EasyHotel, the lowcost alternative

The total invested in Generator Berlin was 5 million euros for a leasehold property.alternative At the entry level of the hotel market, hard budget properties target clients who heretofore stayed with friends and family. Its evolution is therefore very important. The founder of easyJet, Stelios Haji-Ioannou, wants to apply the same low-cost principal to the hotel industry. He presented its first easyHotel with 25 rooms which is under construction, on Cromwell Road, in the heart of London. Scheduled to open in September 2004 as the first link in a chain with international ambition, it hopes to revolutionise the hotel industry the same way easyJet disrupted airline trafic.
Such cost limitations makes it possible to reduce the room price to a rate varying from 5 to 60 pounds Sterling, or 7.5 to 90 euros, by applying an intense yield management programme. Reservations made via Internet well in advance for low periods will benefit from the lowest rate. Inversely last minute sales will be “penalised”. According to its founder, London’s easyHotel reaches its breakeven level with an average daily room rate at some 45 euros. “'We are trying to fill the gap between the cheapest branded hotels where rooms cost at least 100 euros a night and the cheaper unbranded B&Bs, where you don't know what you are letting yourself in for,” explains Stelios Haji-Ioannou. “We are betting on the fact that people will happily surrender space for money.”The development of the concept is already planned: easyHotel intends initially to expand to city centres across the UK and then move on to New York, Paris and Barcelona. After a first series of investments in its own right to perfect the concept, easyGroup will turn to franchising to accelerate the expansion of the network.The Generator, a youth hostel...