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Over the last few years, a new category of hotel has emerged. Sometimes called budget-design, sometimes, urban hotels, this new model revolutionized the hospitality industry.

The trend started in 2008 with the first Citizen M. Today, the group has more than 7000 rooms in the world and many new competitors; independents but also sub-brands from the biggest hotel companies such as Marriott or Accor.

This new model was designed to respond to an emerging segment looking for something different than what was offered on the market. All hotels compete on the same services, the challenge was to think the hotel business differently and surprise customers with a new offer, corresponding to their needs and desires: originality, flexibility, efficiency, good technology and conviviality.

Rattan Chadha and Michael Levie, co-founders of CitizenM, saw the opportunity and decided to create a hybrid hotel model mixing the advantages of different categories of hotels.
They studied the habits of this clientele they renamed “mobile citizen”, and tried to understand why their choice would go from a 3* hotel to a 5* hotel and vice versa. They identified that 5* hotels were appreciated for the experience and the feeling of luxury they offered as well as for their location while 3* hotels were preferred for their pricing and the relaxed atmosphere they provide.
They then sought to create a hotel that would meet all these demands at the same time: the comfort and location of a 5* hotel mixed with the fun atmosphere and the pricing of a 3* hotel.

Just as Easyjet, they removed from their hotel all the superfluous services, rarely used by their target clientele: reception, luggage carriers, restaurant, conference rooms, etc.
Instead, they opted for cutting-edge technology, check-in machines that deliver room keys, a self-service counter where customers can pick-up food 24 hours a day, and multitasking staff that would help the client during check in, answer any of their questions but as well serve them a cocktail at the bar.

Another fact the entrepreneurs realized is that this clientele was spending more time in common areas than in their rooms. Hence, they designed ultra-compact rooms with only the essentials: a large and comfortable bed, a powerful shower, a flat screen, a digital tablet and high speed wifi. Besides, they imagined large common areas, welcoming, friendly and with a modern design, in which clients would feel comfortable and where they would like to spend most of their time.
A hotel, centrally located in big cities, at an affordable price.

All these ideas don’t come from nowhere: a cruise ship inspired room, a LEGO-like construction, a check-in inspired by airports, a booking and pricing system that follows low-cost airlines model and common areas similar to our living rooms. To innovate in a homogeneous business, one must open its perspective and get inspiration from different industries.

Many other brands have been created on the same concept, studying the expectations of this new type of clientele and getting inspired by other industries: Yotel, Motel One, Ruby, Prizeotel, Z hotel, B&B – to name just a few. The biggest hotel chains have not lagged behind and created sub-brands designed for Millenials: Moxy, Ibis Style and Indigo are some example of these.

There is a good reason many hotels decided to get into this business. Budget-design hotels have it all; they focused on a core customer and created an offer that met its expectations. Nothing more, nothing superfluous. Anything that is not essential to the customer has been removed, allowing them to maximize their margin, and not slightly; their construction cost and staffing costs are both 40% lower than the industry standards, and their occupancy rate is considerably higher!

As an industry, we can all learn from this new model by keeping in mind some key elements:

  •  We cannot adapt to demands of each and every type of consumer at once. Focus on a specific profile, learn from their habits and create a product around it.
  • Simplify your concept to offer only what is needed. Wanting to do everything, we do nothing well at all.
  • Be careful, simplifying your concept does not mean offering average quality. Comfort, cleanliness and good service remain the industry basics and a must for all customers.
  • Get the inspiration for ideas and innovation from other industries and bring good ideas back into your concept.
  • Reducing the cost is one thing, but if you do so, you need to do it well! If you decide to reduce the services offered, you first need to define which ones are important to your clients and make sure you excel on these: for example, a high-speed wifi is highly recommended. The same way, if you decide to reduce the room size, you need to compensate with large, welcoming and friendly common spaces were clients will feel like at home.

Innovating in the hotel world is not easy as the offer is more homogeneous than the customers’ expectations. However, other industries are innovating and the hotel industry must follow. Customers nowadays are used to the “one click experience” provided by many of the new age companies, Uber, instant payment etc, to name a few. Everything must be done quickly and efficiently, while providing a personalized and unique experience.
The key to succeed in this competitive and sometimes old-fashioned industry is to challenge the rules, think outside the hotel industry itself and create a unique and meaningful experience to the customers. Hoteliers must learn from new players, study other industries ways of doing and always challenge and reinvent their current model.

About EHL Group
EHL Group encompasses a portfolio of specialized business units that deliver hospitality management education and innovation worldwide. Headquartered in Lausanne, Switzerland, the Group includes:
EHL Ecole hôtelière de Lausanne Lausanne is an ambassador for traditional Swiss hospitality and has been a pioneer in hospitality education since 1893 with over 25,000 alumni worldwide and over 120 nationalities. EHL is the world’s first hospitality management school that provides university-level programs at its campuses in Lausanne and Chur-Passugg, as well as online learning solutions. The School is ranked n°1 by QS World University Rankings by subject and CEOWorld Magazine, and its gastronomic restaurant is the world’s only educational establishment to hold a Michelin Star.
EHL Swiss School of Tourism and Hospitality (Chur-Passugg) has been one of the leading hospitality management schools for hotel specialists for 50 years. The school delivers Swiss-accredited professional training and higher education in its newly renovated 19th century spa-hotel in Chur-Passugg, Graubünden, to Swiss and international students from 20 countries.
EHL Advisory Services is the largest Swiss hospitality advisory company with expertise in the development of educational models and quality assurance for learning centers, as well as strategic and operational advisory for businesses, namely providing benchmark service culture implementation to companies within the hospitality sector and beyond. EHL Advisory Services has offices in Lausanne, Beijing, Shanghai and New Delhi and has delivered mandates in more than 60 countries over the past 40 years.

About the Author

Manon Maréchal

Manon Maréchal Junior Consultant at EHL Advisory Services

As a Junior Consultant in our Lausanne office, Manon brings her sense of hard work, client relationship management and analytical skills to fulfill stakeholder’s expectations and create long-term partnerships. Having graduated from Ecole hôtelière de Lausanne, Manon joined EHL Advisory as an Associate, where she worked closely with the advisory services team. She worked on several high-level projects including the development of a Food & Beverage franchise model for a luxury automotive brand, feasibility studies, market studies and implementing transformational changes to operations for cruise companies. Furthermore, she has been able to actively participate to academic audits, the development of two new learning centers as well as numerous tailor-made executive education programs. Prior to returning to EHL Advisory, Manon worked as a project coordinator at the third largest pharmaceutical company in the world, where she was in charge of overseeing the development of a construction project, managing the relationship with key suppliers on a daily basis, as well as coordinating the project team activities. When she is not traveling and discovering new cultures, you will find Manon running half marathons, doing yoga by the lake or planning a trek in the desert. She is fluent in French, Italian, English and Spanish.

Areas of Focus:

  • Customer service design
  • Hospitality concept development
  • Opportunity and feasibility studies
  • Food & Beverage Operations
  • Relationship management