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How to combine high-end design with affordable room rates

16 April 2010 by

A new breed of hotel has emerged in the past three years, with independent hotel companies launching chains that combine high design with an affordable room rate. But how do they do it? Rosalind Mullen reports

Philippe Starck bathrooms, mood lighting, free Wi-Fi, a handmade bed, a good night's sleep… you might think you've woken up in a pay-through-the-nose boutique hotel, but nowadays you could equally be starting the day in a budget hotel.

Dutch companies such as Qbic and Citizen M, as well as home-grown Yotel and Base2Stay, are among the most exciting new launches to have shown budget needn't be bland. Not to be left out, multinationals are also filling a gap for funky, value-for-money brands - for instance, Starwood with Aloft, InterContinental Hotels Group with Indigo and Accor with Etap and Motel 6. Even established budget chains Travelodge and Premier Inn have been inspired to update their offers.

However, Robin Chadha, partner at Citizen M, points out that these new-breed hotels are in different niches. "Qbic and Yotel offer fewer facilities than, say, Citizen M and Aloft. They are all after the same consumer in different ways," he says.

So, who are these consumers? According to Chadha, today's consumer is money-conscious, but still wants style and comfort. For example, they can't afford a W hotel, but neither do they need all the facilities it offers, so they're happy with a pared-down imitation such as Aloft - or Citizen M.

Stuart Harrison, principal of the Profitable Hotel Company, who coined the term "budget boutique", expands: "The genesis of what we see today was born out of some independent hoteliers, either as second-generation owners or successful entrepreneurs new to the industry, demanding a completely different design and feel. They had seen what Malmaison and Hotel du Vin were achieving versus the sameness of the large brands and were inspired to do the same - to make a statement and have some fun."

But they have to make business sense, too, says Harrison. "Of course, the funky and the fun only work when you're committed to the core values of a good night's sleep, cleanliness, security, service and value for money," he says. "It is through this balance of back-of-house discipline and front-of-house theatre that we'll see the ground-breakers endure commercially."


QBIC

When this chic-but-cheap Dutch hotel launched on two floors of Amsterdam's World Trade Centre in 2007, it was booked solid. The concept reflects the trend of low-cost airlines, where travellers forego unnecessary facilities in favour of value for money - in this case €69 (£61) a night, including taxes.

What sets it apart from some traditional budget hotels, however, is that it also strives to provide comfort and a good night's sleep in a futuristic-looking room. It all hinges on the "cubi", a cube-shaped module in kit form that is assembled in the room. Furnishings include a high-quality Hästens bed, LCD TV screen, a work-and-dine set, a Philippe Starck bathroom, high-speed internet - and different coloured lighting to create moods.

Costs have been kept down in several ways. For a start, the hotel was converted from defunct offices, which saved on construction, and the building's owner adjusted services such as water, electricity and sewage connections. Each room cost €12,000-€15,000 (£10,500-£13,200), plus the same again per room for the services, including the corridors and lobby.

"It's an affordable way of building a hotel," says Paul Janmaat, director at Qbic. "The company saw there was an opportunity in the eight million square metres of empty office space in the Netherlands. You can never build a hotel on the right spot because there is always another building there, so we aim to use existing buildings."

Costs are kept down further through the no-frills policy. For instance, check-in is automated and F&B comes from vending machines - note that it's home-made from local bakeries. The bottom line is that the hotel is staffed by only one full-time equivalent - three a day - and cleaners are outsourced.

In addition, about 50% of bookings come in direct and all reservations are pre-paid, with no cancellations or refunds, which means there is a return on investment on marketing spend immediately. Guests stay an average of 1.2 nights with a 50/50 business to leisure mix.

So far there is only the one hotel, as a franchise deal with Golden Tulip withered when that company went bust. Qbic is seeking another investor with the aim of developing 17 to 20 hotels within five years, equating to 1,500-2,000 bedrooms. To control staffing costs, Janmaat says hotels will be a minimum of 70 bedrooms and a maximum of 120.

CITIZEN M

A new type of sophisticated but money-conscious traveller has been identified by Citizen M, as partner Robin Chadha explains. "They take public transport, but they order a bottle of Champagne when they arrive."

He adds that both business and leisure travellers are out all day, so they don't want to pay for unnecessary services they barely use. That said, they want comfort and style when they are there.

"We all want to stay in a Mandarin Oriental or a W Hotel, but they are £200-£300 a night. There is nothing in between. That is the void we are going for," says Chadha.

In response, the partners, who come from a range of backgrounds including fashion and hotels, took boutique hotels and fine-tuned them to provide affordable luxury. They appointed Dutch designer Concrete to combine innovative, modern design with user-friendly technology and functional space.

Citizen M is, therefore, a cut above budget-boutique hotels, providing large lobbies furnished in iconic Vitra furniture, 24-hour service, super king-size beds, bathrooms with power showers and bespoke toiletries, a stylish café, a bar serving Champagne and cocktails, plus free movies, Wi-Fi and electronic mood pads. Yet, the rooms sell at an average of just €100 (£88).

There are three main areas of cost-saving, says Chadha, although he won't talk figures. The first is the hotel's low-cost design solution whereby all the 14sq m rooms are prefabricated in the company's production facility and transported to the building site. This reduces the on-site construction time to eight to 10 months and ensures minimum construction waste.

The second is staffing. Chadha says they need only 20 full-time staff, plus outsourced housekeeping in a 215-bedroom hotel. That's because there is an automated check-in service where, incidentally, guests also program in preferred lighting, music and room temperature. There is also a mood setting for wake-up calls, digital art and so on. F&B is available in the upmarket Pret A Manger-style canteen M, which offers sandwiches and sushi. Baristas and staff serve coffees, cocktails and Champagne.

The third money-saver is that most bookings are taken online.

The concept is obviously working. Its first property opened with 230 bedrooms at Amsterdam's Schipol airport in 2008, last year a 215-bedroom hotel opened in the city centre to be followed this summer by a 198-bedroom property in Glasgow, and there are plans to roll out 20 in prime European locations in the next five years. Guests stay an average of one-and-a-half days in the airport hotel and two to three days in the city hotel.

YOTEL

Yotel, which launched in 2007, has three sites at Heathrow, Gatwick and Schipol airports, and its first city-centre hotel is due to open in New York next year.

The rooms are reminiscent of space-age pods. This is explained by the fact Yo! Sushi founder Simon Woodroffe famously conceived the idea when travelling first-class on a BA flight. He recognised a Western solution to the Japanese capsule hotel and drafted in aircraft cabin designer Priestmangoode, although Conran went on to refine the design.

Marketing director Jo Berrington explains the concept. "The value for money and simplicity of function came first, so all the design elements are there for a reason. The mirrors, glass and white walls are there to create and reflect light. The mood lighting is to provide relaxation. It's more function-led than design-led, unlike boutique hotels."

The rooms are cost-effective because they only offer the basics - albeit good quality. In response to customer surveys, Yotel has identified what customers want, so it provides an organic coir, latex and lambswool mattress, cotton linen and a monsoon shower. There's also free Wi-Fi, which is used by 60-70% of guests. Food is on a take-away basis, so guests order through the intercom or at reception and get basic dishes such as fishcakes, paninis and drinks delivered to their room within 15 minutes.

"We save money on space that customers don't use. They do want a TV, but they don't need the gismos," says Berrington. "We fit in 50% more rooms - a premium room is 10sq m and a standard is 7sq m - so we can keep the prices reasonable."

The hotel pods can be booked on a four-hour or overnight basis, with the 32-bedroom Heathrow hotel seeing 170-180% occupancy owing to brisk daytime business from transit passengers. Premium rooms attract £70-£80 a night, standards achieve £50-£60 and day business brings in an average rate of £25-£60. Gatwick has fewer transit passengers, so occupancy of the 46 rooms is 130%. The 57-bedroom Schipol in Amsterdam is airside and caters mostly for travellers in transit who don't have a visa. Demand is such that there is a plan to add more rooms at Heathrow and Gatwick to include a mini executive lounge, plus another Yotel at Heathrow.

Rates are kept low by the fact that only two full-time staff are needed to man each hotel, and, in fact, between 11pm and 5am this drops to one. There is also a 24-hour cleaning operation "like a Japanese Formula One team" who can turn around a room in 15 minutes.

The customer profile is 50/50 leisure to business and, according to Berrington, despite the self-service check-in and online booking options, it attracts a cross-section - from families to backpackers to 90-year-olds. But Berrington stresses that staff do answer the phone and are on-hand to advise guests on the complicated London airport system.

The design will be modified for city centres where guests will stay longer. Rooms in New York, for instance, will be bigger and there will also be a funky bar, terrace and restaurant. Next stop is London.

ACCOR'S MOTEL 6 AND ETAP

Accor's aim in redesigning these chains was two-fold - to minimise costs and increase efficiency for the company, and to maximise the space and quality of the rooms for the customers.

The Motel 6 chain is US-based and the first new-look property was unveiled in 2009, winning London airline designer Priestmangoode the 2010 Travel & Leisure Design Award for Best Large Hotel. The remit was that the cost of the redesign should not be passed back to the customer and this was achieved by combining a chic design with no-frills functionality. The rate, therefore, still hovers around $40 (£26), which it claims is the lowest of any US chain, but a spokesman says that occupancy has increased at renovated sites.

Rooms feature wood-effect flooring, ambient lighting, a sofa area and flat-screen TV. The use of space is clever, with the unit that houses the TV and so on, concealing a door-less wardrobe. In addition, free morning coffee, free local calls, Wi-Fi and, in most sites, a swimming pool and laundry, mean there are no hidden costs.

So far 60 hotels have been refurbished, with a further 100 scheduled this year and all 1,000 within next few years. Target customers are the budget-conscious traveller who wants to spend less on their room and more on entertainment and food, as well as business travellers whose employers are looking to calm expenses.

Back in Europe, sister-brand Etap has piloted a similar redesign at the 106-bedroom Etap hotel at Toulouse airport in France and is rolling it out. Most rooms can sleep from one to three people at €49 (£43) a night. And to meet the needs of a diversified customer base, 24 twin rooms have been created - a first for the brand.

All rooms have been reworked to optimise use of space and are designed around a lighted central column separating the bedroom and bathroom. This multifunctional column lights the washbasin and desk, while hiding water pipes and electrical wiring. Soft colours have been used to enhance the guest's mood and, of course, there's the ubiquitous flat-screen TV and free Wi-Fi.

The reception and public areas have also been freshened up with the use of bright colours, comfortable armchairs and drink and snack dispensers.

The Toulouse hotel is also a testing ground for energy-efficiency initiatives that will help offset the cost of design with the low room rate. In addition to solar panels that heat water, the hotel has a heat pump system that regulates temperature year-round. Each room also features faucet-flow regulators, energy-efficient electrical installations and certified construction materials. Together, this equipment is expected to cut energy consumption to one-third of regulatory requirements.

JURYS INN

In response to the fact its hotels don't conform to any particular star-rating, Jurys Inn is investing £9m this year in a bid to redefine the midmarket by repositioning its properties as "Exceptional Everyday City Hotels".

The aim of the redesign is to provide good value across its 30 hotels through 24-hour staffing and facilities such as a bar and restaurant at room rates that start at £49. Its other aim - to "project warmth" - is apparent in the colour palette and use of clean lines.

"Our guests have told us that they like contemporary accommodation, large flat-screen TVs, soft duvets and warm and stylish colours. Our new rooms are a response to their feedback," says sales and marketing director Gill Harris.

Costs have been kept low partly through its eco-initiatives, becoming the UK's first Green Hotel Group as recognised by the Green Tourism Business Scheme. So far, the company's eco-initiatives have saved it £1m a year - a bonus that is being passed on to customers through lower rates.

Eco-initiatives include a heating system that cuts off in underused parts of the hotel and a system to reduce the number of toilet flushes when cleaning, saving 79 million litres of water a year.

Jurys Inn will open in Bradford and Portsmouth this year and in Gateshead and Glasgow in 2011. In addition, Jurys Inn Islington will be expanded with 150 new rooms to meet the demand at the hotel which runs at 90% occupancy.

See also our article, Design of the times

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