Another independent hotel brand is joining a larger hotel brand family. The trade off: stronger distribution; better development opportunity.
Hilton has entered into an exclusive agreement with Yotel, the tech-forward hotel brand that launched its first airport hotel at London Gatwick in 2007 through a design concept that riffed off of airplane cabins. The brand features compact room design, and automated luggage storage systems.
Yotel currently operates 23 hotels across 10 countries with a stated goal of more than tripling its portfolio in the coming years.
Hilton should help.
Under the agreement, Yotel becomes the first brand within the newly established Select by Hilton and its properties will soon be bookable through Hilton’s channels and open to its nearly 250 million Hilton Honors loyalty members.
The key differentiator in this deal is that it’s not an outright acquisition, like Marriott International’s buy of citizenM last year. This deal is more akin to Hilton’s 2024 partnership launch with AutoCamp or its tie up with SLH, where there is no outright acquisition of IP or assets.
To hear it from Phil Andreopoulos, CEO of Yotel, who prior to his leadership at Yotel was 24 years with Marriott, the perception may exist that relationships like this can enervate the brand and its ethos, but he is quick to dismiss this notion, he told HOTELS. “I’ve negotiated with Hilton that Yotel gets to stay fiercely independent,” he said. “We have total control over our brand standards. We own our brand; we’ve not been acquired.” Andreopoulos referred to it as a hybrid: a franchise deal crossed with an affiliation deal.
He’s blunt about it, yes, but he also sees the benefits of joining a large network like Hilton’s with its vast loyalty program and ownership community that likes developing its brands. It’s a realization that many smaller brands before him have come to terms with and propelled them to look for options. A deal like this, he said, frees them from some constraints that held it back. “In our industry, small chain, independent companies are buffeted by the distribution mix. The OTAs are squeezing everyone so tight. It means that we can’t do all the things that we would like to do in terms of growing, in terms of developing our brand, in terms of making sure that we are an ethical employer, because so much of our margins are going on increased labor costs, on increased distribution costs. We are being squeezed,” he said.
There is little detail on the commerical composition of the deal, but Andreopoulos said it’s unique from the straight franchise agreement that a hard brand triggers—where the owner is paying for the brand. “There are things that we’re taking from their system that we need to pay for,” he said. “It’s a very fair structure for our owners and for Hilton and for Yotel.”
Hilton CDO Christian Charnaux called the addition of Yotel “the latest example of our commitment to capital-efficient growth.”