Delivering affordable luxury with a high tech component, citizenM has always taken a fresh approach to hospitality. The global budget luxury brand, launched in 2008, has always put tech at the center of its offering, both from a customer standpoint and in terms of operations.
The COVID-19 crisis has seen the brand once again turn to high tech to deliver a consistent, high-end product that is cost-effective and comfortable for its guests.
citizenM has upgraded many of its pre-existing tech features to provide a totally hands-off hotel experience. Its app can now be used to check in, scan a passport, provide concierge features, manage in-room controls such as lights and air conditioning, and check out at the end of the stay.
As its hotels reopen to the ‘new normal’ citizenM‘s expansion plans continue at a steady pace. The company recently acquired a property in Italy to be converted into a new hotel, as part of a joint venture with European asset manager, Antirion.
In total, citizenM has more than 20 new openings in the pipeline, including a fourth property in London, a fourth property in Paris and new builds in Los Angeles, Miami, Boston and Seattle.
We caught up with Michael Levie, Chief Operations Officer, to talk about the company’s expansion plans, its tech innovations and its approach to revenue strategy and channel management.
Set the scene for us. What’s your elevator pitch for the brand?
We’ve created a hotel for frequent travelers; those people that know what they need from a hotel, and how to navigate their travel. But yet, when they come to hotels they find a lot of friction. We started with a clean slate. We created an organization that hopefully caters to them and although in the end it is a limited service concept, to them it appears to be 100% of what their need in frequent travel.
What do we end up with as a product? A relatively small and efficient room, plenty of technology to fulfil what a contemporary, tech savvy world traveler needs, and a coworking type of environment at the entrance, which does not resemble a hotel, because it’s not necessarily a lobby, a restaurant, a bar, or a meeting space. It’s what we would have at home: a living room, a dining room and that big kitchen where we all end up living anyway.
How would you describe the company culture at citizenM?
citizenM’s culture does not resemble a traditional hotel company. It more resembles a contemporary technology company whereby empowerment stands at the center of how people work together. Very clear purpose. Very clear vision. Lots of specialized knowledge being contributed not necessarily through a traditional top down hierarchy, but by an empowered team that knows their own accountabilities and delivers.
We call our line staff ‘ambassadors’ because, like an ambassador, you represent a whole country, a whole nation, a whole culture. And that’s basically what happens at Duetto as well; when you ask a question, when you’re involved with the organization, everybody’s engaged.
As a relatively new company you don’t have the issue of holding on to legacy IT systems that older, more established hotel companies have. How does that give you an advantage?
Today, I think that the architecture possibilities allow us as in industry to grow up fast. The property management systems and CRS systems were basically bogging us down and giving us very little because those were all room-centric systems, whereas the rest of the world, of course, is guest-centric. We solved it by having middle wear, a service bus that is allowing us to have connectivity. All APIs lead through that service bus and pick up all data through one pipe, so we can put dashboarding on it. Now we have great, specialized systems that are fed by the appropriate information to be as efficient as possible for us.
Where do you want to see your Revenue Strategy taking citizenM and how do you plan to get there?
From day one we have said that we will not be bogged down by segmentations, it’s really channel management. Rate should always be flexible.
Our distribution strategy today is geared towards what is out there, what we can leverage, what is successful and in what combination do we keep our distribution costs in check? We are looking at what is the actual cost of distribution for a reservation? So, with us it’s much more focused on gross revenue, what is that distribution expense and where does it go? And what is net revenue and how does that net revenue contribute to our profit lines?
The myth that your own channels don’t cost anything, doesn’t exist. Vice versa, that OTA has to be the most expensive, doesn’t exist either. A nice interrelationship between all those is what is the best mix, we have found.
Despite COVID-19, you’re continuing to expand. What’s behind your decision making process when you’re choosing a new destination?
We have canvased Europe and the US and found 20-24 target cities. In these target cities we have teams that are actually pounding the streets to come up with great locations and deals. But that does not mean that beyond those target cities we close ourselves off for other opportunities, but we like to cluster. You become more efficient. It’s better to have some local interdependencies and opportunities.
If we find good target cities that hold the magic formula to success for us, why keep it with one hotel if those cities can hold multiple hotels for us? If you take London, it’s walking distance between Shoreditch, Tower and our Bank Side property, yet they serve completely different pockets of the city that are not interrelated at all. It’s easier to operate a cluster that close to each other once you’re operational, so there’s a lot of benefits.
What further development will we see from citizenM in the future?
Our aspiration is to continue to grow with about 7-10 hotels a year, so it’s steady, it’s significant, because if you own/operate it’s a little bit of a different thing to roll out, but it is not excessive either. The organization is set to support that.
You will not see us open up 40 or 50 hotels a year, but we will not slow down to just one or two a year either. So there’s a nice and steady pace.
And as you grow, will you be taking Duetto with you?
Yes. We’re extremely happy with Duetto. You have a contemporary view on distribution. Duetto assists there and we’re able to not only understand our data but also steer on that data. We see that a machine can do better than we humans, but we do need to teach it over time. So, it’s a nice balance. I feel that Duetto as a company, in its culture, in its vision, in its relationships, is very much like us. That’s why we dance so well together.
Duetto delivers a suite of cloud applications to simplify hospitality revenue decisions and allow hoteliers to work smarter, increasing organizational efficiency, revenue, and profitability. The unique combination of hospitality experience and technology leadership drives Duetto to look for innovative solutions to industry challenges. The software as a service platform allows hotels and casino resorts to leverage real-time dynamic data sources and actionable insights into pricing and demand across the enterprise. More than 3,500 hotel and casino resort properties in more than 60 countries have partnered to use Duetto’s applications: GameChanger for pricing, ScoreBoard for intelligent reporting and BlockBuster for contracted-business optimization. Duetto is backed by investors Warburg Pincus, Icon Ventures, Accel Partners, Battery Ventures and Spectrum 28. For more information, please visit https://www.duettocloud.com.