Wassup Yotel?

Ahead of the opening of Yotel in New York, the CEO of the pod hotel brand, Gerard Greene, speaks to Jamie Knights about achieving 200% occupancy, finding cool but quality staff and working with its majority stake investor, IFA Hotels & Resorts.

“Yotel was never really designed to be the airport model,” says Yotel CEO Gerard Greene — the first surprise comment I get from him. Yotel and its pod- or cabin-style format found in Gatwick, Heathrow and Amsterdam’s Schipol airport has become synonymous with being an ‘in-airport’ hotel.

But the soon-to open Yotel in central New York is going back to the original concept for the hotel brand, Greene explains.

“The airport model was actually a spin off from what Yotel was originally conceived to be, which was a city-centre concept,” he says.

“We don’t see a variant in what we wanted the brand to be, it’s always been in our DNA, but as we were developing it we saw there was an application in the airports as well.”

So if the airport model was a “spin off”, has it been successful? Yes, incredibly. The airport-based Yotels are operating at around 200% occupancy, working on a captive audience that wants a room for hours, not days, typically paying for a four-hour stay — a place to rest while in transit.

While the New York property will work on traditional night stays rather than four-hour shifts, it will retain one of its biggest advantages — its small room size.

“The whole point is it is designed to enable us to get in very central locations — we are able to take space that other people can’t; whether that is inside terminals or sites in central cities such as New York,” Greene enthuses.

“When we looked at the [New York] site, the developer had a 300-key hotel in mind and we managed to get 670 bedrooms in there.”

The New York Yotel standard room is 15m² with windows and, while smaller than some competitors, Greene explains that the way the room is designed means it feels bigger.

“No one thought about a small space ergonomically and I suppose that’s where we stand out. We used aircraft designers to design a small space so it doesn’t feel so small and it’s ergonomic — you have desks, a double bed, a monsoon shower; we have soundproof doors, window systems and quiet heat pump systems,” he says.

“None of the hotels in our asset class — even the four-star hotels — have that, so the user will decide that they have everything that they need.”

Greene adds that he is excited to think about how people will react to the New York offering once they test the pod hotel concept.

European travellers are expected to lead the way, followed by the corporate market before more people start to realise that staying in the city is “not about staying in your hotel room”.

The product is certainly not common and there will be a period of education for those who are not accustomed to the brand and what it represents, and while Greene admits his “friends” at CitizenM are the “biggest competitors globally” although “not competing directly”, he adds Hilton Garden Inn to Yotel’s competitor set.

“The people who want to stay in a design hotel have a choice — they can pay US $500 to stay at a Garden Inn or $250 to stay at Yotel in the same location. The budget traveller can stay for $50 to $60 in something that’s pretty uninspiring or they can stay in a Yotel for $250 and get a much superior product,” he says.

The product
So what does this superior product entail? Greene makes the comparison with Apple, in terms of its branding and appeal to the iPod generation, but employing staff who fit in with this ethos is not easy.

“You want to create this brand where people think slightly differently and those people are in every part of the world, but it’s a question of whether they are working in the hotel industry,” he says.

“We have 10 people working for us in New York, but with any brand that starts like Apple, it’s difficult to find people that like to think outside the box while at the same time still providing something that is professional.

We are still in the hospitality industry and I can’t have people walking around chewing gum going ‘yo’ — it doesn’t work like that and that’s not the sort of product we want to be.”

Greene believes that ‘casual’ and ‘lack of respect’ aren’t traits that would work in most places in the world, particularly Asia and the Middle East.

“There are much bigger expansion opportunities and if you run a professional outfit you have to strike that balance between being cool, but also trying to be professional,” he adds.

The “bigger expansion” will no doubt be aided by majority stake investor IFA Hotels & Resorts — a partnership that initially raised some eyebrows, according to Greene.

“People said it didn’t really make sense with IFA having lots of luxury investments such as apartments on The Palm Jumeirah and Fairmont Hotels, they asked how it fitted in with their brand strategy,” he explains.

But IFA Hotels & Resorts CEO and chairman Talal Jassim Al-Bahar “completely understood” what Yotel was about.

“Talal saw it with a long term view as they [IFA] do in the Middle East. These resort projects in emerging locations would be one business model, but in order to stabilise and have a presence in more established cities in the world, and in order to balance the portfolio in terms of where cashflow comes from, Yotel seemed like a good model.

“Yotel wasn’t just an ordinary budget hotel, it had a luxury element to it so that was really where Talal saw it fitting into the overall picture with IFA Hotels & Resorts. It meant they were more able to go into more established city centres with low costs and better cash flows,” he adds.

Greene explains that no bricks or pods have been laid yet so it will be at least another year and half to two years before we see a Yotel in the Middle East.

An MOU was signed with Abu Dhabi National Hotels (ADNH) in 2008, although due to a changing market nothing concrete has yet to emerge from the understanding.

Despite this, Greene sees a lot of opportunity in the region and “the intent hasn’t changed”.

“Dubai is an obvious market but location is key. Pockets of hotel developments in Dubai aren’t doing very well and then there are pockets, like the ones on the beach in Jumeirah, that are doing extremely well, so it really depends,” he says.

But Greene concedes he feels that in the current climate there is more capital in the US, particularly with the number of funds willing to invest in hotels.

With this in mind he believes the New York opening will kick start a more rapid expansion as people get to see the product.

“I think after New York opens things will move very quickly — there’s been no let off in interest since we opened in the airports so it will be crazy,” Greene asserts.

While it may be a few years yet before we see pods in the Middle East hotel market, it would seem likely we will be saying ‘yo’ to a Yotel in the region soon, even if the staff don’t say ‘yo’ back.

About Yotel
FOUNDER: Simon Woodroffe

PARENT COMPANY: YO! Co is the wholly owned holding company of Simon Woodroffe that works with others to develop and seed finance YO! ideas and new YO! brands.

FIRST OPENING: 2007 in Heathrow and Gatwick airports.

NUMBER OF HOTELS: Three (all based in airports). A New York property is set to open in 2011.

CONCEPT: Pods that offer a business-class stay for an affordable price. Due to the ergonomic design (pods designed by aircraft engineers), a lot of features fit into a small space