EasyJet pioneer unveils no-frills approach to hotels, cruises and other endeavours
By Peter Walker
Stelios Haji-Ioannou (c) is presented with a model jet with the words 'low cost hero' by Sir Richard Branson (r) and Colin Chandler (l) during a press conference in London 26 November 2002. Haji-Ioannou, who revolutionized the low-cost airline market in Britain, is resigning as chairman. Chandler, previously deputy chairman, has been appointed as chairman. Haji-Ioannou, still a large shareholder in the company, is stepping down to pursue other business interests, including his chain of internet cafes and car rental company with the 'easy' brand name. AFP PHOTO Adrian DENNIS
LONDON (AFP) Far from being a once-in-a-lifetime
luxury, taking a cruise on the high seas might soon become little
more expensive than staying at home if easyJet founder and self-professed
"serial entrepreneur" Stelios Haji-Ioannou has his way.
However, should a habitual cruise-taker be tempted by prices as
low as 10 pounds (14 euros, 16 dollars) per night, he or she could
be in for a shock.
Once on board an easyCruise ship, all food and entertainment must be paid for and passengers will have to clean up their own compact-sized cabins before disembarking or else face a surcharge.
The same approach will be brought to Haji-Ioannou's upcoming new hotel chain, easyDorm, where the planned break-even tariff for each room is a seemingly-improbable three pounds per night.
While budget hotels and buses might seem a logical step for the founder of Europe's biggest low-cost airline, easyCruise sees Haji-Ioannou plant his distinctive bright orange logo in a territory usually defined by luxury and high cost.
However, unveiling his plans to a cruise ship trade fair last week in London, the Greek-born 36-year-old said he hoped to attract an entirely new customer base.
"Cruises have always been seen as a
luxury experience, something you do once a lifetime. That's not
true now," he said.
When the first easyCruise ship begins sailing down the Mediterranean,
a launch planned for next year, customers will pay as little as
10 pounds (14 euros, 16 dollars) per night, although as with all
easyGroup businesses they rise with demand.
This will be made profitable through rigorous cost-cutting, Haji-Ioannou
said.
"One thing I have learned is that you never underestimate the marginal cost of serving another customer if you can eliminate it you have a more profitable business," he said.
"I'm always a believer in taking frills out and reducing the cost of something, it is always a good direction if people are paying out of their own pocket."
This approach means that the first easyDorm hotel, which should open its doors in London by the end of the year, will charge as little as 20 pounds a night.
Haji-Ioannou said he had stayed in some cheap hotels to discover where savings could be made.
"I realised that essentially what these people have done is exactly the same experience as staying in a Four Seasons, but with cheaper materials. Everything is the same, just a bit worse," he said.
With this in mind, easyDorm rooms painted orange, of course would be smaller than average, spartan and largely made from fibreglass, making them very easy to clean and maintain.
"There's nothing to break, there's nothing to accumulate dirt, you will buy the bedsheets and the cushion on the way in and take them with you on the way out," he said.
"And on the way out, if the room is dirty 20 pounds (extra), thank you very much."
The publicity-hungry tycoon, who came to Britain as a university student and made his first fortune in shipping tankers before launching easyJet in 1995, has also started a chain of Internet cafes, a web e-mail service and a credit card.
His new cinema chain opens its first outlet this month and Haji-Ioannou also has his eye on opening a low-cost bus service, all using his normal cost-cutting methods such as Internet-only booking and variable prices. Melvin Gold, a hotels analyst with the PFK consultancy, said that easyDorm would be entering a booming market.
"It is a huge sector which is expanding very quickly," he said.
"There are around 60,000 rooms in the UK in budget hotels today, from less than 8,000 in 1992."
The editor of specialist magazine Cruise Traveller meanwhile said that easyCruise was unlikely to unduly trouble existing operators.
"I am sure it's got a place, but it's not a cruise, it's a ferry," said Sue Bryant.
"It's like a shuttle around the Mediterranean,
where people get on and off, like the ships that go around the
Greek islands.
"I don't think it will attract people who go on cruises.
It is a very different concept."