HOTELS Interview: Expansion plans for Room Mate Hotels

Room Mate Hotels, Madrid, has been steadily expanding its portfolio of midscale lifestyle hotels, currently one of the industry’s most dynamic segments, across Europe and North America.

Like Ace Hotel founder Alex Calderwood, Room Mate Hotels President Enrique “Kike” Sarasola did not have an extensive background in the hospitality industry before co-founding Room Mate Hotels in 2002, but had traveled extensively as an Olympian horseback rider for his native Spain and found that the type of hotel he wanted to stay in was lacking on the marketplace.

Since then his company has opened 15 design-intensive hotels, initially in Spain and later on in New York City, Mexico City, Buenos Aires and Miami. Room Mate is set to continue its expansion in North America and Europe, and HOTELS recently spoke with Sarasola to find out more about his company’s plans and some background on how its hotels choose their unique names and design.

HOTELS Magazine: How was Room Mate Hotels started?

Kike Sarasola: We started 10 years ago because we, the three co-founders, couldn’t find a hotel we wanted to stay in. If you wanted to stay in a hip hotel, you had to spend a fortune.

I don’t come from a hotels background, but I was a frequent hotel guest. I knew exactly what I wanted — nice, chic, good location for an affordable price, and I don’t need a spa and things like that.

Kike Sarasola <br> </br>
Kike Sarasola

HOTELS: Why use a person’s name for each hotel? How is that decided on?

Sarasola: The concept is that we are your friend in each city.

At the last four hotels we made process of choosing the name and face of the hotel a public thing. We held a competition via social media and women sent over 3,000 photos were sent to us.

HOTELS: Did you use an outside agency for the campaign?

Sarasola: No, it was done in-house.

HOTELS: How do you define the segment Room Mate Hotels are in and what is your typical guest profile?

Sarasola: I would like to say that we are the cheapest one in the street. Our average price in New York is US$220 while our average in Madrid is €120 (US$158). However, the decoration is very, very important, just as important as the location and the price. In Spain, we are the smaller version of W Hotels. We are the hippest hotels there. For each property we open, I work with a pool of seven to eight interior designers and decorators. The design is influenced by the building type and location. The size of our hotels varies greatly — the first hotel we opened has 30 guestrooms, while our New York City property has 150 guestrooms and our upcoming Amsterdam hotel will have 300. However, all of our hotels are city center. In New York we are in Times Square, in Madrid we are on Gran Via.

As for the guest profile, we thought it would be younger but 50% of guests are over 40 years old. They are people that want value for their money, whether they are spending a lot or a little. We have a huge amount of returning customers.

HOTELS: What prompted you to expand into North America and what expansion plans to you currently have?

Sarasola: Well, what hotelier doesn’t want to have a property in New York City, in Times Square? It is a dream come true.

We started expansion in the United States three years ago and we looking at North and South America now. We have a property in Bogota, Colombia that we are looking at for a 2014 opening. We are looking at San Francisco and Los Angeles.

We already have several openings lined up in Europe. Before the summer we are opening our second hotel in Barcelona, Spain, and our first in Rome and in 2013 we are opening in Amsterdam and Rotterdam, the Netherlands.

We are interested in expanding via lease or management and also by buying.

HOTELS: What is the typical management/ownership structure of your hotels?

Sarasola: In the Latin countries we are lease, which is a fixed rate variable, and in the U.S. we have a mix between lease and management.

Our properties have various owners. The owner of the largest percentage of our properties is also the second-largest shareholder in the company, Rosalia Mera, who co-founded Inditex, Arteixo.

HOTELS: How is your portfolio currently performing in terms of RevPAR, occupancy and ADR?

Sarasola: Occupancy is currently averaging 79% across the chain. The starting rate across the Room Mate portfolio is €79 (US$104). We are unable to share RevPAR figures.