Armed with a US$50 million commitment from investor Starwood Capital Group (30% shareholder) to use for operating guarantees and key money for conversions, London-based Yotel is poised to reach for its goal of 50 properties by 2025.
With 18 hotels and some 4,500 keys open today, and a pipeline of another 11 properties with almost 3,200 keys, Senior Vice President of Development & Technical Services Rohan Thakkar told HOTELS this week that the brand now has enough scale to more aggressively move into the franchising space, with its Yotel Pad extended-stay brand perhaps providing the most unique growth opportunity in the United States. “It’s micro-residential, in a sense, and we can do mixed-use with Yotel Pad. It is also easier to do conversions with the Pad.”
Yotel opened six new hotels in 2019, including its first city center hotels in Europe, and four more in 2020, including the first Yotel Pad in Park City, Utah.
Thakkar said properties are under construction in markets like Miami, Atlanta, Long Island City, Brussels, Geneva, with new deals in Tokyo and Melbourne, and hopefully Bangkok is coming, too.
Thakkar said the Yotel brain trust has spent a lot of time during COVID discussing growth, how to bring in more institutional investors and what tools are required to grow faster. They also finished a new prototype with its small but perfectly-formed rooms and unique communal public spaces to give developers a sense of what the brand is trying to achieve. “We have also been looking for distressed assets, but it has not materialized,” he added.
As it ramps up franchising, Yotel leadership has also spent a lot of time making sure they have what investors are looking for from a fee structure. “Not having extra, hidden fees will obviously give us a shot,” Thakkar said, adding that building brand awareness with consumers is another big focus. Yotel just started ad campaigns in the U.S. and the U.K., he said.
Thakkar said the growth goal could accelerate with the company taking leases in countries like Germany and France. Meanwhile, franchising will be the big push in the U.S., while Europe will focus on leases and conversions. Asia Pacific will be trickier, Thakkar said, and won’t accelerate until “people can touch the product.” There are currently only two Yotels open in Asia Pac. Dubai will open next year, but again, the Middle East faces similar challenges to Asia with limited supply.
Among the other major investors in Yotel are Med Al Bahar International from Kuwait, United Investments Portugal and Kuwait Real Estate Co.