GLOBAL UPDATE
ON HOTELSMAG . COM
BLOG :
WHY DON ’ T MAJOR BRANDS ENTER THE HOSTEL SPACE ?
Ivar Yuste , partner at PHG Hotels & Resorts , Madrid , launched his Hotel and Resort Investor blog on HOTELSMag . com with a provocative post asking why major hotel brands have chosen not to enter the hostel space given the rise of chic hostels like Generator and Freehand .
“ The BMW 1 Series and other car brands all serve the same purpose : These are ‘ entry products ’ to higher-end models such as the BMW 5 Series and 7 Series , Mercedes S-Class , etc .,” Yuste wrote . “ However , the likes of Marriott , IHG , Accor , Starwood and Hilton have deliberately decided so far not to serve the 16- to 22-year-old age segment . Why ?”
The blog post drew strong reactions , some citing the perceived risk aversion of the major brands . “ The chains you mentioned like any large corporation are slightly old-fashioned , institutional and averse to perceived risk taking . Hence they have become late adapters ,” wrote Patrick Landman , CEO of Xotels , Barcelona . “ Mind you only some have started to move into the budget boutique market … the chains are not trendsetters , but financial institutions that only enter into a market segment once it has been established by daring and visionary entrepreneurs .”
Others pointed out the potential return on investment for a major brand might not be sufficient . “ What is the total annual discretionary spending in this demographic subset , and where are they going ?” wrote John Kennedy , partner , Neuner + Kennedy Hospitality Consultants , Örebro , Sweden . “ It tends to be an individual owner / operator market so less data is available in terms of performance or benchmarking . It is a volume bed mentality rather than a room so it is different to manage from a revenue or inventory perspective . There are smaller margins and not much opportunity to make up spend through F & B .”
Ivar Yuste
Read the full interview : hotelsm . ag / 19fi3GJ
INTERVIEW :
YOTEL ’ S PLANS FOR ASIA PACIFIC
Yotel , London , recently announced a 600-room development set to open in 2016 on Singapore ’ s Orchard Road , and CEO Gerard Greene hopes this further jumpstarts development of the chic , cabin-style brand in Asia Pacific .
Greene is bullish about growth prospects in the region , as he says developers there better relate to the Yotel model and have the capital to invest in the right opportunity .
“ We are hiring a development person for Asia where there is more opportunity , and developers get the business model there ,” Greene told HOTELS . “ Asia is hot for us now , and we should be taking advantage of the market . Hong Kong , Seoul , Japan , Taiwan , Manila , Bangkok and further afield are on our radar . We are getting inquiries from Sydney , Melbourne and Perth , as well .
“ These are all management deals ,” Greene added . “ People in Asia are starting to realize spending X per key for a luxury brand doesn ’ t make the returns they want . So budget brands are starting to come in now . Where land is expensive , the Yotel model works very well and probably works in Hong Kong and Singapore more than anywhere else given that land prices are so high .”
Gerard Greene
Read the full interview : http :// hotelsm . ag / 15VV4lU
www . hotelsmag . com December 2013 HOTELS 19