Smaller Rooms for the Younger Guest
October 17, 2016 9:28am
by Ryan Sikorski
As other industries and employers target millennials by attending to their preferences, the lodging industry is no different. In an attempt to attract younger guests, new hotel franchises are emerging. These recent flags are shifting away from emphasizing larger room sizes and in-room offerings in favor of more common amenities which also have an emphasis on technology.
For instance, Marriott introduced its 18th brand Moxy to the U.S. in April 2016. Moxy opened its first U.S. hotel in Tempe with other locations in Milan, Italy and Munich, Germany. A reported 59 Moxy hotels are in the pipeline internationally with U.S. locations slated for New York City, San Francisco, San Diego, Seattle, New Orleans and Chicago. Moxy puts an emphasis on common space, offering tech-enabled lobbies and food and beverage space. This brand has a considerably higher proportion of public space than its other limited-service flags.
Hotels offering smaller rooms have a place in history, having originated in Asian cities such as Tokyo and Hong Kong as a response to high real estate prices and construction costs. The origins of this recent trend have similar roots as hotels with smaller rooms are cheaper to build and maintain. In turn, this pushes down room rates as well, especially in urban locations.
However, new brands such as Pod, Yotel, Tommie and CitizenM are also promoting their new layout as not just price conscious but attractive and fun. They are highlighting public spaces such as a café by day and a bar by night as places that allows guests to work during the day and mingle and play at night. These areas are marketed as a material advantage over the offerings of AirBnB users, which are seen as an emerging alternative to hotels. A guest of an AirBnB user is often isolated from others as they are staying in an apartment, condominium or even single-family home. These hotel brands are banking on the fact that this arrangement is not seen as attractive to millennials.
The jury is still out whether this is merely a passing trend or one of the many hotels of the future. The Moxy Hotel in Tempe has recently quite favorable press since opening this spring and all signs point to additional U.S. locations opening in the mid-term. However, Commune Hotels & Resorts announced in June 2016 that it would not proceed with its two tommie components (250 rooms on East 31st Street & 325 rooms on Hudson Street) of larger projects (NoMad and Hudson Square, respectively) in New York City. Commune did announce it continues to pursue tommie hotels in Chicago, Los Angeles, Austin and New Orleans.
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Ryan Sikorski, MAI, CFA is a Valuation Services Director with Colliers International Valuation & Advisory Services (CIVAS). Ryan has completed appraisal, financial reporting, litigation support and consulting assignments on a wide range of asset types throughout the Midwest. Ryan currently operates the CIVAS Wisconsin Office out of Milwaukee and oversees appraisal efforts across the entire state. Ryan is a member of the Hospitality and Leisure specialty group and has been active in valuation and consulting for over a decade. Prior to joining Colliers, Ryan was a Senior Appraiser with Vitale Realty Advisors, LLC. Vitale Realty Advisors is known regionally for its specialization in hotel and golf course appraisal. Ryan focused entirely on these asset types (hotel and golf) during his time there. Ryan also worked at Duff & Phelps, LLC, which is a premier global valuation and corporate finance advisory firm. Ryan was part of the Valuation Advisory Services practicing, offering financial reporting, purchase price and ESOP valuation services.
Contact: Ryan Sikorski
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