Micro Hotel Industry & citizenM
Micro-hotels have emerged as strong disruptors in the hotel industry. By prioritizing low costs, amenities, and comfort, the micro-hotel industry has gained popularity amongst business and leisure travelers globally since the early 2000s. While guest rooms are a fraction of the size of standard hotels, many micro-hotel brands focus on an elevated guest experience that maximizes comfort through architecture, room design, modern décor, and technology. A shining example of a micro-hotel company that is gaining global market share is the Netherlands-based hotel brand citizenM. We came to know this brand when looking for affordable options in Los Angeles in 2021 and have since become “mobile citizens” having been guests of the company’s Washington, D.C., Boston, London, New York, and Miami locations—with plans to visit the Seattle and Chicago properties later this year. This blog explores how citizenM’s innovative approach to the hotel guest experience effectively disrupted the hotel industry, and how this strategy led to the company’s tremendous growth and expansion into new markets around the world.
citizenM Founding & Disruption Strategy
Founded by Michael Levie and Rattan Chadha, citizenM opened its first hotel in Amsterdam in 2008 and has since welcomed over 10M guests in its 32 global locations. With extensive research into the luxury hotel industry and a deep understanding of the modern traveler priorities, citizenM’s founders discovered key areas where their hotel brand could implement efficiencies to elevate the guest experience and improve the brand’s overall value proposition. While exploring hotel guest decision factors when choosing 4 and 5-star hotels, a profile of travelers who prioritize luxury/beauty, a luxurious sleeping environment, prime location, and price emerged. citizenM refers to these sophisticated travelers, as “mobile citizens,” and has built a brand around their evolving appreciation for luxury and value. We detail the founders’ blue ocean strategy (eliminate, reduce, raise, and create) strategy below. The effective implementation of this four-pronged strategy has gained citizen recognition as the “hotel that changed hotels.”
citizenM’s Blue Ocean Strategy: How did they do it?
Exploring the preferences of its “mobile citizens”, citizenM’s founders discovered that standard hotel front desk operations, concierge services, door attendants, and other services did not add a great deal of value for these types of guests. As such, the company eliminated these services, opting for a more efficient multi-station digital check-in/check-out process.
citizenM’s research indicated that “mobile citizens” did not spend much time in their hotel rooms as they prioritized locations that were close to international tourist destinations, nightlife, and bustling areas. As such, citizenM reduced the square footage of its guest rooms, focusing the smaller space on super-sized luxury and maximizing its real estate square footage.
citizenM raised the quality of its guest experience with an intent to focus on its guests’ preferences for luxury and value. With sleeping space and bedding comfort being a priority to citizenM’s target audience, the company incorporated ultra-comfortable XL king-size beds with lush bedding and fluffy pillows into the design of its guest rooms. In addition, citizenM rooms feature state-of-the-art room controls (via iPad), black-out blinds, customizable led lighting to adjust the mood of the room, huge luxury towels, a workspace, superfast Wi-Fi, and much more. The company defines its rooms in six words; “supersized, essentials, nothing you don’t need.”
In addition to raising/increasing its focus on bedding and other supersized amenities, citizenM dedicates much of its hotel square footage to common spaces that are designated for lounging, working, eating, and relaxing. By reallocating space from guest rooms to public spaces, citizenM properties occupy a fraction of the space of traditional upscale hotels.
By identifying its core consumers, understanding their needs, and identifying opportunities to disrupt the luxury hotel industry, citizenM’s founders were able to create value for its “mobile citizens” and its shareholders.
citizenM Business Model & Future Expansion
citizenM is estimated to have a valuation of just over $2B USD that has been achieved through venture capital funding and debt financing according to CB Insights. In 2019, Singaporean sovereign wealth fund GIC acquired a 25% share of citizenM in a multimillion-euro deal according to the Financial Times. While hotel operation is citizenM’s core business activity, the company combines real estate development, design, project management, and hotel operation to maximize operating profits. In addition to its blue ocean strategy, citizenM also benefits from economies of scale in its construction as most of its units are prefabricated, cutting down on construction costs.
Since its inception, citizenM has expanded to 11 countries with 32 hotels in operation as of this post. The company aims to have more than 40 operating hotels by 2024 with properties opening in Kenya, South Africa, and continued expansion into Asia.
Our citizenM Experience
As a guest of citizenM, the vibrancy of the spaces and thoughtfulness about every detail of the guest experience is immediately apparent. We initially booked citizenM for its price but ended up leaving with value and a sense of brand loyalty that has heightened with each experience. Walking into our first citizenM in Los Angeles, we were greeted with outstanding customer service as the citizenM ambassadors were happy to show us how to check in using the state-of-the-art front desk technology. The company’s dedication to the guest experience is consistent in all of the locations where we have been mobile citizens (Los Angeles, London, Boston, Washington D.C., New York, & Miami). The hotel’s public spaces are warm and inviting with beautiful furniture, fixtures, and artwork throughout. For the modern business traveler, citizenM is a place where work-life balance can be easily achieved by enjoying its public workspaces, dining, rooftop spaces, and gym accommodations alongside spending time in your cozy hotel room. citizenM’s guest rooms are cozy and we were impressed with how the space was used. A feature that stands out is the ability to control the room’s lighting, climate, window treatments, and television from an iPad mini with a custom citizenM application. After a long day, the citizenM guest room is a perfect place to achieve optimal relaxation. We loved the incredible comfort of the extra-large bed and the spa-like showers with fluffy towels and custom citizenM branded soap and shampoo (that we are glad were available for purchase).
Finally, we cannot say enough about citizenM’s locations. All of the locations that we stayed in were centrally located and easily accessible to business districts, public transportation, and tourist attractions. Additionally, many of the citizenM locations have rooftops with beautiful city-scape views of some of the world’s most beautiful cities.
Enjoy our slideshow of images captured at the various CitizenM locations that we’ve visited around the world:
The Wrap Up:
citizenM has created a brand that checks all of our boxes as modern business travelers. As a guest of citizenM, the feeling of a space designed to meet the needs of mobile citizens is inescapable. We look forward to our upcoming stays in Seattle and Chicago and hope to update this blog as we visit other locations around the world.