Arlo Hotels Still Wants to Be Hip – But With Larger Rooms

25.08.2023 - 13:33 / skift.com / Sean Oneill

Real estate development firm Quadrum Global said this week that it planned to bring The Williamsburg Hotel under its Arlo Hotels brand by September — having in April bought that boutique hotel in Brooklyn, New York, for $96 million.

The move underscored how the Arlo brand has evolved in response to shifting consumer demand since its debut in 2016. Rooms at The Williamsburg are notably larger than the ones at the first Arlo properties.

“When we first invested, we bought into a concept that was all about fitting the largest number of rooms on a tiny plot in New York to make the numbers work,” said Oleg Pavlov, founder and CEO of Quadrum Global and Arlo Hotels. “The idea was that, for a certain customer segment, you just need a bed and a couple of amenities, and the rest of the time you spend in communal areas or out of the hotel.”

Arlo compressed 575 rooms, each about 165 square feet, into its first two buildings in New York: Arlo NoMad and Arlo SoHo. The brand wasn’t alone in betting on the “micro-hotel” concept. Dutch hotel company CitizenM, which raised $1 billion in 2021, typically has guest rooms of merely 160 square feet in size. Marriott’s Moxy brand, launched in 2014, has similarly small rooms that aim to appeal to younger guests trading off space to get cheaper room rates.

Yet, at least in Arlo’s case, the thesis wasn’t quite borne out in practice.

“At the time, the Arlo was targeted at, for lack of a more sophisticated term, millennials, such as solo travelers or people with young families,” Pavlov said. “That turned out not to be the case. We were very surprised.”

Arlo saw the crowds at its first two properties as more affluent and of a wider age range than expected. So as it has added more properties to the brand, it has been shifting to properties with larger rooms: in Midtown New York, Miami’s Wynwood district, and now The Williamsburg in Brooklyn.

Arlo is a small player in a big sea. But backer Quadrum Capital is a player that commands attention within hotel investing circles. The real estate firm has deployed more than $1 billion in equity in the past two decades. So what it did next will catch notice.

Executives decided that “experiential travel” was a better bet. The new theory is that guests staying at a hotel not part of a big chain want something memorable.

The company has hired Jimmy Suh, who had been chief commercial officer at The Standard, a buzzy upscale lifestyle hotel brand.

“When you travel, your senses are incredibly heightened,” Suh said. “So we want to capitalize on those heightened senses with elements of surprise. We have a signature scent in every one of our hotels. In the room, instead of the fuddy duddy mints on the turndown, we offer fortune cookies on the pillow,