LONDON—With the launch of its newest brand, YotelPad, the short-stay focused Yotel has entered a new market segment—but is that segment more branded residence, condo hotel or extended-stay? The answer is a bit of a hybrid.
“We conceived it as extended-stay when we started working on it,” explained Hubert Viriot, Yotel CEO. But the company’s development partners—whom Yotel created the brand with—saw the opportunity to sell those units to investors, thanks to a growing trend in congested cities: micro homes.
“Certainly in Europe and some in the U.S., a new generation of consumers and investors is looking for small—but well-designed and well-serviced—homes in the heart of the cities,” Viriot said. “What started as a pure extended-stay product eventually became far more hybrid, which can also be rolled out as what is more traditionally called a branded residence.”
It’s a term Viriot is reluctant to use, primarily because of its association with five-star, luxury properties; YotelPad, he noted, is designed to be much more affordable. “It is a hybrid product and it’s one of the great future trends: purposefully built residential buildings that have multiple uses; they can be used as purely residential or short-term rentals, or a hotel type of accommodation,” he said. “It’s not exactly new—luxury condos have existed for years. But what’s new is this is happening in a segment that is much more affordable, and that’s what we’re focused on.”
The elephant in the room with regard to the hotel industry—Airbnb—played a role in the brand’s creation as well. Viriot noted YotelPad was born out of the needs of both its guests and developers, as well as the company’s monitoring of the disruption of the industry via alternative platforms. “I’ve always said the potential customer of Yotel might very well be an Airbnb customer, depending on which requirements our guest has,” he said. “I see both businesses completely functioning in parallel.”
However, he noted, Airbnb and platforms like it lack a few aspects Yotel can address. Key among them, Viriot noted, is “a sense of experience, service, assurance in the quality and layout of the product, flexibility in utilizing the product from checking in and out to extending your stay, and security.”
He added, “We could create all of that and also compete on a longer-stay basis because Pad is a bit more residential than our typical cabins. There’s a social element to the experience, facilities to share, such as a café or coworking space. There’s great flexibility in usage allowing people to stay from one night to six months, but also with residential components, like the ability to cook in your own place, your own privacy. It’s a very interesting segment, which the core Yotel brand was not fit for because it was designed for short stays in great cities.”
Standard Pads will start from 215 sq. ft., but larger Pads will also be available. They will offer Yotel’s adjustable SmartBeds, work and relaxing areas, en-suite bathrooms, fully equipped kitchenettes, ample storage space and Yotel’s signature Technowall. “Instead of creating large apartments, which are shared among people, we’d rather create smaller pads that comprise everything you want to have and don’t necessarily want to share,” Viriot explained. “The way the size gets accepted is thanks to a number of shared facilities and a sense of community.”
For instance, while the Pads will offer small kitchenettes designed to cook a meal for only a few people, YotelPad properties will have shared facilities guests can access to host a larger dinner or a party. Similarly, the properties will have shared spaces to conduct work and meetings, a fitness center, and the ability to receive mail for long-term guests. Programmed to the local environment, communal areas could also include bike and gear storage, Amazon lockers, laundry, a home cinema and a library. “In certain locations where there will be opportunities to interact with the local community, we may have a small café or food and beverage outlet, not only for the YotelPad users, but also for the community around it,” Viriot said.
And, with technology playing such an important role in Yotel’s ethos, YotelPad will offer up its own app for check-in and checkout, digital key and a go-to place for ordering amenities and food-to-go. “This will give guests the ability to control their stay, use the various facilities in an easy and friendly manner, but also provide them with information about their local surroundings and connect them with the retailers and F&B operators around the pad, which we think is quite important,” Viriot said, noting this helps create a sense of community.
YotelPad has launched with five projects already confirmed: Park City, UT; Dubai; Downtown Miami, which will form part of a mixed-use development including 250 Yotel cabins and 208 Pads by the Aria Development Group; and two in the Geneva Lake area of Switzerland.
“It’s a combination of being opportunistic and strategic,” Viriot said of the brand’s growth strategy. “We’ve always been focused on North America, Western Europe and parts of Asia. That strategy remains fully in force.
“Where we’re opportunistic is that the inspiration [for YotelPad]also came from development partners,” he continued. “When we tested the idea, the last thing I wanted to do was launch a brand without a project… When we launch something like YotelPad, we’re following a clear strategy, but we need to remain a little opportunistic because it’s new to us. We need to listen to our development partners.”
The CEO sees several types of markets that would be a good fit for the YotelPad brand. The first is in urban centers across the world—markets that the company has already entered with Yotel and YotelAir properties, but with a product designed for longer-term stays or as a residence. While Yotel is designed for two-to-three-night stays and YotelAir for merely a few hours, the company saw that sometimes, those guests had different requirements. “Within our consumer base, sometimes [they needed]longer stays, either for holidays or an extended business assignment, and in those circumstances we would lose our customer,” Viriot explained, noting that the potential for more long-term residents is also great. “The barriers to entry [in these markets]are gigantic and, therefore, they are the forefront of the micro-home trend,” Viriot said. “Small is not an issue—what matters is quality, design, service, community, etc. We fit perfectly in those markets, and we think there’s a lot of people in those markets currently forced to share their apartments because of the barriers to entry—both from the rental and the buy perspective—who would rather stay in a smaller pad like ours, and have their own privacy with access to a number of facilities that are typically reserved for super-luxury condos.”
Another market is one the company doesn’t have penetration in: resort-type destinations like the Park City project, which will be developed in partnership with Replay Destinations. “It makes sense in a resort type of location, a holiday-driven type of destination where people come regularly but need greater flexibility,” Viriot said.
Finally, he pointed to the Switzerland projects, which will be developed by M3 Real Estate. “The reason for them is Geneva Lake has plenty of global or regional headquarters where people need to commute on a very regular basis but don’t necessarily live there,” the CEO said. “There’s no product that gives the flexibility that YotelPad is trying to achieve. It’s a new destination we hadn’t targeted before.
“It’s a combination of focusing on the cities that we know well and opening up some new opportunities in new locations, which may be resorts,” the CEO concluded. HB