The concept of micro hotels is simple: provide guests with a pared-down offering at a slightly lower price. The model’s benefits for investors is also easy to understand: penetrate a popular market with a smaller footprint, while reducing expenses.
The problem lies in the fact that many have caught onto the merits of micro hotels, at least within the country’s biggest metros.
“It’s a very competitive landscape,” said Rohan Thakkar, chief development officer at YOTEL, which operates seven micro hotels across three brands throughout the U.S. “So, securing the right locations for the product and audience can be challenging.”
The global micro hotel market held an estimated value of $94.6 billion in 2024. This number is anticipated to reach $164.8 billion by 2034, with a compounded annual growth rate (CAGR) of 5.7 percent over that period, according to Future Market Insights.
The model is generally enjoyed by both solo business travelers and younger travelers who frequent dense city centers, would like to save a few dollars and don’t plan to be in their rooms all that much. Micro hotels are particularly appealing to Millennial and Gen Z travelers who value experiences and social interaction.
“We continue to appeal to the ‘Generation Go’ mindset, which represents a new wave of travelers who prioritize flexibility, efficiency, and the seamless integration of work and leisure,” Thakkar adds.
The challenge for investors, then, becomes how to create a minimal, yet experiential offering that appeals to this cohort’s sensibilities and wallets.
Design
Anyone can reduce a hotel room down to a Murphy bed and toilet, but those types of accommodations usually accompany a steel door, bars on the windows and a felony charge. Today’s micro hotel guests may appreciate minimalism, but that doesn’t mean they want to sacrifice comfort.
“Successful micro hotel properties like Moxy Times Square and YOTEL Boston remind us that size doesn’t dictate impact – design does,” said Alex Kuby, associate principal at DyeLot Interiors. “These spaces strip away excess while emphasizing what truly matters. It’s less about size and more about feeling cared for, seen and supported in a space that tells a story.”
That starts with the accommodations. The average hotel room is around 300 square feet, while a micro hotel offering can be less than half of that. This means everything counts.
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