After nearly 20 years, London-based Yotel may have finally found the partner it needs to scale.
The hotel brand, which originally launched as an airport accommodation concept at London Gatwick in 2007, quickly earned a reputation for its tech-forward design, efficient use of space and penchant for purple lighting.
Yotel's expansion efforts, however, have been fairly modest, with the brand currently at just 23 properties globally. But a new franchise agreement between Yotel and Hilton, unveiled in mid-March, looks likely to change that.
Under the deal, Yotel has become the first brand within Hilton's new Select by Hilton portfolio, which Hilton said is designed to bring "high-quality, established hotel brands" into the Hilton fold, without requiring them to give up their individual identity or brand management.
Yotel retains control of its brand and operations while gaining access to Hilton's distribution channels, technology platforms and Hilton Honors' nearly 250 million loyalty program members.
Yotel CEO Phil Andreopoulos -- who was appointed to the role late last year by the brand's majority stakeholder, Kuwait's Al-Bahar Group -- said the partnership marks a turning point for Yotel. In addition to its core, city-center Yotel concept, the brand also encompasses Yotelair, which offers short-stay airport accommodations bookable from four hours, and Yotelpad, an extended-stay concept with apartment-style accommodations.
"We see this collaboration with Hilton as a key driver of our next phase of growth, enhancing performance across our portfolio, strengthening relationships with existing and prospective owners and building brand visibility in new markets," he said, adding that Yotel aims to triple its portfolio to 100 hotels over the next five years, with a focus on opportunities in Europe, North America and Asia-Pacific.
Future Yotels in markets like Kuala Lumpur, Athens, Belfast, Lisbon and Saudi Arabia are already in the pipeline.
A niche gets a boost
For analysts, the partnership addresses a central challenge for many smaller hotel groups with limited reach.
"When you're subscale, it's tough," said Robert Cole, Phocuswright's senior research analyst for lodging and leisure. Before the Hilton affiliation, said Cole, developers may have struggled to get lenders on board with a lesser-known brand.
"Now, all of a sudden, you go to the bank and say, 'Hilton's behind it,' and that changes everything," said Cole.
John W. O'Neill, a professor and director of Pennsylvania State University's Hospitality Real Estate Strategy Group, echoed that sentiment, pointing out that Yotel's distinctiveness could have been something of a double-edged sword, with developers adopting a wait-and-see approach toward a concept they may have viewed as "a little strange."
"They're what you'd get if micro hotels married airport lounges," he said. "Their guestrooms are called cabins, they're very compact, and their lobbies are like high-tech airport lounges. They're doing something different." (The rooms in the company's Yotelair airport hotels are called cabins.)
Because Yotel's properties are so different from a standard hotel, the brand can't easily grow through conversions, unlike other select-service hotel brands, he added. And according to O'Neill, Yotel's concentration in downtown and airport locations meant the pandemic likely hit its pipeline particularly hard.
Despite those obstacles, O'Neill also sees upside in Yotel's uniqueness.
"It's a unique niche that's different enough from Hilton's existing brands, so Hilton and Yotel can both synergistically benefit from growth," he said.
Phocuswright's Cole added that Yotel's small-footprint rooms are a big part of the brand's appeal, particularly at a time when new hotel development is increasingly costly.
"They're very efficient," he said. "The rooms have a really, really tiny footprint -- not a pod, but getting close to a pod hotel. And you can generate really good revenue on a per-square-foot basis, which is fantastic."