Yotel shifting from airports to city centers

22 Feb

It’s a big statement from a man whose Yotel hotel concept is so decidedly small. The brand, which comprises three in-terminal airport locations and a larger property in New York, was modeled after a first-class airplane cabin and features the same efficient use of space in sleek pod-style rooms. Beds double as couches, nightstands double as desks and shower walls double as room dividers.

“I find it difficult to believe that no one’s come up with something like this in the industry,” Greene said last month at the Americas Lodging Investment Summit.


But what Yotel lacks in size it makes up for in luxury—or rather, “affordable luxury.”

“That’s always been the vision, to offer this affordable luxury,” said the company’s CEO. “I mean real luxury. What’s really luxury is a quiet room, free Wi-Fi, a great shower and great bed. There isn’t a US$200 property offering what we offer in New York City.

“Dollar for dollar, square inch for square inch, we have the best hotel room in the world—in terms of value,” Greene added. 


The concept works especially well in today’s cost-conscious marketplace, Greene said, pointing to property performance as case in point. Yotel’s three airport locations—located in London’s Gatwick and Heathrow airports and Amsterdam’s Schiphol—have 150% to 250% revenue-per-available-room penetration within their competitive sets. With 30 to 50 rooms on average, the properties boast occupancy rates of 150% to 220% (rooms can be turned over several times in one day) and average daily rate indexes of 100%, he said.


The company’s New York property, which is much larger with nearly 700 rooms, opened in June and has seen occupancies of 80% and gross operating profit of 47%.

Dealing with developers
That last number in particular has piqued the interest of developers, Greene said.  Yotel’s 3-star concept is inexpensive to operate, and its pod-style concept means more rooms in a smaller amount of space. This, in turn, means higher margins than upper-tier alternatives.

The company was in talks with a number of interested parties, Greene said, including one for a 350-room project in New York’s JFK International airport.

But while the airport model has become something of a trademark for Yotel, the company’s CEO never envisioned it that way.

“That airport model works very well for us,” he said, but the city center is what Yotel is really all about. “It’s just taken a long time to get it going.”

Greene and his development team are targeting the top 10 cities in Europe, Asia and the Americas. The brand doesn’t need to get much bigger than that, he said.

“We don’t want to compete with the Starwoods and InterContinentals of this world,” Greene said. “We still want to have a handle of what’s going on in this business.”

The goal, Greene said, is to have approximately 70% of revenue coming from city center locations as opposed to airports.


The industry and innovation
“I don’t see a lot of innovation in the industry,” Greene said. “We’re bringing something to developers and consumers that’s very unique.”

The CEO said he wants Yotel to be the Apple or JetBlue of the hotel industry—a brand that promises a unique and accessible type of value consumers can’t get anywhere else.

So far, Greene said he thinks Yotel is living up to that premise. While other brands have introduced trendy lifestyle offerings, none can offer Yotel’s combination of unique style, luxurious amenities and affordable room rate, he said.

“Innovation is lacking,” Greene said of the hotel industry in general.

Continuously working to fill that void is what keeps him up at night, he said. “For some reason, I want to revolutionize the industry.”



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