The Hoxton hotel’s “luxury budget” business model
I'm just back from our annual brandgym partner retreat in Amsterdam and loved The Hoxton where we stayed. It has a cool, retro, industrial vibe. A great location on the canals. Lovely service. And the rooms were a measly €149 for a mid-week stay. It opened recently, following on from the original Hoxton hotels in London.
But how can they do all this at such a reasonable price? What happened to the old Michael Porter model or choosing differentiation OR value pricing? Below we look at how they might have pulled off this "luxury budget" value proposition.
The Hoxton Amsterdam has lots of what you want from a boutique city hotel. I loved the "shabby chic" design feel of the place, with old sofas and other up-cycled old furniture. The rooms were surprisingly spacious. The bar and restaurant, Lottie's served good bistro-style food, and was buzzing with people even on a Wednesday night. And the location was to die for, right in the centre of the city. I paid a bit more to get a room with a canal view (below).
The Hoxton have been really smart in what they have reduced or removed from their business model. As they say on their website, "Because we knew what pissed people off in traditional hotels and didn't do it. The no rip-off policy is still very much at the heart of everything we do."
Take breakfast for example. Rather than including a full breakfast in the price, you have a paper bag in your room that you leave on your door, and they fill it with a yoghurt pot, fresh orange juice and banana. This reduces complexity for the hotel and is convenient for customers. There is a fridge but no pre-stocked mini bar charging rip-off prices. Rather, they sell drinks and snacks at supermarket prices downstairs. Smart. Better value and takes out cost, as you don't need staff checking and re-filling every mini bar, every day. And there is a room service menu, but a really simple one, which again reduces costs for staffing and stocking a full kitchen.
3. Crafted with care
Every detail of the Hoxton felt crafted with care to me, from the choice of every table, chair and sofa, to the decoration of the rooms. I even picked up on the little pull-out tray that stored a corkscrew, pencil and pad. The tray had "Crap" written on it, smuggling a wink of the eye into something mundane. And the cut-out design of the tray's bottom makes it easier for hotel staff to replace missing items in the right place.
The whole experience had the touch of what I imagined was a founding creative genius, a bit like my beloved Olympic Cinema in London. I was even more impressed to discover that the founder and creator had actually sold the hotel to a group called Enismore in 2012. The new owners have done a great job of "bottling the magic" of The original Hoxton in London, and expanding it to Amsterdam, with plans for other cities including Paris. As their website says below, they are indeed trying to "hand craft" their properties.
In conclusion, The Hoxton Amsterdam shows how to hand craft a distinctive brand that breaks the Porter-esque strategy model of value or differentiation.