New budget, design-hotel chain

Prizeotel CEO Marco Nussbaum spoke about opening the second budget-priced Prizeotel hotel in Hamburg, Germany, addressing aspects of the future of business travel and how new hotel concepts are defining the industry.

The concept of Prizeotel is built around serving Millennials and catering to travelers who want a stylish, local, Wi-Fi-offering property that's affordable and easily found on the Internet. Rates at the Prizeotel in Bremen started at 59 euros. Nussbaum, a Cornell hotel school alum, partnered with designer Karim Rashid to give the concept distinct style.

Stowe Boyd, Web anthropologist and futurist who authors the Future of Work blog, notes that building hotels with smaller guest rooms is a Millennial trend. "Millennials are less likely to spend time in their rooms," Boyd said. "They are more likely to hang out in shared spaces in hotels, if they are well designed and convivial."

Highlights from the conversation with Marco Nussbaum:

Q. You're getting ready to open your second hotel?
A. Yes, the Hamburg hotel opens. We will open with 100% occupancy.

Q. Design is a big deal for Prizeotel.
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. (About 172 square feet.)

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. 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. 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 cannot 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 cannot 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 do our own videos. 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.