Last week, I spoke for the first time with Prizeotel CEO Marco Nussbaum in Hamburg, Germany, as he was preparing to open the second, budget-priced Prizeotel hotel. Friday, June 27, 2014, (updated) is opening day.
Why should you care about a fledgling hotel chain in northern Germany? Because it addresses many aspects of the future of business travel – a topic that Travel Update cares deeply about – and Nussbaum will play a role in defining what that future looks like.
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The concept of Prizeotel is built around serving Millennials, although I’d like to point out that Nussbaum – formerly a “big brand” hotelier – didn’t even mention this arguably overused term. Basically, the concept is to cater to travelers who want a stylish, local, Wi-Fi-offering property that’s affordable and can be easily found on the Internet. Rates at the Prizeotel in Breman start at 59 euros, or about $80. The Prizeotel team sees the Internet as the great equalizer to size. Nussbaum, a Cornell hotel school alum, and his investors also partnered with a provocative designer to give the concept some pizzazz.
Building hotels with smaller guest rooms “is a Millennial trend, since Millennials are less likely to spend time in their rooms,” Boyd told me. “They are more likely to hang out in shared spaces in hotels, if they are well designed and convivial.”
By the way, how Nussbaum and I met also reflects his mix-it-up mindset: We met over Twitter in recent weeks, then after finding we have a few people and ideas in common, scheduled a Skype call.
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Here are highlights from our 40-minute conversation, which I edited into Q&A format for your reading and scanning pleasure:
Q. You’re getting ready to open your second hotel?
A. Yes, the Hamburg hotel opens (on June 27). We will open with 100% occupancy and on Tuesday, a German TV station will come to film, so we’re busy.
Q. Design is a big deal for Prizeotel. Even the backdrop where you’re standing looks stylish.
A. We teamed up with (international designer) Karim Rashid. What we have experienced is that you have lots of hotels where people have had a chair or table created by a designer and they call themselves a design hotel. Karim always wanted to do a design hotel that is affordable for the masses. It’s about democratic design not only for the rich and wealthy. Everything you see inside the hotel is from Karim. Every chair, every color, every style.
Q. You said each hotel will be different. How can Prizeotel make the numbers work – especially being a budget chain – given that uniqueness deteriorates economies of scale?
A. We are earning good money. The other founder is a construction company. We build the hotels ourselves…We have one room type. That’s how we scale the cost of things.
Q. Small rooms?
A. 16 square meters. (Editor’s note: This is about 172 square feet, which is quite small.)
Q. Internet bookings.
A. 75% of our bookings come through the internet. This is where we are very efficient.
Q. Where will you grow next after Germany?
A. We are looking at southern parts of Europe, where we can get cheap real estate. But we think that our product is global and it fits in key markets driven by the Internet. We should open in Barcelona 2016 or 2017. We are negotiating lots of product right now.
Q. What about the USA?
A. We’re looking at Brooklyn and Times Square.
Q. Will Prizeotel give guests the option of mobile check-in?
A. We will introduce mobile check in (next week). So on the day of arrival in room 212, you’ll know your room will be ready at 3 pm; if you have an RFID chip inside your phone, then you can put it near the door to unlock it. (Opening with new technology) gives us an advantage that large companies do not have; they can not scale this quickly anymore.
Q. Marriott International is rolling out a somewhat similar chain in Europe called Moxy with investors from Ikea. Do you see it as a competitor?
A. I think Moxy is just another Marriott hotel. They also have money, brand and franchising partners so the value chain of those people who want to earn money is way too long to be very efficient. In the end, real estate guys want to earn money, and you can not buy the “cool.”
Q. Do you think the giant brands have an advantage when it comes to the future of business travel?
A. No. There’s a total shift. Brands with not such a large amount of hotels will be very popular with business travelers. The competition is not taking place on a worldwide basis.
Q. Content for Prizeotel?
A. We don’t have sales people. We focus on content online, so people can get to know something about the inside of the hotel. We’re not doing fancy pictures with models. We have Twitter, Facebook, Instagram, Flickr accounts that are all connected. We do our own videos. We have our own YouTube channel. Every two weeks, we’re loading a video telling people what’s new about the construction.
Q. You’ve spent your career so far at big hotel chains. How else will Prizeotel differ?
A. After working at NH Hoteles, I was chief marketing officer for a Ramada franchise partner. For Prizeotel, we thought we’re going to do everything different…We don’t even have a GM in the hotel. We have a very lean structure. We have horizontal structure where everybody knows his or her responsibility.
Q. Tell us about Prizeotel’s money back guarantee?
A. If you come to the front desk and the shower didn’t work well and you didn’t feel comfortable, no matter who stands there at the front desk, you won’t have to pay.
Q. I’m sure this received a big response from consumers.
A. People are writing about the guarantee on their blogs, on Facebook, so we developed a tremendous reputation. People know we’re very authentic. We’ve been awarded five times in a row as the top hotel in Bremen on TripAdvisor. On top of that, user-generated content gives you a better rating on Google.
Readers: Comments about Prizeotel or the new breed of stylish, small-room hotels?