First 'pod' hotel to open early next year in Dubai

DUBAI — Istithmar Hotels, part of the investment company of Dubai World, announced yesterday that its first property will open in Dubai early next year.

By Lucia Dore (Senior Correspondent)

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Published: Mon 26 Feb 2007, 9:12 AM

Last updated: Sat 4 Apr 2015, 8:30 PM

It is Istithmar's first budget hotel to be launched in a chain of 38 to be opened across the Middle East, North Africa, India and Pakistan within the next five years for a total investment of $400 million.

Other countries where Istithmar is immediately seeking sites to establish the brand, for which it became the master franchisor in the Middle East last April, are Cairo, Saudi Arabia, and Bahrain. And in India, "sites are under discussion," said the chief executive of Istithmar Hotels, Joe Sita.

Located in Karama, Dubai, and described as a "completely new concept for hotels in the region," the 195-room easyhotel is expected to open after a construction period of only eight months. Rooms will be pre-fabricated at a single manufacturing site as self-contained units, which are then constructed into a hotel using a "stack, connect and stick" building concept.

Self-structured units are stacked on top of each other, and are connected with pre-fabricated corridor and lift units and are founded on a concrete platform. This type of structure means a 200-room hotel will be able to be opened within 20 weeks of the concrete podium being completed.

The construction of each room costs about $50,000 and more than $2.5 million has gone into researching, designing and refining the core room concept, said Sita. Each room will be 15 square metres and "provides everything that the guest will want — a well, sprung bed, a high pressure shower unit, a work cubicle, and an activity wall that includes a flatscreen television and broadband internet," he said. "The core concept is to deliver an absolutely first class 'sleep and shower experience' at an affordable price". In Dubai, the room rate will start at between Dh250 and Dh300 per night.

The rooms are designed by international architects, Harper Downie, and are to be assembled at a single manufacturing plant, described as the "world's first hotel room assembly line," said Sita. Each room is delivered to the hotel site fully assembled, with all internal elements included — even down to sheets and towels. More than 3,800 rooms will be constructed for the 38 properties being built across the region. Istithmar is in the process of tendering for the manufacture of the hotel "pods."

Of the initial 30 manufacturers from Europe, the Middle East and Asia, a shortlist of six has been drawn up, said Sita, Manufacture is due to start in April.

The adoption of cost efficient construction methods means the return on equity is higher than is typical for other hotels, said Sita. The hotel is expected to be profitable after three months, with a gross operating profit of about 70 per cent of revenue, he said.

Istithmar's hotel portfolio also includes a significant investment in Kerzner Group, the developer and operator of Atlantis Resorts, and in the luxury resort brand, One and Only.

Stelios Haji-Ioannou, who describes himself as a "serial entrepreneurm," launched the easy brand in 1995 with the establishment of the low-cost airline, easyJet. The easy brand operates in 17 industries mainly in travel, leisure, telecoms and personal finance. It profits by either selling shares in the business or by licensing or franchising the brand to partners. To date, Easyhotels are centrally located in London and Basel, Switzerland, and target short-stay customers. There is a central online booking system, based on the formula that the earlier you book, the less you pay, with higher pricing for periods of popular demand.

Haji-Ioannou said his approach to business is that "one-third of his businesses will be doing very well, one-third will be doing OK and one-third will need something seriously done to them."

He added: "I take a lot of risk and some businesses do struggle. But unless some aren't doing well, you aren't taking a risk."

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