2023 has been a big year for YOTEL. The company announced the debut of its aparthotel brand, YOTELPAD, in Europe with the upcoming opening of YOTELPAD London Stratford and it has also made a series of eye-catching announcements about expansion in Asia.
Hospitality Investor recently caught up with Rohan Thakkar, YOTEL's chief development officer to find out more.
Hospitality Investor: You've got a new YOTELPAD opening shortly in the UK could you explain the concept, especially for the investors reading this and then maybe talk a bit about the trajectory and the plans for the brand in the UK and elsewhere?
Rohan Thakkar: The idea behind YOTEL came from first class airline travel and the idea that luxury wasn't necessarily defined by having more space but that it was more defined by the experience and the elements within the room that drive the experience. It’s why we frequently refer to “Everything you need and nothing you don't.”
We started with airport hotels and eventually developed into city centers with the eventual idea to expand someday into the extended stay/aparthotel space.
YOTELPAD has always been a concept that we have discussed since the early days of YOTEL as we saw (and continue to see) a gap in the market for an extended stay brand that focuses on smart design and efficiency. The length of stay can vary - it could be a long stay (3-4 months) or short stay (one or two weeks) – we wanted to be sure that the commercial offering was flexible enough to adapt to different types of opportunities. From a contract standpoint, we remain true to our ‘asset light’ model and offer management and franchise agreements, even if the units are ‘sold’ and put back into a mandatory rental program.
In the UK, we are opening our first YOTELPAD in May 2024 in London Stratford, which we hope to be the start of many more in the UK/Europe and will be announcing our first YOTELPAD in Asia at some point in 2025. The brand has tremendous potential in all the same key target markets as YOTEL – in particular North America, UK/Europe, KSA/UAE, Japan and Thailand, either as a standalone brand or dual branded with YOTEL.
Hospitality Investor: Where did you start off?
Rohan Thakkar: Our first YOTELPAD opened in Miami in 2021 as a dual-brand, YOTEL & YOTELPAD. This project was a bit unique in that the developer, ARIA, wanted to sell the residences to individual investors. Given branded residential in the ‘affordable luxury’ segment has previously never existed, this gave us (YOTEL) a great opportunity to launch the brand in North America in one of our key target markets. The residences ended up selling in record-breaking time at nearly $700/SF – a huge success for both the owner and YOTEL.
While we still offer the ‘branded resi’ option for our potential investors, we also have a more ‘traditional’ operating model (management/franchise) which is what both YOTELPAD London and Brussels will operate under.
Hospitality Investor: Do you think that the strength of design and brand at YOTEL gives you the advantage when you're looking for these conversion sites?
Rohan Thakkar: Definitely – a key part of the YOTEL brand has always been smart design and flexibility. As we continue to look at many new conversion sites (both existing hotels and other building types such as office, retail, etc), flexibility is key to ensure we maximise the revenue per square meter but also minimise construction costs while not losing sight of the brand identity.
Hospitality Investor: You must have been watching the extended stay market pretty keenly post pandemic?
Rohan Thakkar: Certainly – fortunately we had already been working on YOTELPAD pre-COVID hence timing was perfect given the positivity towards the extended stay market. YOTELPAD also offers us the chance to convert existing hotels which may have larger room sizes that may not necessarily work for YOTEL or alternatively enter submarkets that are more geared towards a long stay guest.
Hospitality Investor: Looking more for YOTELPAD specifically, is it more UK opportunities or is it looking at markets across Europe and seeing what fits?
Rohan Thakkar: Similar markets to YOTEL – North America, UK/Europe, KSA/UAE, Japan & Southeast Asia but with variance in submarkets. More specifically, we have been working most on PAD opportunities in Los Angeles, Chicago, London, Madrid, Lisbon, Berlin, Tokyo, Bangkok, Dubai, and Riyadh – perhaps markets where there seems to be more demand for a hybrid between ‘work & play.’ We have also seen more interest in dual branded YOTELs which gives the owner more confidence with a varying segmentation and target customer base.
Hospitality Investor: You've touched a bit already on the opportunity for conversions, which is another theme we've been tracking in the in the market post pandemic because there's a lot of redundant real estate now and I guess YOTEL has a great opportunity to plug itself into those buildings?
Rohan Thakkar: Definitely. We've seen a huge pickup across all the all the brands on conversions and adaptive re-use. We've looked at converting everything from department stores to vacant office buildings to existing hotels. We’ve now completed 4 office conversions – Porto, Edinburgh, Glasgow and San Francisco and 3 hotel conversions – Washington DC, Manchester and London Shoreditch, which accounts for nearly 1/3 of our portfolio (excluding the YOTELAIR properties which are technically ‘conversions’ within airport terminals)
Hospitality Investor: And another thing I was going to pick up on was the franchising. What was the thinking behind the move and how is it going?
Rohan Thakkar: Franchising was always part of the long-term business plan as the YOTEL model (regardless of which brand) has always been focused on an efficient and great rooms experience. F&B and our public spaces are meant to complement our rooms but are not the primary focus unless for very specific reasons (like VEGA, our rooftop bowling alley, in Glasgow or HYGGE at YOTEL Geneva) and therefore having 3rd parties operate our hotels should be reasonably straightforward.
The franchise model arrived much quicker than we expected as we soon realised that not having a franchise model was hindering our growth and there was adequate demand already from investors.
Our first franchises in San Francisco, Porto, Manchester, and London Shoreditch, have been very positive learning experiences for the company and we are now at a stage where we can easily roll this out globally.
Hospitality Investor: I know YOTEL is getting a lot bigger in in Asia and that's like a really a big focus for you. So could you talk a bit about the plans there?
Rohan Thakkar: So we have two hotels open now in Singapore, one in the Jewel Terminal of Changi Airport and then we have YOTEL Singapore, which has been open since 2017 on Orchard Road. Our focus in Asia has always been on key markets such as Tokyo, Seoul, Hong Kong, Taipei, Bangkok, and Kuala Lumpur, to name a few. We were fortunate over the last 12 months to sign deals in Tokyo, Bangkok and Kuala Lumpur which has directed our growth strategy to really focus on Japan and Thailand. We are opening a new office and building a team in Japan, both to support YOTEL Tokyo opening in late 2024 but also to further expand the brand in key markets, particularly as we are seeing many hotel conversion opportunities in the market.