$2-a-night super-budget hotels heading to the UAE

“We see the UAE as our next big target,” says Rhea Silva, a 24-year-old managing director and founder of a start-up that aims to provide $2-a-night accommodation to the millions of people worldwide priced out of the housing rental market. Chototel is currently breaking ground on its first “super-­budget hotel” in Nagothane, an industrial hub […]

“We see the UAE as our next big target,” says Rhea Silva, a 24-year-old managing director and founder of a start-up that aims to provide $2-a-night accommodation to the millions of people worldwide priced out of the housing rental market.

Chototel is currently breaking ground on its first “super-­budget hotel” in Nagothane, an industrial hub near Mumbai. The small, steel-frame rooms have the look of stacked shipping containers, but they are ingeniously designed to provide uninterrupted electricity, water, gas and internet, all on a pay-per-use basis, as well as free TV.

There will be services like a kitchen and creche, run by elected occupants in return for reduced rates or revenue share; an app that allows residents to check in and pay electronically; and an eco-friendly energy grid, water management system, and waste system to keep down costs and reduce environmental effect. Pricing at the initial Indian location will surge to $5, depending on demand, says Ms Silva, but around one-fifth of rooms will always be kept at the lowest possible price of $2.

Ms Silva, who was born and raised in India but is currently based in London, says that Chototel is planning to launch in the UK in 2017, and is also eyeing Nigeria and China as pot­ential markets. When asked if she plans to be in the UAE by the time of the 2020 World Expo, she answers “most definitely”.

Ultimately, she says, her aim is to build five million rooms worldwide, which would entail US$50 billion in investment fund-raising.

“I don’t want to sound obnoxiously ambitious, but that’s the big, hairy, audacious goal.” A third-generation entrepreneur whose father launched an Indian internet service provider and whose grandfather was involved in setting up cooperative banks in India, she is using her own equity to build Chototel’s first location, and is looking to raise funds to expand after that.

Her model is both socially beneficial and profitable, she says. While what drives her has always been “helping people less fortunate than I am,” she says that “you have to create a profit in order to scale. It doesn’t help anyone to falsely subsidise a business”.

“The move towards budget travel is a mega-trend,” says Jeff Robinson, hospitality sector leader for Aurecon, the design, management and consulting company based in South Africa and Australia. In the UAE, which is saturated with five-star hotels, tax breaks were recently introduced for cheaper hotels, for which there is increasing demand.

But there is also huge demand around the world for affordable, basic primary residences that do not require a down payment and a long lease, and it’s this demand that Chototel is really aiming to address. Ms Silva’s “super-budget hotel” model, she says, is “a completely new category”, which “has the pot­ential to disrupt the housing market more than the hotel market”.

People around the world are more transitory than they used to be, Ms Silva points out. They shift jobs and move house more often. “Access and flexibility and comfort” – as well as internet connectivity – “are more important than house ownership today. There’s a fundamental shift in the way that people are perceiving housing.” Chototel is aimed at workers and families who might otherwise, in the Indian communities she’s targeting, be living in tin sheds or under plastic sheets, with no access to sanitation or utilities.

“Super-budget hotels like Chototel are a very good idea,” says Mr Robinson. “They meet a need for decent and afford­able [accommodation], and this is a market that is currently being ignored by established developers. I think that this innovative way of constructing and operating these super-budget hotels will do very well in the Middle East. I look forward to seeing the first one built.”

Ms Silva has only just turned 24. Her father also works in the affordable housing market, and she has a bachelor of management studies degree (she is also in the middle of another degree, in law). Despite these advantages, she says, work at any start-up is a “battlefield,” and as the CEO, “all responsibilities start and end with me”.

When asked if she is ever underestimated due to her youth, she says that “if your purpose is strong enough” you can deal with whatever comes at you. “We are setting out on a mission that can change the way the world accommodates its people. Your age, your gender, it doesn’t matter. What you do, ultimately, is what people judge you upon.”

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