How We Balance Rapid Growth With Innovation

with Eli Sokol, Vice President of Development and Investment at citizenM Hotels

Author

Josiah Mackenzie
October 19, 2023

Together with

CitizenM Hotels changed the game in hospitality 15 years ago, creating a new concept for the type of traveler who would “happily take a bus from the airport but then dine at a Michelin-starred restaurant,” as I recall one of their executives saying early on.

early citizenM marketing

Their growth is only accelerating: they were chosen by Facebook/Meta above other hotel brands to be their on-campus hotel - and that’s just one of the innovative projects they have in progress.

To understand what’s driving their growth and creating opportunities for them today, I spoke with their VP of Development and Investment, Eli Sokol, and you can learn more in our feature story below.

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FEATURE STORY

How We Balance Rapid Growth With Innovation

with Eli Sokol, Vice President of Development and Investment at citizenM Hotels

Eli Sokol

CitizenM Hotels has made a name for itself in the hospitality industry with its unique and innovative approach. From its origins in Europe to its global presence today, the company has experienced rapid growth and shows no signs of slowing down.

Today, we’re learning from Eli Sokol, citizenM's Vice President of Development and Investment, about the company's business model, growth strategy, and an exciting project on the Meta corporate campus in Menlo Park, California.

A Contrarian Business Model

Unlike many companies in the hospitality industry that are going “asset-light,” citizenM has always followed an “asset-heavy” approach.

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From the get-go, we were asset-heavy, meaning that we have some level of ownership in every hotel that we operate.

This strategy gives them maximum control over the product, brand, and growth strategy. It also provides greater upside from a cash flow standpoint. However, being an owner also comes with challenges, such as the need for more capital and the potential risks associated with performance.

That said, citizenM has found success with this business model and continues to pursue opportunities that align with this investment strategy.

Growth to Date

Since its founding in 2007, citizenM has experienced remarkable growth.

citizenM Times Square

The brand first entered the US market in 2013 with a hotel in New York’s Times Square. Today, they have 32 operating properties worldwide, with the US representing 50% of their business.

Their growth strategy focuses on major US markets with diverse demand drivers and is typically expensive for travelers. CitizenM aims to provide an affordable luxury alternative in these cities, offering comfortable and unique accommodations at a reasonable price.

The Meta Campus Project

One of CitizenM's exciting projects is its collaboration with Meta (formerly known as Facebook) on their Menlo Park campus.

citizenM Menlo Park rendering

This project is a first of its kind. The partnership with Meta allows citizenM to serve the tech community and build brand awareness among a crucial audience.

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We see a lot of potential here. Meta is a great partner.

The Menlo Park location fills a gap in the market, providing a much-needed affordable option for travelers visiting the area for meetings with tech companies. The hotel will feature a restaurant, meeting spaces, and all the amenities that make citizenM properties unique.

Growth Through Joint Ventures

CitizenM has found success by working with local or national partners in their development projects. These partners bring valuable market expertise, capital, and relationships.

By collaborating with experienced developers, citizenM can de-risk the execution of a project, reduce capital requirements, and secure the best opportunities. Joint ventures have allowed citizenM to expand its portfolio and enter new markets more efficiently.

Sustainability and Responsible Development

Sustainability is a key consideration for citizenM in its development process.

They aim to create a sustainable portfolio that will stand the test of time. Beyond meeting building standards, citizenM evaluates locations based on insulation from climate risks and other environmental factors. They prioritize materials and building systems that are energy-efficient and cost-effective in the long run. CitizenM takes a triple-bottom-line approach, considering their developments' economic, environmental, and social impacts.

Technology - With Options

We’re thought of as a tech-savvy brand, but I think you have to be careful there because there are a lot of people who, across all ages, who are not as focused on using the latest technology throughout their lives. Some people like the analog way and I think we all value human connection to a certain extent.

While they offer cutting-edge technology in their hotels, such as self-check-in kiosks and room controls via iPads, they understand that not everyone is tech-savvy or desires a fully automated experience - so they strike a balance by providing technology as an option, but not a requirement.

If you've ever stayed with us, you know we have an iPad that controls everything in the room. Blinds, lights, different mood lighting, temperature, TV, you name it. It's really cool. And I think for some people, it's a difference maker for us. And for many others, they don't touch it the entire time they stay there. They're going to use the light switches. And that's perfectly fine, too. I think what we do well is we offer technology that's ahead of the curve, but we don't force it upon people.

Hospitality and Urbanism

Eli and I live close to each other in San Francisco, and since he described himself as an “urbanist,” I asked him what he thought about the self-driving taxis we see on our streets now.

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As an urbanist I'm frankly less interested in self-driving cars and more interested in micro-mobility.

Micro-mobility solutions like scooters and biking can make cities more pleasant and enjoyable, he says - and believes cities thrive when prioritizing human experience, authenticity, and walkability.

CitizenM's focus on creating unique and thoughtfully designed spaces aligns with the principles of urbanism and contributes to the overall vibrancy of cities.

CitizenM Hotels stands out with its unique business model, focus on sustainability, and commitment to innovation. Its collaboration with Meta on the Menlo Park campus is a good example of its ability to identify market gaps and provide affordable luxury accommodations in high-demand areas. With its tech-forward (but optional!) approach and emphasis on design, citizenM continues to redefine the guest experience and shape the future of hospitality.

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