Hotels: Touch of luxury on a budget

16 March 2006
Hotels: Touch of luxury on a budget

The hotel world is full of subcategories and semantics. Take "boutique", for instance, also known as "lifestyle", "hip" or even "townhouse". Or how about "limited service", which in the USA is often referred to as "select service"? Now the lines are being blurred even further with the emergence of a new breed, the "designer" or "luxury budget" hotel, which comes in the shape of some familiar and less familiar names, such as Yotel, Nitenite, The Big Sleep, Dakota, The Place and Base2stay.

These stylish but value brands are outsmarting the traditional budget players, often to great acclaim. "They are a welcome addition and the aspirational budget traveller will definitely consider them," says hotel industry consultant Melvin Gold. "We just don't have many of them in this country."

In terms of positioning, these players would probably prefer not to have the traditional tag of "budget" applied to them. Yet they agree that, for the purposes of people understanding what they are about and being able to put a relevant word into a search engine, "budget" is a good starting point. However, that's as far as the whole budget thing goes. These hotels aim to lure their customers with a heady cocktail of value for money and design, at a price point higher than that of the traditional budget players but below that of their full-service three- or four-star counterparts.

Of all the new players, it's Yotel - whose style mimics Japanese capsule hotels, and airline travel, to offer a 10sq m room with elements of high design at budget prices - that has had the greatest exposure. "It will be the iPod of the hotel industry," claims its chief executive, Gerard Greene.

After three years of high-profile planning, Yotel will open hotels in Gatwick's South Terminal and Heathrow's Terminal 4 in autumn this year, following a major investment by Kuwait-based IFA Hotels & Resorts and an agreement with BAA. A third hotel will open in central London in 2007, as part of a plan to be in all prime city centres and key airport locations in the next five to 10 years.

The central London Yotel will be priced at £80 for an overnight stay, and the airport hotels at £40 for four hours, aiming at delayed and transfer passengers and those with early-morning flights. Each hotel will have between 40 and 50 rooms.

Yotel is the brainchild of Greene and Yo! founder Simon Woodroffe, who were seeking to develop a product offering low-cost, luxury accommodation. The idea was conceived by Woodroffe after he was upgraded to first class on a flight. He decided to translate the language of luxury airline travel into a small capsule-style hotel delivering "aspirational luxury at a low cost".

This, the partners agree, requires a quantum leap in thinking and design. Woodroffe claims: "Ask a focus group if they would like to sleep in a
10sq m room with no natural light, and you won't get many takers. Walk into the Yotel room and you want it."

It may take some getting used to, however. Designed by Priestman Goode, who helped Airbus define the interior of its double-deck aircraft, the prefabricated "cabins" feature sophisticated double sofa beds, pull-down desks, wall ports for the most popular electronic media plus Wi-Fi capabilities, aircraft-cabin style "mood" lighting, "monsoon" showers and flat-screen TVs. There will be a limited grazing menu via concierge bars on each floor at airports, and more choice from a business class-style lounge in city centres.

Although rooms have no natural light, they have windows facing on to the corridor, creating a "street", while at the same time providing complete light and sound privacy as the guest wishes. This will allow Yotel to open in tricky central city locations, airports, rail hubs and even underground.

If aircraft were the inspiration for Yotel, then boats were the inspiration for Nitenite, a 104-bedroom hotel due to open in the heart of Birmingham at the end of this month. Like Yotel's, Nitenite's rooms are based on prefabricated pods, and will be priced at just £49.95 per night.

Intended to emulate the feel of a cabin on a luxury yacht, each air-conditioned room includes high-quality wood and leather finishes, a 42in plasma screen TV, multichannel entertainment, wireless internet access and a hi-tech bathroom with a power shower. Though the rooms are smaller than those of Yotel - at just 2.1m by 3.4m including the bathroom - as in Yotel's there are no windows. However, a camera on top of the building takes in a slow panorama of the city, which guests can view on their TVs, allowing them to see what's going on outside and to see whether it's day or night.

Nitenite's food and beverage offer will be kept low-key. By the reception will be a deli serving breakfast, which could be used as a place to gather before a meeting, for example, but that's all. "Hoteliers have always struggled to make F&B pay," says Nitenite managing director Neil Tibbatt, "so we've decided just to concentrate on the sleeping aspect. Affordable style is the key."

Tibbatt has ambitious plans for 4,000 bedrooms in 30 locations, all in city centres, including six in London, all within five years. Although the Birmingham property is owned, Tibbatt says he will look at a variety of lease and ownership options to expand the brand.

Base2stay, which will open a 67-bedroom hotel in Kensington, London, next month with both rooms and apartment options, markets itself as "value" rather than cheap. The company's mission statement reads: "With rooms starting at £80 per night including VAT, we wouldn't want you to think of Base2stay as cheap, we like to think we're great value."

Chief executive Robert Nadler says that he's not reinventing the wheel but is taking lots of different elements and giving people what they want in a hotel, rather than making them pay for facilities that they're not likely to use. Consequently, there's no gym, no restaurant and no bar. Base2stay describes its offering as "edited services". Indeed, it makes money by not having an F&B department, and by converting into rooms the floor space that more traditional hotels would use for other services.

If you want food, you can have a takeaway delivered or you can go out. If you want breakfast, you either head for the local Starbucks or, for a small price, you can have a breakfast box delivered to your door. And unless you want to watch lots of movies, the rate you've been quoted will be pretty much the rate you pay when you check out. "It's about transparency in pricing," says Nadler.

All the rooms have home comforts such as a mini-kitchen with a fridge and a microwave oven, high-speed broadband internet access and daily maid service. And all, from the smallest to the largest, have contemporary design - the element that, Nadler says, is going to make people trade up from traditional budget. Will there be more Base2stay hotels? Nadler says there's definitely room for growth, although for the moment this is just a "twinkle in the eye".

Also focusing on the home-from-home aspect is The Place, a 108-apartment hotel in Birmingham owned by Opal Developments. Although there's a full-service restaurant on site, one-bedroom apartments at £135 a night have a full kitchen including dishwasher, washing machine and microwave. "It's fine to come in here with your Tesco carrier bag, although it wouldn't be in many hotels," says sales and marketing manager Faith Thomas. Further rollout of the brand is under consideration.

The same is true for both Dakota, owned by Ken McCulloch, who has stated that he would like 10 Dakotas in both the UK and the USA, and The Big Sleep, owned by entrepreneur Cosmo Fry and high in profile because of the involvement of Hollywood actor John Malkovich. There's currently one Big Sleep in Cardiff and another will open in Cheltenham in October, with an opening rate of £69 per night.

Fry's plan is to open six hotels in the next three years, targeting cities such as Bath, Bristol, Exeter, Oxford and London. He also has plans for the South Coast under an extended brand, to be known as The Big Sleep on the Beach.

Fry's vision is not only to be at the top of the "rather congested" two-star budget market, but to redefine the three-star market, which he sees as "really rather redundant".

Whether any or all of these new brands can take the hotel world by storm remains to be seen and will be determined largely by their ability to roll out their concepts.

Gold says: "The budget market has been successful largely because it can take a phone call or internet enquiry and be able to cross-refer to another of its properties 10 miles down the road. Unless these new brands can do the same, they're unlikely to achieve the same penetration."

Names to watch

  • Airline cabins meet Japanese capsule hotel; targeting major cities and airports and opening in UK airports this autumn; anticipated rates, from £40 for four hours.
  • An established apartment hotel in Birmingham, with plans to expand; a one-bedroom
    apartment with a full kitchen comes in at £135 per night.
  • Another stylish, bijou cabin concept, this time based on a yacht; super-cheap at £49.95 a night; opening in Birmingham at the end of March.
  • Stylish and high-profile; one hotel in Cardiff and one opening in Cheltenham in October, with room rates at about £69 per night.
  • From £84.50 per room per night, and with ambitious plans to expand both at home and overseas.
    Apartments and rooms from £80 per night including VAT; opening in London in April.
  • The latest from EasyJet founder Stelios Haji-Iannou has had a lot of publicity, particularly if you like the colour orange and minute rooms; rates from £30 a night in central London.
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