rock boutique hotel as part of the property’s accommodations options. “You’re going somewhere … to experience something you never have.”
Three hours from Cleveland and Columbus, Ohio, and only an hour from Pittsburgh, the Farmington, Pennsylvania, hotel is close enough to city locations to feel a part of urban culture but far enough away to enjoy the benefits of rural living isolation.
Boutique hotels are “viable as long as you have a strong market close enough,” Plummer noted.
Modeled after European boutiques, the U.S. market has latched onto these hotels in hopes of finding “a lost paradise,” said Philippe Doizelet, managing partner in France for Horwath HTL. In the Paris hotel market, Doizelet said the city markets are growing as the small-town hotels are on a downtrend.
“It’s not sustainable because of low profitability,” he said, referring to France’s low market on small countryside hotels. “It’s something that’s a downtrend … the French country inn is really vanishing.”
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| Geneva, Illinois, 44-room hotel was formerly an old creamery, incorporating this into its amenities by offering guests chilled bottles of milk at night. |
Small-town benefits
Doizelet claims the U.S. travelers desire and seek the influence of nostalgia. “This has not been translated into something material in the hotel business (in Europe),” he said.
In many ways, it’s the nostalgia of design and service that drives the American independent market, but dissuades European hoteliers, who want to “market themselves as anything but traditional. There’s a strong expectation from the old world to have Americans behaving like the French, and the French behaving like Americans,” he said.
The Herrington Inn, about an hour west of Chicago in the river town of Geneva, Illinois, exemplifies Americans need for idyllic leisure. Like Lynchburg, Geneva has a lot of history. “It’s very scenic. It has a lot of shopping and restaurants,” GM Paul Ruby explained.
Before the hotel was transformed into a 61-room boutique, it was home to a 19th century creamery. Ruby said the hotel embraces its past by including the traditions of the creamery into aspects of the hotel by delivering chilled bottled milk at night to the rooms and using dairy treatments at the spa.
“We definitely capitalize on the town itself,” he said. “We try to focus on everything someone would need right here instead of going to a large market.”
“There’s something to be said for smaller markets,” explained Christner, by offering guests myriad adventures by highlighting eco- and agro-travel and enticing potential guests with the natural attributes of the region: winery tours, breweries, hiking, etc, she said.
Financing boutiques
Doubts about the financial viability of independently owned boutique hotels located in tertiary towns have John Hardy, founder of hotel consulting group The John Hardy Group, hesitant about their potential.
“There’s not real compelling reason to go to a small town to (develop) boutiques,” he said, especially when branded hotels are a safer alternative.
Though finding financing in the hotel development arena is hard everywhere, “it’s easier in that (small-town) environment,” Christner said, listing incentive programs for developers, historic tax dollars, grants for green programs, grants to take derelict buildings and make them unique, as options developers can pursue when considering taking on boutique hotels in small towns.
“You’re creating a destination of its own in that market,” she said.
But that’s a hard thing to convince investors and lenders who are more interested in making money then building a community, Hardy said.
“You don’t see investors saying ‘What can I do for the community,’ it’s ‘How can I make money for myself.’” Unbranded, independent boutique hotels are risky endeavors, and Hardy said “the lending community is risk adverse.”
“Over the last 20 years, (boutique hotels) established themselves as part of the industry,” he said. “Even though they have a lot of panache because they’re sexy, they’re still a small fraction of the total inventory out there.”
But the advent of the Internet has changed this small-minded thinking, Hardy conceded. It’s one of the reasons independent boutiques can be successful.
As Craddock was preparing to build the Craddock Terry Hotel, he opted to play on the heartstrings of investors, hoping they’d see the long-term benefits the boutique hotel could bring to the struggling Lynchburg.
To do that, Craddock convinced the city of Lynchburg to invest approximately $20 million to make downtown a thriving city center, focusing on infrastructure, sidewalks, parks and a pedestrian promenade.
The city, coupled with 53 other investors—local people who wanted to invest in the product—did so because they knew “it would be good for the city and they wouldn’t lose money,” Craddock said. “I didn’t pull the wool over their eyes. It’s a risky business. I can’t guarantee anything.
But, if he does it right, “we’ll make money,” he said. “It’s about telling a story and getting people where the story resonates, and where they want to be a part of the story.”