{"id":21904,"date":"2017-11-13T19:10:19","date_gmt":"2017-11-14T00:10:19","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/"},"modified":"2017-11-26T21:45:36","modified_gmt":"2017-11-27T02:45:36","slug":"citizenm-the-digitalized-hotel-supply-chain","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/","title":{"rendered":"CitizenM: The digitalized hotel supply chain"},"content":{"rendered":"

CitizenM is a Dutch hotel company with thirteen properties across three continents. A majority of the company\u2019s hotels are in European capital cities and the brand targets the affordable luxury segment[1]<\/a>. In January 2017, the World Trade Organization indicated that 2016 marked the seventh consecutive year of sustained global tourism growth following the 2009 global economic and financial crisis, resulting in 300 million more international tourists traveling in 2016 as compared to the pre-crisis record in 2008.[2]<\/a> Growing international tourism due to economic growth since the financial crisis matched with scarce hotel supply in parts of the world such as Europe[3]<\/a> has led to increased revenue metrics for hotels and an encouraging rate outlook for new entrants.[4]<\/a> These dynamics mean that hotel developers and operators such as CitizenM must increasingly solve for a quick go-to-market strategy in an industry that is typically characterized by construction delays and limited availability of high-potential development sites. To address this challenge, CitizenM leverages the digitalization of its supply chain via modular construction to create competitive advantages for its operation. <\/em><\/strong><\/p>\n

Digitalization of the supply chain should be of concern to the management of the CitizenM group because of the ability of digitalization to (1) reduce the go-to-market time of the group\u2019s product offering; (2) mitigate uncertainty around quality and product performance; and (3) provide greater clarity on costs. Specifically, digitalization of the supply chain refers to off-site modular construction or \u201csmart construction\u201d that employs data-driven sequence of operations, robotic manufacturing, and advanced logistics. This digitization allows for more \u201cintegrated planning and execution, logistics visibility, and efficient spare parts management\u201d in a real estate context.[5]<\/a> Moreover, a 2016 report on smart construction by KPMG found that offsite modular construction led to less on-site inspections and maintenance, shorter development borrowing periods, and earlier revenue streams.[6]<\/a> This fact is particularly key for a company such as CitizenM because it enhances its ability to match supply with demand.<\/em><\/strong> For CitizenM, similar outcomes proved to be true in its project in the Lower East Side neighborhood of Manhattan: \u201cmodular construction enable[d] the company to accelerate the construction completion by two to five months and significantly reduce ancillary costs related to construction, such as truck delivery of raw materials.\u201d[7]<\/a> A compression of the construction cycle in any real estate project has meaningful impacts on the overall project return and financing costs.<\/p>\n

To address this opportunity, CitizenM has designed a business model that leverages advances in off-site construction to launch innovative hotels in desirable global cities. Applying lean manufacturing principles to the hospitality business, CitizenM is able to deliver its product with less waste and maintain low costs of production[8]<\/a> through a process called \u2018Industrial Flexible Demountable.\u2019 Moreover, the hotel rooms are pre-made in an off-site factory that ensures that the end product is of a comparable quality to a luxury yacht or private jet.[9]<\/a> The company\u2019s first hotel was constructed in twelve months and serves the Schiphol airport in the Netherlands. The construction method also allows for timely customization and rapid integration of value-add technologies such as in-room electronic moodpads that enable guests to control the entire room\u2019s experience.<\/p>\n

Going forward, CitizenM can continue to leverage digital advancements in construction to grow its footprint in additional markets and expand to different segments across the hospitality value chain. As modular construction becomes more ubiquitous in both the residential housing and hospitality sector, key participants will need to ensure the lowest cost of production to remain competitive. In the short term, this can take the form of driving scale in the markets it enters and targeting geographies where production can be optimized to serve multiple opportunity sets with one production hub. Currently, the company\u2019s main production facility is in Poland[10]<\/a>, which begs the question: can one facility efficiently serve global expansion? Will the brand be able to differentiate itself going forward on a product that prides itself in uniformity?<\/p>\n

(798 words)<\/p>\n

[1]<\/a> https:\/\/www.citizenm.com\/global\/company<\/p>\n

[2]<\/a> \u201cSustain<\/em>ed growth in international tourism despire challenges.\u201d<\/em> World Tourism Organization UNWTO. 17 January 2017. http:\/\/www2.unwto.org\/press-release\/2017-01-17\/sustained-growth-international-tourism-despite-challenges<\/a><\/p>\n

[3]<\/a> Mayer, Nicholas & Trunkfield, David. \u201cStaying power: European cities hotel forecast for 2016 and 2017.\u201d<\/em> PWC. https:\/\/www.pwc.com\/gx\/en\/hospitality-leisure\/pdf\/european-cities-hotel-forecast-2016-2017.pdf<\/a><\/p>\n

[4]<\/a> Mayer, Nicholas & Trunkfield, David. \u201cStanding out from the crowd: European cities hotel forecast for 2017 and 2018.\u201d<\/em> PWC. https:\/\/www.pwc.com\/gx\/en\/hospitality-leisure\/assets\/european-hotels-forecast-report-2017-2018-web.pdf<\/a><\/p>\n

[5]<\/a> Schrauf, Stefan & Berttram, Philipp. \u201cIndustry 4.0: How digitization makes the supply chain more efficient, agile, and customer-focused.\u201d<\/em> PWC. 2016.<\/p>\n

[6]<\/a> Southern, Joshua.\u00a0\u201cSmart Construction: how offsite manufacturing can transform our industry.\u201d <\/em>KPMG. 2016. https:\/\/assets.kpmg.com\/content\/dam\/kpmg\/pdf\/2016\/04\/SmartConstructionReport.pdf<\/a><\/p>\n

[7]<\/a> Rosenberg, Zoe. \u201cCitizenM\u2019s modular hotel on the Lower East Side is now under construction.\u201d Curbed<\/em> NY. 2017.\u00a0 https:\/\/ny.curbed.com\/2017\/1\/9\/14213154\/citizenm-lower-east-side-hotel-nyc<\/a><\/p>\n

[8]<\/a> Cheshire, Tom. \u201cHotels that arrive prebuilt: how CitizenM manufactures its buildings.\u201d<\/em> Wired Magazine. 2012. http:\/\/www.wired.co.uk\/article\/hotels-that-arrive-prebuilt<\/a>.<\/p>\n

[9]<\/a> Krzykowksi, Matylda. \u201cCitizenM by Concrete.\u201d<\/em> Dezeen. November 7, 2008. https:\/\/www.dezeen.com\/2008\/11\/07\/citizenm-by-concrete\/<\/a><\/p>\n

[10]<\/a> Morris, Keiko. \u201cNew York hotel Arrives in Pieces from Poland, Some Assembly Required.\u201d<\/em> The Wall Street Journal. 08 January 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

A 210-room hotel required in New York? No problem, we can ship that to you: Digitalization of the real estate and lodging supply chain in the form of modular construction is allowing companies such as CitizenM to react more quickly to changes in global demand with hotel delivery inspired by the &quot;just-in-time&quot; philosophy. <\/p>\n","protected":false},"author":10314,"featured_media":21905,"comment_status":"open","ping_status":"closed","template":"","categories":[279,1616,428,2029,628,270,775],"class_list":["post-21904","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-architecture","category-buildings","category-construction","category-digitization","category-europe","category-hotels","category-real-estate","hck-taxonomy-organization-citizenm","hck-taxonomy-industry-real-estate","hck-taxonomy-country-netherlands"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nCitizenM: The digitalized hotel supply chain - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CitizenM: The digitalized hotel supply chain - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"A 210-room hotel required in New York? No problem, we can ship that to you: Digitalization of the real estate and lodging supply chain in the form of modular construction is allowing companies such as CitizenM to react more quickly to changes in global demand with hotel delivery inspired by the &quot;just-in-time&quot; philosophy.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"article:modified_time\" content=\"2017-11-27T02:45:36+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/citizenm_shoreditch_village_2.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2144\" \/>\n\t<meta property=\"og:image:height\" content=\"1050\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/\",\"url\":\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/\",\"name\":\"CitizenM: The digitalized hotel supply chain - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\/\/d3.harvard.edu\/platform-rctom\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/citizenm_shoreditch_village_2.jpg\",\"datePublished\":\"2017-11-14T00:10:19+00:00\",\"dateModified\":\"2017-11-27T02:45:36+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#primaryimage\",\"url\":\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/citizenm_shoreditch_village_2.jpg\",\"contentUrl\":\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/citizenm_shoreditch_village_2.jpg\",\"width\":2144,\"height\":1050},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/d3.harvard.edu\/platform-rctom\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"CitizenM: The digitalized hotel supply chain\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/d3.harvard.edu\/platform-rctom\/#website\",\"url\":\"https:\/\/d3.harvard.edu\/platform-rctom\/\",\"name\":\"Technology and Operations Management\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"CitizenM: The digitalized hotel supply chain - Technology and Operations Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/","og_locale":"en_US","og_type":"article","og_title":"CitizenM: The digitalized hotel supply chain - Technology and Operations Management","og_description":"A 210-room hotel required in New York? No problem, we can ship that to you: Digitalization of the real estate and lodging supply chain in the form of modular construction is allowing companies such as CitizenM to react more quickly to changes in global demand with hotel delivery inspired by the &quot;just-in-time&quot; philosophy.","og_url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/","og_site_name":"Technology and Operations Management","article_modified_time":"2017-11-27T02:45:36+00:00","og_image":[{"width":2144,"height":1050,"url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/citizenm_shoreditch_village_2.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/","url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/","name":"CitizenM: The digitalized hotel supply chain - Technology and Operations Management","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/citizenm_shoreditch_village_2.jpg","datePublished":"2017-11-14T00:10:19+00:00","dateModified":"2017-11-27T02:45:36+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/citizenm_shoreditch_village_2.jpg","contentUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/citizenm_shoreditch_village_2.jpg","width":2144,"height":1050},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/citizenm-the-digitalized-hotel-supply-chain\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-rctom\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/"},{"@type":"ListItem","position":3,"name":"CitizenM: The digitalized hotel supply chain"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website","url":"https:\/\/d3.harvard.edu\/platform-rctom\/","name":"Technology and Operations Management","description":"MBA Student Perspectives","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/21904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/users\/10314"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/comments?post=21904"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/21904\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media\/21905"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media?parent=21904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/categories?post=21904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}