It is in this environment that boutique hotels appeared, yet another in a long list of ways that hotels
have tried to differentiate themselves. The innovation of boutique hotels was not a radical change
from current offerings. It was clear that the concept of boutique hotels enhanced the competence of
hotel operators. Many of the current practices in the industry were kept and sometimes enhanced or
lessened, but the new hotels did not represent a disruptive technology to the core concept of hotels.
By combining their existing market knowledge with new ideas of what a new and different segment of
customers desired, Ian Schrager and later Starwood were able to create (in Schrager’s case) or enhance
(in Starwood’s case) current offerings (see Exhibit 10: What Type of Innovation is the Boutique
Hotel?). Although the concept of boutique hotels did not destroy the existing market knowledge, it did
disrupt what hoteliers believed was the correct combination of product offerings to target the lucrative
segment of young and upscale consumers (it is important to note that boutique hotels themselves are
not a disruptive technology, rather a more targeted offering to a particular segment that was either
ignored or underserved). The ultimate list of attributes combined in a boutique hotel is narrowly
aimed at this segment, and therefore the innovation of boutique hotels can be described as niche
creation (see Exhibit 11: How Disruptive Are Boutique Hotels?).