“The hotel sector has been the poor relation of the property industry in many ways, but yields from hotels are starting to match those of other sectors in the property industry. Operators are starting to be able to level out the troughs and peaks of the hotel industry. Providing the right gearing is in place, I think property developers will see hotels as a suitable alternative to office buildings and other types of commercial property. The Savoy Group sold back in 1997 at around 6 percent, but now we’re starting to see yields in budget hotels at that level, which had been unheard of. There are massive growth opportunities in the budget hotel area in Europe – many markets are pretty fragmented and you don’t really have any low cost branding.

Independent boutique hotels have done very well, and I’m sure the Internet has helped that happen, but the major chains still have the brands. Brands make a big difference, but they have to stand for something. Best Western, for example, doesn’t really mean anything to me; it’s just a reservation site. Meanwhile the 5-star sector is increasingly prostituting their brands – they’re selling their assets and you never know nowadays if it’s one brand or another over the door. With so much merger and acquisition activity in the sector how does a consumer ever distinguish between brands? That’s where some of the budget hotels have done quite well. At least with the Travel Lodges, the Travel Inns and the Expresses, you have a pretty good idea of what you’re going to get.

The whole passion of the hotel industry used to be about putting a personal touch into properties. What consumers really want when they go to a hotel is to feel special and experience something personal, and that’s where the design hotels and boutique properties are doing really well. The big issue for us at Yotel was to offer affordable luxury. In order to do that, something had to give – you can’t offer 4 or 5-star luxury at an affordable price and still have a 25m2 room – the numbers just don’t add up. We decided to translate the language of first class airline travel into a small, stylish and functional hotel. Instead of bringing in an interior designer, we brought in a firm who design aircraft interiors, which has made the space really special. There are so many hotels that are full of furniture that takes up all the space in the room and you never use any of it. We’ve kept the key features of a luxury hotel room, but shrunk the space and used it cleverly.

We’re using an automatic check-in and checkout system, like the airlines, but we’re offering a first-class experience throughout the hotel. Rather than making another soulless hotel, we allocated the front desk cost elsewhere to improve the guest experience, getting back to what real hospitality is. We’re opening at Heathrow and Gatwick later this year, and our goal is to have properties in every major airport and every major city centre in the world in the next five to ten years.”

 

Gerard Greene is CEO for Yotel

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