Being Boutique in a Hotel Cluster: The Benefits and Threats of Agglomeration

Abstract

Drawing on the agglomeration and hotel management literature, this paper identifies the benefits, threats and opportunities of being boutique in a hotel cluster. According to the literature on agglomeration, firms that pursue differentiation strategies are more likely to enjoy the benefits of agglomeration rather than suffer from the threats of agglomeration. Being boutique is a classic differentiation strategy in the hotel business. The rise of Airbnb threatens the operational model of a boutique hotel. The author proposes that strategic human resource management may allow the boutique hotel to enhance its differentiation advantage by pairing unique features with superior service.