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Umi hotels eyes three new UK properties under franchise model

By Luke Nicholls , 13-Aug-2012

Steve Lowy hopes to add three to five properties a year to the Umi portfolio over the next three years

Steve Lowy hopes to add three to five properties a year to the Umi portfolio over the next three years

Umi hotels, the luxury budget hotel chain with sites in Notting Hill, Brighton and Moscow, has plans to expand under a franchise business model with an aim to sign up three new Umi-branded hotels in the UK over the next year. 

Overseen by the brand’s owner Steve Lowy, Umi has expanded over five years into also establishing a new marketing agency to serve other independent hotels and hospitality businesses.

Under the new franchise model, Lowy has hopes to add three to five properties a year over the next three years, concentrating on the UK major and secondary cities.

“We are already in talks with two or three different hotels who are looking for an Umi-style brand,” he said. “We’ve talked to quite a few people about this, some are existing hotels and there have been a couple of office building conversion opportunities in the UK and Europe.

“They would be Umi-branded hotels; they would all have their own character to suit the style of the location.”

Explaining the decision to look move into franchising as opposed to independent growth, Lowy said: “We just don’t have the cash to expand on our own. I’ve been approached a couple of time with some private equity funds, but I really feel there’s a need for independents to make use of a flexible brand where they can be part of something, so a franchise agreement feels like the sensible root for us to expand the brand.

“Umi hotels has over 25,000 people on its newsletter and just 200 rooms. The brands been going for over five years and we have a lot of repeat guests – so we have the capabilities to really push it now and a team capable of expanding.”

Umi Marketing

Under the agreement, franchisees would be asked to pay a start-up cost, a low commission charge on bookings gained through Umi websites and to commit to a three-year minimum term. In exchange, they would get marketing support from the brand’s ‘Umi Marketing’ arm.

Umi was set up in 2006 when Lowy was just 25. He took over the old Westminster Hotel in London’s Notting Hill, relaunching it as a budget hotel aimed at young travellers. He went on to open the hotel in Brighton in 2008 before launching his third hotel in Moscow earlier this year under a partnership agreement with the owners of the former Petrovka Loft hotel.

Speaking of how business has been for the current Umi hotels, Lowy said: “Brighton’s up on last year, but it could have been busier recently. In London, we’ve actually done very well from the Olympics.

“I listened to a lot of people from other cities that have previously hosted the Olympic Games, and taken their advice. We had 50 per cent of our London property contracted in 2010 with an Olympic association. And we weren’t too greedy, which was important.”

The two UK Umi hotels have seen a combined 27 per cent rise in gross operating profit over the past two financial years.