For Philadelphia hotels, small might be the next big thing.
Crews are scheduled to begin work this spring near the southeast corner of 19th and Ludlow Streets in Center City on an outpost of the Pod Hotels chain, part of a growing hospitality genre known as micro-hotels. They’re defined by tiny rooms, trendy design flourishes, and lively on-site restaurants and bars.
When the 11-story Pod Philly property has its opening, anticipated in September 2019, its 252 guest rooms, including bathroom, will average 170 square feet — smaller than two 2018 Toyota Corollas parked side by side. By contrast, guest rooms in an average, full-service city-center hotel average 350 square feet, according to commercial real estate firm JLL.
“The room is a comfortable bed; it’s a big TV; it’s a high-design bath,” said Conrad Cafritz, whose Washington-based Cafritz Interests is parent to Modus Hotels, one of Pod Philly’s developers. “It’s everything you want or need in a room and nothing you don’t need, which is extra space.”
The microhotel concept was born abroad in such cities as London, Paris, and Tokyo, where demand for overnight stays is high and space for building new hotels is scarce. The trend picked up steam domestically in New York and San Francisco, providing visitors some relief from otherwise stratospheric guest room rates.
The format has begun spreading beyond those high-priced climes as budget-conscious travelers — empowered by Google Maps directions, Yelp restaurant reviews, and TripAdvisor attraction guides — spend more time exploring destinations and less in their hotel rooms, said Steve Michels, managing director of global hospitality for commercial real estate firm Cushman & Wakefield in New York.
Developers, meanwhile, are embracing micro-hotels because they can wring more profit from their properties in an age of rising land and construction costs, according to Lauro Ferroni, global head of research for JLL’s hotels and hospitality group in Chicago. “You can generate more revenue on a lesser amount of square footage, and that can bolster the attractiveness of the investment,” he said.
Prominent brands specializing in micro- hotels include the Amsterdam-based citizenM chain, which has a New York hotel in addition to ones in London, Paris, and Taipei, and Yotel, a subsidiary of Yo! Co. in London, which calls its guest rooms “cabins” and operates hotels in Singapore, New York, and Boston.
Getting in on the act, too, are U.S. companies such as Marriott International Inc. of Bethesda, Md., which has opened micro-hotels under its Moxy Hotels brand in cities including New York, Chicago, New Orleans, and Denver. Hilton Hotels & Resorts, based in McLean, Va., is said to be working on a new brand with guest rooms that are even smaller than the roughly 250-square-foot units at its Tru by Hilton chain.
While no statistics are available on the growth of micro-hotels, Michels said their increasing prevalence can be seen in New York, where — according to his analysis of data from hospitality-market-tracker STR — about a fifth of the 11,500 guest rooms under construction fit the classification.
“Five or six years ago, that number was basically zero,” he said.
Pod Philly will be Pod’s sixth hotel, following locations in Washington’s Chinatown and in New York City, where the brand started with the conversion of the aged, already tiny-roomed Pickwick Arms in Midtown Manhattan into the Pod 51 Hotel. That property is now as well-known among locals for its rooftop bar scene as it is among visitors for its small, relatively affordable rooms.
At Pod DC, which is also operated by Modus (the New York properties are under separate management), rooms average 150 square feet, leaving barely enough space to shimmy around the queen-sized beds that fill most of the space. Storage is largely limited to what can fit in under-the-bed nooks or hung from wall hooks mounted beneath the rooms’ 50-inch televisions.
At the ground-floor lobby — a mini food and beverage district in its own right, with a coffee shop, a late-night diner, and steps leading down to a basement bar specializing in whiskeys — Eduardo Spargoli, a 25-year-old tourist visiting Washington recently from Sao Paulo, Brazil, said he didn’t mind the tight space.
“I just want a place to sleep and take my shower, and that’s it,” he said. “That’s all I need.”
Lydia Smyth, a 56-year-old representative for the Wisconsin Medical Society in town for meetings on health care, said she chose a micro-hotel because of the low room rates, spending $89 a night compared with the $330 paid by some colleagues staying at the Grand Hyatt Washington.
“I’m a business traveler, so any money I spend on a hotel is money I can’t spend on marketing,” she said.
Modus, which also operates the Windsor Suites hotel on the Benjamin Franklin Parkway, said rates at Pod Philly would typically run about 20 percent less than market averages. The hotel will rise at a 12,000-square-foot site of a former parking lot owned by Philadelphia-based Parkway Corp., which is partnering on the project.
The hotel’s ground floor will be given over to a restaurant and a coffee shop, which are to be operated by Greg Root and Nick Kennedy, the team behind Fishtown’s Root and Suraya restaurants. The pair’s Defined Hospitality group also will run the hotel’s rooftop bar, which is to feature a retractable canopy.
Part of the restaurateurs’ job will be creating an ambience that can draw travelers in a market where standard-sized rooms are already relatively affordable. Average nightly room rates in Philadelphia ran $130 in 2017, compared with $229 in San Francisco and $255 in New York, Cushman & Wakefield’s Michels said, citing STR data.
Philadelphia rates could soften further, too, as the city’s growing number of hotels compete for guests. More than 2,300 new guest rooms are forecast to have been delivered over the three-year period ending with the close of 2019, an increase of about 21 percent over the roughly 11,200 available during 2016, according to calculations based on data from CBRE Hotels, a division of the real estate firm CBRE Group.
Cafritz said he’s “sensitive to the competition” but expects Pod Philly to thrive.
“There will be the value proposition, and it’s brand new, and the full concept of it is new,” he said. “We think we’re going to do very well.”