Good to grow: the flourishing Yotel trend

21 December 2017



A $250-million investment from new partner Starwood Capital helped make 2017 another big year for Yotel. Having also introduced a new brand to differentiate between its airport and city hotels, the group is all set for a unique period of growth, as CEO Hubert Viriot tells Ross Davies.


The summer of 2007 saw Europe suffer one of its worst recorded heat waves, Tony Blair step down as UK prime minister and French bank BNP Paribas herald a global financial crisis by freezing three of its hedge funds.

In the midst of the upheaval, the first Yotel opened at Gatwick Airport’s south terminal on 20 June. Based on the Japanese-style pod concept, it was geared towards travellers on the move, or in need a couple of hours’ shut-eye before a flight. The world media was invited to sample one of the site’s 46 pods.

“Absolutely brilliant, we’ve waited too long for this,” enthused the Guardian. “A trend that could definitely catch on,” read the New York Times’ verdict.

Ten years on, Yotel Gatwick is still standing. In fact, 2017 marked the property’s most successful year to date – regarding occupancy and average room rates – according to the group.

A record performance at the location where it all began for Yotel seems a fitting way to mark an anniversary, but the past isn’t for dwelling on – especially given the group has just launched a long-term growth strategy targeting 60 hotels by 2023.

Currently, Yotel has seven operational properties on its books, comprising four airport hotels under its YotelAir brand – Gatwick, London Heathrow, Amsterdam Schiphol, and Paris Charles de Gaulle – as well as three city hotels in New York, Boston and Singapore.

Giant steps

YotelAir was launched at the end of 2016, as a means of marking a dividing line between the group’s airport and city hotel properties – of which the first to open was Yotel New York in 2011. Geared towards three-to-four-night stays rather than power naps – with a 24-hour gym and club lounge – the Midtown Manhattan property’s inauguration six years ago was a transformative moment for the group.

“It was a giant forward step,” explains CEO Hubert Viriot. “Yotel moved from being in a very unique enclosed environment in airports to being a force in the most competitive hotel market in the world.”

Since opening, Yotel New York’s occupancy rate has consistently hovered around 92–93%. As the first of its kind in the group’s portfolio, it has become “a kind of laboratory” for Yotel, says Viriot, through which the company first dipped its toes into the urban space and has been able to gauge the performance of its subsequent properties.

“We have learned so much from the New York property,” he says. “What we have learned is that we were able to incorporate in Yotel’s DNA to continue growing on a global scale.”

Despite all of Yotel’s properties having “the same DNA” – based on the same highgrade tech, including a “technowall” with smart TVs, multiple power points and easy connectivity – Yotel has been left with two clearly different products. A second brand was needed for clarification.

“I love both products,” declares Viriot. “But they operate very differently, and we were creating some confusion with our guests, as well as our investors. “Some were coming to us and asking, ‘Well, are you the airport guys, or the city guys? We’re not sure.’ We needed to differentiate between the two. Now we ~are growing both brands in parallel.”

While Yotel may no longer be a monobrand operator, it remains a wholly independent hotel management company – which is something Viriot is keen to stress.

Having now branched out into the wider, more traditional urban space, how does this enable the group to distinguish itself? Not by franchising, for one thing, says Viriot. “We aren’t trying to replicate things that have been done pretty much the same for the last 30 years,” he says. “We want to create a fresh, innovative entrepreneurial environment. That’s why we are only focused on doing management contracts in only the major cities around the world.

“We are not trying to franchise our brand left, right and centre, as is so often the case when you are a giant management company.”

Perfect partner

In September, Yotel also received a boost in the shape of a $250-million investment from Starwood Capital. The new partnership – which gives Starwood a 30% stake in the group – ties in with Viriot’s vision for Yotel to retain its independence while consolidating its balance sheet.

“Starwood was an ideal partner,” he says. “Firstly, it’s a global investment firm with niche expertise in the hospitality environment, so it’s a very dynamic partnership.

“With a joint-funded capital base, we can focus more on what we are supposed to do, which is managing hotels better. As Starwood owns so many hotels, we also have the opportunity to tap into their resources to better the platform.”

With its new backing, Yotel now finds itself in super-growth mode. One notable new hotel in the pipeline is a city-centre property in Edinburgh, pencilled in for early 2019. Similar to its previous city hotels, guests will be able to take their pick from 290 cabins, ranging from Premium Cabin to VIP Suite. It’s very much a continuation of the “affordable luxury” concept Yotel has long aligned itself with.

But with its properties now spanning three continents – Europe, North America and Asia respectively – one wonders how the group defines luxury within the hospitality sector. Is it universal or region-specific?

“I don’t think it’s regional,” answers Viriot. “Luxury is pretty much universally defined. What our real focus is on is responding to the needs of this new brand of savvy traveller, who are busy with either personal or professional commitments.

“Luxury, in this instance, is really about giving them back their time. This means using technology – apps and kiosks – to remove check-in and checkout queues. We realise that travellers don’t actually want to spend much time in their hotel – they want to be out seeing things, shopping and eating.”

Extended stay

Yotel’s minimalist approach offers the premium experience associated with an upscale hotel, within the shell of what could be any budget hotel. The requirement for less space also means cheaper real estate costs.

“It’s the absolute solution,” says Viriot. “Providing a well-designed, well-built cabin in a great location. Because we don’t consume much real estate, we don’t need to charge the same kind of prices found in upscale hotels.”

The group, Viriot reveals, is also eyeing up a move into the longer-stay segment, with an announcement on this expected in early 2018.

Given the impact of Airbnb on the extended-stay space – and wider hospitality industry – one might say it’s a bold move, but Viriot believes more disruption might be necessary.

“It’s a further evolution of our brand,” says the chief executive. “We see the extended stay space as being very traditional, but also having great potential. It needs to be reinvented. So, we are working on this, and looking at how we might be able to introduce a Yotel that caters to seven to 21 nights in the future.”

On a personal level, Viriot – who joined Yotel from IHA in 2014 – occupies “one of the most exciting roles I’ve ever had”. If we were to speak again in 18 months’ time, he tells me, Yotel will have doubled its portfolio. “In two and half years, it’ll have doubled again.”

When Viriot first took the reins, his purview was around reorganisation, consolidation and growth of the business. Now with fresh backing from Starwood – and other partners expected to follow – he believes his role is set to shift increasingly away from day-to-day operations towards investor relations.

“It’s almost like starting a new role,” he explains. “As the company grows, the number of investors will become increasingly sophisticated, which means managing our different owners and partners, and having a clear strategy vision in place.”

Viriot is also keen to channel the same entrepreneurial spirit of the group’s founder Simon Woodroffe into operations across the board.

“I’m a huge believer of entrepreneurship,” he says. “That’s a spirit I want to retain within our organisation, and which I want to nurture within everyone from our hotel heads of departments and GMs to our vice-presidents.”

Looking back, Yotel’s first decade can be best defined as one of constant evolution, in which it has also thrown down the gauntlet to traditional hotel models.

The next decade should see more of the same, but with a growth curve that promises to touch new heights.

Hubert Viriot
Yotel’s redevelopment of the former Erskine House in Edinburgh will open at the start of 2019.
Judicious application of technology removes queues, giving guests as much free time as possible.
Yotel’s minimalist approach guarantees a premium experience within a no-frills building.


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