CitizenM
Word Count: 2000 Author: Kimi Ural Created: 2016 Grade: 83% (1st)
Table of content
Executive summary
Introduction
The Market
Service offerings
Organisation and Ownership
Number of employees
Truthful impression of the business operation
Conclusion
Executive summary
The Marketing Mix (also called the 7P’s) can be described as a conceptual framework designed to satisfy customers needs by shaping the companies services and products accordingly (Bitner & Booms, 1981). This framework will be used throughout this report to identify CitizenMs positioning in terms of offerings for customers including facilities and services.
Key findings in this report include CitizenMs customer market which identify as mobile citizens. The norm of luxury being destroyed and re invented by the companies concept of understanding customers needs. Also, ambassadors as well as managers require to complete the training in barista, bar tender and other services such as the check in system. Which results in a team work environment and easier shift distribution through everyones skills being on the same level. This also helps the company to reduce the number of employees at a time. Finally, the ERRC grid may have been used by CitizenM in the planning process of their servicescape (Chan & Renée, 2005).
Introduction
CitizenM is a luxury hybrid hotel founded by Rattan Chadha in 2007. The main aim of the creation being to combine compact rooms with luxury whilst maintaining a reasonable price (CitizenM, 2015). Their definition of luxury differs to the majority of high quality hotel chains. Being different does not mean that their idea is bad nor that they have fever customers. With only 12 hotels in 7 different cities across Europe, America and Asia CitizenM draws a lot of attention to them through their unique concept. Resulting in a higher brad awareness which leads to their target market being made aware of this new established hotel chain. Furthermore, people made aware by this concept, even if it is not exactly appealing to them, may choose to stay for one night to experience something new.
The Market
CitizenM’s customer market can be defined as a combination of 4 segments. According to Spierenburg these are so called mobile citizens which come to big cities for:
- shopping
- Business
- Party
- Culture
(2017)
Spierenburg also mentions that these 4 segments are interlinked with each other. The reason being that someone attending a business meeting may go to a pub afterwards or visit the local museum (2017). This way the main intention of the visit may be combined with one or more of the 4 segments. Looking at the Ark Leisure Model can represent some of these segments and even add more to CitizenMs market (ArkLeisure, 2011). In order to help them identify every segments need to represent them in their products section of the marketing mix (Appendix A). Out of the 8 types of travellers, 5 are more likely to be found in CitizenM (Figure 1). Although, a combination of functionals and discoverers seem to be their ideal customer market. Since one values technology, the other functionality and both being early adapters, it fits perfectly in to CitizenMs concept.
Exploring the mobile citizens characteristics more rather than their occupation reveals that they are multi-cultural, urban, sociable, frequent travellers and open minded individuals which seek different luxuries to the norm. Fortunately, CitizenM successfully analysed these characteristics and based their hotel concept on a new definition of luxury which is also represented in the price, promotion and people section of the 7P’s (Appendix 1).
Service offerings
When picturing a luxury hotel people may think of hotels such as Hotel de Paris which offers unnecessary services including a 24 hour room service and a concierge which takes guests bags to the room (SBM, 2011). Through CitizenMs nature of being a luxury hybrid hotel, they do not have traditional luxuries (Appendix A). Instead they value functional luxuries through the realisation of todays customers being more of a mobile citizen. Their services truly help the customer through the ability to control everything in the room on a tablet. Lights, curtains, TV, music, temperature and even digital art in some of their hotels (CitizenM, 2016). The customers can easily control everything with a few clicks without leaving their bed which results in ultimate comfort and time efficiency. In fact most facilities in CitizenM are designed to be time efficient. The 1 minute self check in , and 30 seconds check out makes it ideal for business travellers and everyone else who wants to make the most of their visit in the area. Also, high water pressure in their rain shower, a 2m x 2m bed, free internet and movies, a 24 hour buffet & bar, and a ‘lounge’ called living room is offered and designed in a way that customers feel welcome. Especially the 24 hour casual food availability is an excellent idea so that customers can eat breakfast when they feel like it rather than having to depend on certain breakfast times. Combined with the living room, guests can decide to have their food at the bar, table or on the couch which enables them to stay sociable. This is extremely important for solo travellers so that they will not feel lonely. The food it is not meant to be the best in the city but rather an average high quality offer, since most customers prefer to eat out and experience the surroundings. A common item British hotels offer is a kettle in each room, CitizenM however does not because they try to prevent customers from missing out on trying one of the best coffees in the world which they provide on the ground floor. According to Statista 28% of 3,195 adults in the UK consider kettles, teabags and coffee an essential in their hotel room. The global numbers of 29% from 34,026 participating adults is slightly higher than the UKs (2017). This suggests that it can be a debatable area whether CitizenM should provide these facilities or not since the London based hotel receives national as well as international guests which may see this as an essential.
Analysing several online reviews revealed that customers took one or two stars off their review due to the missing kettle facilities (TripAdvisor, 2017a). Most of these customers were first time visitors or booked from an external website, both resulting in the customer not knowing what to expect. Over 100 customers complained about the room size being too small, some thought they could be bigger but that the excellent view makes up for it. The fewer minority would not book with CitizenM again as a result of this (TripAdvisor, 2017b).
It is extremely important to inform customers on what they should expect to reduce areas of disappointment and re assure the buying process. Particularly for CitizenM because they have different concepts compared to other hotel chains. CitizenM highly encouraging customers to book through their website instead of external ones such as booking.com because those may not provide the needed detail. Offering a CitizenM membership including a 10% discounts on all bookings and a complementary drink encourages customers to book through their website. This does not only enable CitizenM to have more control of the customers experience and expectations but also builds a better brand awareness which could lead to customer loyalty.
CitizenMs provocative advertisement also aims to reflect their servicescape (Appendix A). For the opening of their hotel at Times Square in New York, they published an advert representing hotel cliches which got destroyed in the end. By saying “farewell hotel cliches, hello affordable luxury”, CitizenM sets a clear statement that they are different to any other luxury hotel (KK Outlet, 2014). Also their local advertisement is an eye catcher with their limo ad saying “luxury is free wi-fi and XL beds, not a stupidly long car”. The limo with the ad was provocatively placed in front of the Hilton Hotel in New York (Kesselskramer, 2015)
Organisation and Ownership
CitizenM acts as an owner-operator or an operator of hotel owned by third party investors. Moreover, the hotels business model can be defined in a ERRC Grid (Chan & Renée, 2005). The below created ERRC Grid is based on the companies current situation and possible past thoughts which helped them to succeed their creation (Figure 2).
Through their business model being based on mobile citizens’ wants/needs CitizenM successfully reduces room prices by eliminating unnecessary luxuries and replaces them with more valuable ones. Another procedure preventing the price inflation is through a set price ceiling. CitizenM valued the rooms in 2017 between £129-299 per night (Spierenburg, 2017), thus the price stays within the price floor and ceiling. Through this, CitizenM can inflate the price during major London events such as the olympics to follow the demand, and still remain reasonable prices to concur perishability.
Number of employees
Through the cuts on unnecessary services, the normally labor intensive industry managed to be reduced drastically in CitizenMs hotels. The 270 bedroom tower of London hotel only has 50 employees (ambassadors) and 30 outsourced housekeepers. Comparing this data to another local hotel: Four Seasons which has 140 suits and 350 employees suggests how effective CitizenMs strategy is (Spierenburg, 2017). Also, up to 2 chefs and 5 waiters work at a time, if the hotel is not busy, they will clean the tables regardless of what their actual role is. The preparation kitchen enables them to save on labor and high skilled staff but also reduces their waste. Especially because they order last minute for the following 2-3 days only. Thus, they can base their orderings on the amount of guests they have as well as save money and space on big storage facilities.
According to Spierenburg ambassadors are hired on personality and known to switch between positions (barista, bar tender). Thus CitizenM can contact any employe when they are understaffed which higher the possibility of someone being able to take the shift. The 8 hour morning and evening shifts are also supported by a lunchtime shift to support the transition, resulting in a less stressful environment for the workers (2017). Besides the offered training for employees, and shift transition support, CitizenM also ensures that managers go through the barista and bar tender training. This is to ensure that they know how the system works in order to manage it more effectively but also useful in emergency situations so that they can help if necessary. It also creates a bond between ambassadors and managers and reduces the mental hierarchy. Resulting in a more human and home like environment where the managers contribute and work together as a team.
Truthful impression of the business operation
Personally thinking of the company and its concepts reveals that the company has an excellent attitude towards employees and guests. It seems like the working environment is supportive and stable which makes it a great place to start working at. Especially because CitizenM hires based on personality, it would be the perfect place to start in this industry to gain the needed experience in order to progress on to higher and better paid jobs in the future. Staying within the company however, may mean that an ambassador stays an ambassador through the low opportunities of development. This is through the hierarchy being set up on 2 levels (ambassadors and managers). Which could mean that CitizenM may satisfy short term employees but loose some over the years, because they would start looking for higher positions in order to leave their comfort zone and learn more.
Analysing the customers point of view suggests that their servicescape is not for everyone. However those it is aimed at will declare the company their new favourite and go to brand in the future. Their outstanding approach and modern, art inspired facilities are appreciated by many people. Hence, the progress in further hotel openings and won awards over the years (Appendix A). Not offering a kettle, tea and coffee in the rooms may be a downside for some customers but it is a great way to make guests socialise by drinking their chosen drink in the living-room. Solo travellers will not feel excluded or alone and the small room-size would not affect the customer too much through spending the majority of their time outside of it.
Conclusion
Overall, CitizenM is an excellent company with a well functioning business operation. Especially the multi skilled ambassadors are an excellent idea to overcome many problems. Also, having certain areas outsourced reduces their pressure and increases the accuracy of the fulfilled job. Because the outsourced cleaners are experienced and provide their own equipment meaning if anything breaks the hotel will not have to worry about replacement costs. However, CitizenM could consider basing each hotel on a different artists works to create an even more unique style and combine accommodation with a type of attraction. This way customers could possibly collect stamps or art from each of their hotels which would create a collector effect so that customers stay loyal and aim to travel to each of their hotels. Since CitizenM is revolutionary and does not stick to the norm, this unusual idea would fit perfectly in to their servicecape.
References
ArkLeisure. (2011). Introducing the ArkLeisure® model. Available: http://www.arkleisure.co.uk/explore/. Last accessed 25th Apr 2017.
Bitner MJ, Booms BH (1981). Marketing Strategies and Organization Structure for Service Firms. In Donnelly JH, George WR. (Eds), Marketing of Services, Conference Proceedings: American Marketing Association, Chicago, IL, pp. 47- 52.
Chan & Renée (2005). Blue Ocean Strategy : How to Create Uncontested Market Space and Make the Competition Irrelevant. Boston: Harvard Business Review Press. p19-20.
CitizenM. (2015). Rattan Chadha. Available: https://www.citizenm.com/citizenmag/amsterdam/people/rattan-chadha. Last accessed 25th Apr 2017.
CitizenM. (2016). citizenM says: choose a hotel where luxury and technology sleep in one big bed. Available: https://www.citizenm.com/destinations/london/tower-of-london-hotel. Last accessed 26th Apr.
Kesselskramer. (2015). Limo Ad. Available: http://kesselskramer.com/system/files/072014/53c79735e60d817d9b000214/fancybox/limo.jpg?1405589350. Last accessed 30th Apr 2017.
KK Outlet. (2014). citizenM Swan Song By PES. Available: https://vimeo.com/90946072. Last accessed 30th Apr 2017.
SBM. (2011). Services. Available: http://www.hoteldeparismontecarlo.com/practical-information/practical-information/. Last accessed 26th Apr.
Spierenburg, J. (2017). CitizenM London Hotel Manager. Presentation/Interview. Held on 27th Mar.
Statista. (2017). Share of travelers who consider kettles, teabags and coffee an essential accommodation amenity in 2015, by country. Available: https://www.statista.com/statistics/500082/kettles-teabags-coffee-as-a-must-have-accommodation-essential-by-country/. Last accessed 28th Apr 2017.
TripAdvisor . (2017a). citizenM Tower of London Hotel. Available: https://www.tripadvisor.co.uk/Hotel_Review-g186338-d10410272-Reviews-CitizenM_Tower_of_London_Hotel-London_England.html. Last accessed 29th Apr 2017.
TripAdvisor . (2017b). citizenM Tower of London Hotel. Available: https://www.tripadvisor.co.uk/Hotel_Review-g186338-d10410272-Reviews-CitizenM_Tower_of_London_Hotel-London_England.html. Last accessed 29th Apr 2017.
Appendices
