Business travelers are about to check in at smaller hotel rooms

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Brands like Yotel and CitizenM are gearing up for growth: are small rooms the future?

Matthew Parsons

Not small, but “compact” – that’s the message the Yotel hotel group prefers when it comes to the size of their rooms. But there’s no denying that business travelers will have to get used to less square footage after the pandemic.

Hotels are giving way more space to public spaces, with corporate guests and local remote workers looking for office space or a place to hold a meeting.

Developers will need to focus on “diversifying revenue streams” after the pandemic, predicts JLL Hotels & Hospitality Group in its new global asset management report. Hotels should also consider new fee models in the same way that airlines charge for accessories, he added.

“As hotels reinvent themselves, we should look at the total revenue of the entire hotel and the impact each square meter of the hotel has on bottom lines,” said Andrea Grigg, Head of global asset management, JLL Hotels & Hospitality.

Today, Yotel, whose major shareholders include a subsidiary of Barry Sternlicht’s Starwood Capital group, is growing and well positioned to capitalize on the return of business travel.

Deductible first

“We are seeing real positive growth in our hotels, in some cases going from low occupancy to single digits reaching levels we only expected to see in 2022 or 2023”, Kenan Davies, Regional Director of transitional sales at Yotel.

The group operates 18 hotels worldwide and said it is on track to reach 50 hotels by 2025. The plan is supported by a hotel franchise and conversion model, which it just launched in UK. The hotel management deals are also part of its global expansion strategy and follow the opening of a property in Manchester following its takeover by Tristan Capital Partners. This is the third franchise agreement after Yotel Porto, in Portugal, and Yotelpad Park City in the US state of Utah.

“The launch of Yotel’s franchise business model in the UK and Europe is timely, as investors seek to partner with unique brands that are best positioned for the post-Covid world,” said Rohan Thakkar, senior vice president, development and technical services at Yotel. . The brand also owns Yotelair properties at Amsterdam, Paris, Istanbul and London airports.

Another brand known for its small parts is also gearing up for global growth. Dutch hotel company CitizenM just called on existing investors for $ 1 billion in order to expand. Its goal is to have 24 hotels in its portfolio by the end of the year, and more than 40 by the end of 2022.

Like Yotel, the company is known for having smaller rooms than a typical hotel room, and it encourages guests to use more public spaces.

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Update December 2, 2021

Hotels are still popular for meetings, with a booking platform Hubli 52% of its on-demand meeting bookings go to non-hotels and 48% to hotels.

Yotel’s current customer base is 55% leisure and 45% business, but Davies is optimistic despite new virus variants and lingering restrictions, saying his team has piqued the interest of local business travelers. and international. “Although our cabins are compact, they have been cleverly designed to optimize every square inch of space, offering everything a guest may need and nothing they don’t need, whatever the reason for their trip.” , said a spokesperson.

However, not all brands focused on business travel are losing weight. Mint House, which has a partnership with American Express Global Business Travel, said it will continue to provide guests with larger and more equipped apartment-style spaces, compared to traditional hotels, to combat pandemic-induced habits. .

“People are extending their trips, finishing their work weeks at their destinations, taking their families and generally staying longer. Business travel is turning into leisure travel and our offering is perfectly suited to adapt to this profound change in traveler behavior, ”said Founder and CEO Will Lucas.

“The ‘new nomad’ must be able to work wherever he is. They are adaptable and agile and expect effortless experiences and inspired environments, and want the ability to work comfortably from their homes without having to be in a crowded workspace, ”he added.

Mint House has over 25 properties across the United States. Recent and upcoming openings include New Orleans, Philadelphia, Seattle and Dallas, and it will reach nearly 2,000 units by the end of this year. It now plans to expand to 3,000 units in 30 markets over the next 12 months.

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