CitizenM and Life House Redefine Hotel Relationships in Their Own Ways

Skift grip

CitizenM is willing to profit to retain long-term customers, while Life House seeks to limit services to customers to extract maximum profits for owners. The Sustainable Business Model Award goes to CitizenM.

Denis Schaal

CitizenM and Life House are at odds with hospitality in their approaches to hotel-guest relationships, and their strategies also diverge from each other.

Ernest Lee, Citizen M’s Chief Growth Officer, said traditional hotels have things backwards when incentivizing guests to prove their value to brands in order to earn higher rewards. Instead, Lee explained, CitizenM first tries to prove its value to customers to earn long-term loyalty over a period of, say, 10 years.

That’s why CitizenM recently launched its citizenM+ membership program for $120 per year. Among its features, the subscription offers 10% discounts on stays and “free” late check-outs, among other benefits.

While that may seem like a money-losing proposition, Lee said CitizenM’s short-term sacrifice will lead to long-term gains in customer loyalty. He compared it to people thinking Amazon was crazy for offering free shipping to Prime members.

CitizenM, Lee said, focuses on the “mobile citizen,” whether the guest is traveling for business or leisure, and seeks to learn how to best serve in an era of decentralization where people can live and work no anywhere.

Meanwhile, Rami Zeidan, founder and CEO of House of Life, said that while the company has branded hotels, it’s mostly a business-to-business game for hotel owners, trying to find ways for them to make maximum profits. Life House focuses on what to give customers at scale – and what not to give them.

Zeidan of House of Life and Lee of CitizenM discussed “Keeping Ahead of Future Changes in Lodging” with Skift’s Hospitality Editor Sean O’Neill on Thursday at Skift’s Lodging Future Forum At New York.

Software is a huge competitive advantage for a property, Zeidan said, and Life House is trying to cut out financial services and revenue management staff, say, at a hotel to extract costs. Life House is managing these functions so the property’s frontline employees can do what they do best, he added.

Life House is trying to automate hotel operations so hotel employees can “clean rooms, bring smiles.”

Life House does not hire in the hospitality industry and its revenue management employees often have no experience in revenue management. The company is developing software to automate revenue management and make it easy, Zeidan said.

Lee is CitizenM’s chief growth officer, and he said other hotels should consider similar positions because these roles can enhance long-term growth options instead of just focusing on annual reports.

Life House’s Zeid said independent hotels would find joining a big brand expensive because of high franchise fees. The “Tripadvisor Effect” and social media mean brand loyalty will decline as customers know in advance what they will be getting at the establishment, he said.