The Pod and Yotel, two "micro" hotel brands whose tiny rooms and high-concept designs have gained popularity in New York in recent years, are each making expansion plans to better capitalize on both resurgent leisure-travel demand and their success in the country's most expensive hotel market.
BD Hotels opened its first Pod-branded property on Manhattan's East 51st Street in 2007 and debuted a second Pod on East 39th Street last year. By the end of the year, it plans to break ground on properties in Brooklyn's Williamsburg neighborhood and in Manhattan near Times Square. The Brooklyn hotel is scheduled to open by late 2015 while the latter site, which at more than 600 rooms will be by far the largest Pod, will open the following year.
For BD Hotels, it marks the first branded focus after 28 years of opening independently badged properties such as the Maritime, Chambers and Blakeley hotels. BD Hotels also opened a "micro" hotel, The Jane, in New York's West Village in 2008.
"The Pod brand has legs," said BD Hotels Principal Richard Born. "It's a shame for us not to roll it out."
Meanwhile, Yotel, which got its start in 2007 at London's Heathrow and Gatwick airports and debuted its first non-airport property in New York City's Hell's Kitchen neighborhood in 2011, will take its hotel operations back overseas. Yotel majority investor, Dubai-based IFA Hotels & Resorts, earlier this month announced a joint-venture agreement with Jeddah-based Capitas Group International to open an unspecified number of Yotel hotels in Saudi Arabia. That followed a July announcement stating that Yotel will open a 669-room hotel on Singapore's Orchard Road in 2018.
"Given Yotel is heavily inspired by Asian culture, it is fantastic that we are launching such an iconic project as our first in Asia," Yotel co-founder and CEO Gerard Greene said in a July statement.
The expansion plans reflect the popularity of a niche hotel sector that so far has only gained U.S. traction in New York City, where space is at a premium. The city's first-half 2013 average nightly room rate of $240.55 makes New York the most expensive city for lodging in the U.S., according to STR. Almost all of Yotel's 669 New York rooms are of the "standard" 170-square-foot variety, with touches such as retractable queen-size beds, a futuristic design scheme and a common area that includes one of the largest outdoor spaces for a Manhattan hotel. Mid-September weekend rates start at $279.
Meanwhile, most of the Pods' rooms are even smaller, at about 100 square feet, but the hotel tries to make up for it with clever, space-saving in-room design and common areas that include outdoor gardens and rooftop lounges. Rooms for upcoming weekend stays at both Pod hotels start at about $200 a night, and the properties have been achieving occupancy rates of about 93%.
How flexible these brands are in appealing beyond their current clientele remains to be seen. While Pod and Yotel have like-minded European counterparts in CitizenM (four hotels opened in Amsterdam, London and Glasgow since 2008) and Qbic (one Amsterdam property), the clientele tend to skew toward a younger group that could start opting for larger accommodations as their income grows, according to John Fox, New York-based senior vice president with PKF Consulting USA.
Additionally, such a hyperurban concept might have limited prospects in the U.S.
That said, the relatively low price point and design concepts could also ensure that customers who move on to larger accommodations will be replaced by an ever younger clientele looking for a good deal in a great location. Additionally, while Yotel has the advantage of an international reach, Pod may benefit from the fact that "pod" has become one of the shorthand terms for the small-room niche, Fox said.
"It probably bodes well for them," said Fox. "It worked for Xerox and Kleenex, right?"
Follow Danny King on Twitter @dktravelweekly.