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Dutch group CitizenM opens first UK hotel

13 September 2010 by

CitizenM has announced that it plans two London and two New York City hotels, having opened its first UK hotel last week.

The Dutch hotel group has moved into the UK market with the £100m 198-bedroom new-build hotel in Glasgow city centre, next to the Theatre Royal.

Chief operating officer Michael Levie said that the London sites were acquired at a low point in the hotel trading cycle. "We're efficient and stubborn as hell and our efficiency gives us our competitive edge," he added.

Construction starts this year on a 209-bedroom hotel located behind Tate Modern and the second London hotel (384 bedrooms) is on top of Tower Hill Underground Station. Both are expected to open late next year.

CitizenM's business model is based on successful branding and keeping costs low. Investment costs are 45% lower than the average cost (£150,000 to £200,000 per room) of a four-star hotel, according to Levie.

The Glasgow bedrooms, for example, were made in North Wales by Corus Living Solutions then transported and stacked on to the building's frame like bricks of lego. Construction time was 38 weeks, compared with 52 for a traditional build process.

In terms of staffing, self-service check-in, a self-service canteen and the outsourcing of housekeeping, maintenance and IT frees up front-of-house staff (known as "ambassadors') to concentrate on customer service. Based on customer feedback and their performance, staff receive a monthly bonus of up to 30% of their basic pay.

There were around 75 applications for each vacancy in Glasgow, said general manager Chris Kelly. The group employs 0.2 full-time employees per room, compared with an industry average of 0.5 per room.

At citizenM Glasgow all IT functions, including room access, the mood pads that control the in-room entertainment, lighting, heating and window shades; the wireless IP phone system and CCTV, are managed remotely by Swisscom Hospitality Services making full use of IP (Internet Protocol) networking technology and SaaS (Software as a Service).

Rooms can be booked online only and Levie said that 53% of reservations were made through citizenM's website.

In New York a 315-bedroom hotel on Bowery and a 230-bedroom hotel near Times Square are both due to open in early 2012. CitizenM is also pursuing joint ventures in China and Hong Kong, and actively scouting building sites in Paris, Milan and Zurich.

Levie is one of four owners of the CitizenM operating company. The real estate is financed by ABP, the largest Dutch pension fund, and KRC Capital, the private equity firm backed by Rattan Chadha, former owner and founder of fashion company Mexx, which was sold in 2001 for a reported $264m.

The value of budget hotels >>

CitizenM eyes UK in European expansion plan >>

Hotel sustainability - could do better >>

By Ben Walker

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