Could Citizen M's budget boutique be the next big thing? – the Caterer Interview

10 March 2011 by
Could Citizen M's budget boutique be the next big thing? – the Caterer Interview

Groundbreaking concepts are few and far between, but CitizenM believes in these austere times its budget boutique concept could be the next big thing. With a debut property in Amsterdam, another in Glasgow and two planned for both London and New York, the roll out has begun. They combine funky design with state-of-the-art technology and there are barely any staff. Co-founder Michael Levie explains his vision to Emily Manson

How did you come up with the idea? We were frustrated by the way the industry keeps repeating the same old trick. Other industries move on, innovate and change, but the hospitality industry thinks a lick of paint is innovation. We wanted to redo hotels from scratch.

Travellers have changed, their ideas and habits are different. Luxury isn't a chandelier or silver service anymore. We travel more often now, for shorter periods and we all have different needs. We wanted to create an environment for the contemporary traveller who's text savvy and socially aware.

So what is your concept? CitizenM started as an observation. It was about the new traveller, who is a mix of explorer, professional and shopper who takes long and short trips for business and pleasure. They're young at heart and the mobile citizens of the world.

We reflect their common need which is affordable luxury for the people. They like stylish design, want a good bed, nice fluffy towels but also want great value and no hidden costs.

Why has it taken until now for budget boutique to catch on? I'm convinced the hospitality industry is somewhere people end up by default; many didn't do well in their studies, took a side job and then eventually became hoteliers. We have some great hotel schools but we don't academically educate our hoteliers as much as other sectors. Training on the job means people repeat what was done yesterday, whereas in other industries you see more invention and constant change because they come in with different ideas.

We still sell a night's sleep, but luxury has changed, it's all about speed and efficiency. Buying online and checking-in by computer doesn't detract from the guest experience. In fact, our clientele thank us for giving them back control over the check-in process. They don't mind as their eyes are met when they come in, they get a friendly smile and help if they need.

Staffing is always an issue for the industry. How do you get yours? They are the product and the face of the business. When we recruit for an opening, I do it myself, we publicise it solely through social media and invite about 50-odd people to a half-day workshop.

They have to really want the job to go through with that. I set up a lovely breakfast and watch them interact, then we do group activities, trust exercises like being fed while blindfolded and talk about our heroes - I now have to bring boxes of Kleenex because some of the stories are so moving. At the end, I sit with pictures of them all - X-Factor-style - and pick the team that will open the property.

You have about 40% less staff than equivalent hotels, yet good customer feedback. How do you get staff to deliver? In essence we're operating a limited service hotel but we focus services and match them with what our target audience wants and deliver that. In a traditional hotel, managers' time gets taken up by all sorts of things, but we look at our properties as a retail store, because the only thing that takes place on site is guest satisfaction. Managers are only in charge of scheduling staff and ordering food. All other back office work is done centrally.

We pay well, a little above the average, but staff can get a huge incentive - 20% of their salary - based on guest satisfaction scores. Their only task is to make sure the guest leaves the hotel happy and staff are empowered to ensure they can do that.

A lot's been said about your lack of traditional check-in. How exactly does the process work? Guests check-in themselves at automated terminals in the lobby. It takes under two minutes including payment and 80-85% do it without help, so we need less than half the normal staff requirement. But staff are there, their job is to grab your eyes - acknowledge you've arrived and offer you a coffee.

CanteenM is all done on trust, everyone said we'd have a problem in Glasgow, but we don't. If you give people respect they live up to it. We have more of a problem with stocks and wastage but if you have the urge to take a sandwich, knock yourself out.

And the rooms? How are they built? Each room is a self-contained pod, created on an assembly line, finished, sealed and shipped to its site. The Southbank site will take eight weeks of an assembly line, then we put them on top of the foundations, and basically play giant Lego.

Inside the doors are flush against corridors and they're well lit, so there are no spots to hide - we have a lot of female guests so it's really important to feel safe and comfortable when you travel.

You've also got cutting edge IT. How do your systems work? A pioneering company [Hetras] has taken our PMS [property management system], CRS [central reservations system] and CRM [customer relationship management] and put it all on one system and it's cloud-based.

So, for instance, with the in-room mood pad, your preferences are stored in the system and wherever you check-in it pops back up, whichever hotel you're staying at. Guests just want things to work the way they want them.

Our centralisation means staff can be totally guest focused and we can provide today's luxury - which is speed and things that just work. We also have things like free Wi-Fi and movies - including enough porn for a couple of years - as these are a minimal cost to me, but 100% for the guest.

Who do you see as your main competitors? We have two kinds of competitors: hotels in the direct vicinity of our properties and aspirational lifestyle brands. Products like W created a way people like to be and Starwood got that right. But it's also much more expensive and product for product we are very competitive.

What's the grand plan? We did the first few ourselves, but are well funded [by a large pension fund] and have enough capital to complete the first phase.

We're good to go for about 18-20 hotels but it's a small company and finding the right locations, building, staffing and then operating them is a lot of work. We could go quicker but we're happy with our growth.

Why do you think your concept works? We've created living spaces that reflect our lives at home. We don't spend much time in the bedroom, most of us don't want to be stuck in a hotel room either, so we reflect that. Our lobby is somewhere to congregate, come down, sit, relax, read, work, have a beer, watch the game, whatever. The spaces are "propped" with great books and iMacs and have started to live differently; they're cosy, warm, down to earth and buzzy, not like the sterile, larger-than-life atriums of big hotels.

Do not assume you know what your guest wants. Hoteliers do not always know best, ask your guests
2 Make spaces and create an environment that's on a human scale. Massive atriums and daunting spaces aren't necessary
3 Never be satisfied. The minute you've created something good, you need to think how to improve it. If you rest, you'll slide, as the rest of the world keeps moving on
4 Trust your instincts and follow them. Don't do something because the rest of the world does it
5 Just be nice

citizenm in a nutshell

The Facts
2008 Launch CitizenM Amsterdam Airport
2010 Opened CitizenM Glasgow
2012 and beyond Due to launch CitizenM Bankside mid 2012 (186 rooms) and Tower Hill late 2012 (370 rooms) and two in New York: Times Square at the end of 2012 (240 rooms) and Soho in spring 2013 (240 rooms).
Building cost per room 40-45% less than an average four star room (£125k-£175k).

The Experience
Check-in Ambassadors make eye contact with each guest as they walk in, offer them a cup of tea/coffee and are on hand if help is needed to check-in on the self-service, touchscreen terminals.
The room Each room has wall-to-wall window, LCD TV with free movie channels (& porn), XL king-sized bed, power rain shower, luxury linen, Philips touchscreen mood pad to control TV, coloured lighting, blinds, temperature and alarm.
CanteenM Each lobby has a 24-hour honesty food bar, CanteenM, providing daily fresh sandwiches, wraps, sushi, Dutch beer and Italian coffee, with spirits and cocktails at night.
The lobby The lobby is designed as the hotel's living room complete with wall-mounted TVs, remote controls, computer terminals, books and comfy designer furniture.

Rattan Chadha, chairman (career: founder of the Mexx International fashion company)
Klaas van Lookeren Campagne, chief investment officer (career: headed the real estate corporate finance team at Deloitte hospitality and leisure industry)
Kai Overeem, chief financial officer (career: NIBC bank, ING and Numico)
Michael Levie, chief operating officer (career: international hotel chains including Sonesta Hotels and NH Hoteles.)
Robin Chadha, chief marketing officer (career: worked for Mexx and opened "Rain")
Carel van Houte
, chief development officer (career: industrial designer with 20 years' blue chip international experience)

TagsTrends and Hotels
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