Chototel is rolling out 'super-budget hotels', where tariffs start form US$2 per day, and has identified the UAE as an upcoming destination for development
Chototel has embarked on a mission to supply 1% of the world’s demand for affordable housing by 2025. Moreover, the hotel group has plans to build five million super-budget hotel rooms in the next decade.
Originating in India, and conceived out of the need to provide better quality housing solutions in a global market that fails to cater to those at the bottom of the pyramid, Chototel is spearheading a movement to supply budget-friendly
accommodation with uninterrupted utilities, clean water and social infrastructure, while delivering market returns.
“I don’t think Chototel is targeting or addressing the housing crisis in a way that no one has attempted previously – there has been social housing before and there have been low-budget hotels too, but our concept of bringing these two models together is new,” Silva begins.
“No one has looked at the issue in this way before. We are positioned between these two models – providing a life of dignity to people, in a joyous and welcoming way, instead of a derogatory way. Furthermore, people are invited to stay with us as long or little as they like: one week, one month or one year”.
Formed from the words “chotu” – meaning small in both Hindi and Japanese – and “hotel,” Chototel aims to deliver its own style of clean, safe and affordable accommodation to the UAE in the coming years.
“We choose our locations where there is a high growth in the manufacturing, information technology or industrial sectors. These are locations where jobs are being created, where there is greater potential for growth and most importantly where the cost of land and buildings are appreciating. So we think the UAE has a lot of potential in terms of these key criteria.”
Silva explains that where the UAE-based property is concerned, the exact location is anticipated to be finalised by the beginning of 2017, after which it will take approximately six months to complete the development and construction phase. “We use a steel frame construction method, this is no longer an uncommon method of construction, in fact it’s being used all over the world.”
Silva adds: “The difference is that in most countries around the world, people are paid by the hour for the time worked, so a lot of people are not incentivised to complete the project promptly. At Chototel we pay our employees as per each completed hotel project, so they are motivated to complete the current job and get on with the next one much faster.”
Chototel now has tenders in China that can import the whole building to the UAE, completely fabricated: “It just works like nut and bolt construction – it’s like Ikea, but in steel. We just have to erect the building in its final location. Other than the hotel’s foundations, it’s completely dry, with no wet construction and no bricks, it is all made using steel and dry technology”.
When it comes to developing in the UAE, Silva anticipates a broad spectrum of source markets, but she acknowledges that in areas where there are large numbers of jobs being created and in-transit corridors, Chototel will be most attractive. Construction workers and labours are to be targeted in the initial project, until the company has capital to locate addtitional properties centrally in the cities.
“I think our target market will be people who actually work in the industry and manufacturing sector – those without access to quality accommodation. Because we are offering accommodation from $2 (AED7) per night, that can be shared for up to four people, the actual cost can be as low as 50 cents (AED2) per person.” She adds: “We want to target those without access to accommodation, electricity and gas; those at the lower end of the pyramid.”
On the topic of revenues, Silva speaks passionately about the use of innovative technologies to build, operate and manage in a way that keeps costs low and efficiencies high. “There are two income streams for the hotel: one from daily rent for the rooms, the other is from guests paying as per utility use.” She adds: “We implemented tiny bots in different areas of the room, so we have a bot at water meters and gas meters measuring the amount of resources being used in real time. These pieces of technology then send this information to the guest’s smartphone, so they can monitor exactly how much is being consumed and how much it is costing. They then pay as per their individual usage.”
Chototel also has crèche facilities that guests can use for an additional fee.
“The income from utilities and services is all going into running the hotel maintenance and paying staff, the $2 room rate goes back to the investors.”
Silva reveals a method implemented by the company to reduce the need for staff, labelling the hotels as ‘manless,’ but noting at the same time there is a need for light management, for which the company has implemented a self-help group.
“The residents and guests democratically elect among themselves people to run the hotel. If we have 240 rooms, we’ll need about 24 guests to run the hotel. They are elected to run facilities like the kitchen, and they are paid a small wage from the income generated.”
This outside-the-box approach to staffing is also seen in the hotel’s view of sustainability, as Silva highlights, the hotel concept uses a closed-loop utility system. “We have seen this implemented in different aspects, for example, off-grid solar power and places where gas is generated through waste, but generating electricity, water and gas completely off-grid, we haven’t seen this before.”
The company aims to accomplish this target by October 2016, but is still currently in the testing phase at the moment.
“By using photovoltaic systems to generate electricity, capturing ground and rain water and using guest waste in a biogas treatment system to generate cooking gas, we aim to operate the whole concept off-grid. The idea is to be completely sustainable by being completely renewable.”
Speaking specifically of the UAE-based property, and the practicalities of operating off-grid in the Emirates, Silva notes that it is possible due to a strategy intended to keep consumption very low, around 2,000 to 3,000 watts per room. “We designed our rooms to use 250 watts – because of this it is much easier to run off-grid with recycled resources.” She continues: “With air conditioning usage – it will be difficult, so running at 80% overall off-grid in the summer may be more realistic in the UAE.”
Ultimately is comes down to planning effectively for each location: “Our strategy is to keep resource load per room low and operate in a way that requires low energy, so we’re sustainable.”
Reflecting on the Chototel journey so far, Silva admits “It’s not easy in India, and I don’t foresee it being easy in UAE either.”
She adds: “Our goal therefore, is to use developers experienced in the UAE, because not many developers are successful outside their own geography, and we’ll outsource construction to local developers to ensure high quality too.”
She ends: “People today need flexibility more than ever. We are no longer attached to home ownership, so here at Chototel we are offering a balance that we really see a need for in today’s market.”