Yotel bringing its small scale to Dubai

Hotel rooms are getting smaller and smarter in Dubai as affordability becomes a deciding factor for tourists.

More midmarket hotels are opening because of a push for budget rooms from the emirate’s government. The latest is London-based Yotel, a subsidiary of Kuwait-listed IFA Hotels and Resorts, which is known for its pocket-sized but luxurious rooms at airports.

Yotel’s model is gaining ground as it expands in top tourist destinations where land is hot property. The company expects to open its first Middle East property in 2018 in Dubai’s Business Bay.

Yotel rooms start at barely 170 square feet, or 16 sq metres, which fits in a queen-sized bed that can fold into a sofa and an internet-connected flat-screen television. The 42-storey Business Bay tower is to have 438 cabins and 127 serviced apartments, and will be developed by Dubai Investment Properties.

The question is whether Yotel has picked a suitable location.

“It is difficult to make such a model work in Business Bay because it is mostly a four and five-star property area, and because land is valuable there,” said John Podaras, a Dubai-based partner at the hospitality consultancy Hotel Development Resources. “That said, it is a strategic location.”

Room rates on Sheikh Zayed Road are under pressure and will further feel the pinch when nearly 2,000 rooms across three Starwood-Habtoor hotels – a St Regis, a Westin and a W hotel – come to the area by the end of next year.

In Manhattan, a Yotel room can start at US$199 a night during weekends. The company did not say what its rates in Dubai might be.

In February, the emirate’s average room rate fell 5.6 per cent year-on-year to Dh983 a night, according to the research consultancy STR Global. Occupancy rates slipped to 86.6 per cent.

Yotel also expects to open city hotels in New York, Singapore, Miami and San Francisco in 2017, building on the success of its first city hotel, which opened in New York in 2011.

Next year, the chain is to open hotels inside the terminals at Paris-Charles de Gaulle Airport and Singapore Changi Airport. It is also scouting for space for city hotels in Abu Dhabi, Riyadh, Jeddah and Istanbul.

Yotel operates airport hotels inside London Gatwick (its first property, opened in 2007), London Heathrow and Amsterdam Schiphol, as well as the city hotel in Manhattan.

In 2005, IFA Hotels and Resorts acquired a majority stake in Yotel, whose founders had been inspired by similar Japanese capsule hotels.


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