Low Cost Carriers and Low Cost Hotels - when the Pods come with perks

The original hallmark of the low cost carrier (Ryanair, Southwest, Virgin-blue, easyJet etc) was "you get what you pay for". The brands pitched themselves as about cheap fares and no-frills. A seat, a destination and for everything else there is Mastercard. There have been some changes here and there such as Virgin-Blue opening a lounge and having a frequent flyer program and even Southwest announcing a plan to change parts of it's famous "cattle call" board system. But by and large the trend has been to keep the brands focused on price and to find ways to change the product to introduce more things you can charge for ( see Ryanair charging for check in baggage). So in the airline business we have a history of low cost providers with a common brand shtick around cheap, cheap, cheap - you get what you pay for.

It has been very interesting to observe that the low cost hotel model is taking the opposite approach. Accor's Formule1 was among the first to offer a low cost but dependable hotel experience sticking with the airline approach to marketing the brand. Since then we have seen a boom in brand launches around a concept of a Pod Hotel or Modular Hotel or Cabin Hotels - basically a step up concept from the world famous Japanese capsule hotel. However the brand focus for these new breed of low cost accommodation has been around "hip, happening, young, funky and convenient" - not around "cheap and no frills".

Here are some examples of these types of hotels that are trying to combine low cost with cool/chic:

• Qbic - launched first in Amsterdam;
• easyHotel - across London;
• The PodHotel - of New York;
  
• CitizenM - also soon to start out in Amsterdam;
• Yotel - out of UK airports Gatwick and Heathrow
• Tune Hotels - multi-coloured edition in Malaysia
  

I was wondering what else the low cost hotels would do differently to the low cost airlines - especially in the area of distribution and pricing. I had an email exchange with Patrick Landman from Xotels - who are providing revenue management services to and are a shareholder in Qbic - to help answer some of these questions.

As expected they make not distinction between business and leisure travellers and as a result do not do corporate rates. What was interesting though is that unlike the airline brethren, they are happy to distribute through third party websites. In the case of Qbic Patrick said that

50% of the business is booked through the own website or are small groups referred from the website to the call centre, the other 50% through 3rd parties and a tiny piece of GDS only

So in low cost hotels we have two significant differences to low cost air in terms of brand and distribution. Is a clear reflection of the greater competition and supplier spread in the accommodation business.

If you are interested in reading more about some of the hotels mentioned here check out the Smart Travel Asia article Bods in Pods by Vjay Verghese.

UPDATE - Guido Van Den Elshout at the Happy Hotelier blog has a story on the ultimate cube hotel. The Hotel Everland has set up a one room suite on the roof of the Paris Palais de Tokyo where Guido reports it will receive guests for an overnight stay and museum visitors during the day until the end of 2008. Great pictures in Guido's post.