NEW YORK—Yotel could develop an additional six to eight U.S. properties with the capital it is raising from its recently announced $250-million real-estate fund, the company’s CEO said Tuesday.
Yotel, in partnership with IFA Hotels & Resorts, Kuwait Real Estate Company and The John Buck Company, is in the process of raising the fund focused on expanding the Yotel brand’s reach in the United States.
So far, CEO Gerard Greene said approximately $50 million has been placed in the fund. The full $250 million could be raised by early next year.
Gerard Greene, CEO of Yotel
“I think there’s a lot of capital out there,” he said.
First up on the company’s development list is Boston. Greene said they’re still in the early stages and no sites for a new-construction build have been chosen yet, but he said the plan is to have a Yotel-branded property in Boston in two years. That opening would be followed quickly by a Chicago opening, which is scheduled to occur in two and a half to three years but also is still in the early stages, Greene said.
Greene said Boston’s close proximity to Yotel’s management team in New York and its strong mix of leisure and corporate/group business made it a prime development target.
Yotel is looking to develop hotels that are in the range of 300 rooms to 500 rooms and can be developed at a price of approximately $250,000 per key. A multi-pronged development strategy is at work, with capital from the fund being used to acquire:
- existing development sites and/or condominium interests in mixed-use development projects;
- non-hotel buildings that can be converted to Yotel hotels; and
- existing hotels that could be converted to Yotel properties.
In addition to Boston and Chicago, Yotel also is looking at major U.S. markets including Miami, Los Angeles and San Francisco, Greene said.
Yotel’s hotel portfolio today consists of three airport locations located at London’s Heathrow and Gatwick airports and Amsterdam’s Schiphol as well as a property in New York.
The latter, a 669-room hotel near Times Square that opened in 2011, represents the company’s first foray into the U.S. market.
“As long as we go into good markets, we see ourselves taking market share,” Greene said.
Green noted, however, that conversion could be tricky given the unique layout of Yotel’s small, pod-style hotel rooms.
He added that he is optimistic over how the U.S. hotel industry is likely to perform in the two to three years leading up to Yotel’s potential Boston opening.
“The world’s not going to fall apart,” he said. “We’ve been through the worst of it.”