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Why this investment banker quit his job at Merrill Lynch to bring 'flashpacking' to Sydney

Jean-Claude Branch Photo: supplied.

It’s a well-known fact that Sydney isn’t cheap — especially when it comes to accommodation.

Hospitality entrepreneur Jean-Claude Branch is trying to curb this problem in Sydney’s hotel market by offering travellers “budget boutique” hotels.

The former analyst at Bank of America Merrill Lynch in San Francisco quit his job after one year saying he “didn’t like working in finance” and that “he hated his life” while there.

It was only after he came across an old four-unit Victorian building in San Francisco one day that he realised that he could actually do something with it. As a lucky recipient of sub-prime loans in the US, Branch left his job and decided to move into the construction industry, developing residential properties including multi units and single family homes in old heritage buildings.

After a few years of doing this, Branch returned to Sydney, Australia and decided to transition into “budget boutique” or “flashpacking” accommodation.

He says this was a culmination of his experience in San Francisco as well as his travels throughout Europe and Asia where he realised there was a market for affordable luxury accommodation that was a step up from standard hostels and budget hotels.

Branch, who is an avid traveller himself, is now banking on “flashpacking” to drive his growing business in Sydney, Emerald City Hotels. Over the past 10 years, he’s been trying to find hidden gems in Sydney, mainly heritage buildings, and turn them into affordable boutique accommodation.

“Flashpacking”

Standard double manor ensuite at Dalziel. Photo: Supplied.

The term “flashpackers” has been around for some time — they’re considered luxury backpackers and instead of booking out a bunk bed with 10 other people in the same room, they opt to stay somewhere with their own bed, TV, wardrobe and even desk area.

Branch says flashpacker accommodation is very common overseas, especially in Europe and Asia.

“In Hong Kong, people live in tiny, tiny spaces. The fact is, it would be nice to have big spaces in Hong Kong but you just can’t afford it,” he says.

He acknowledges that all cities are increasingly becoming more expensive to live in.

“Sydney is short on hotel rooms… Hong Kong has 55,000 hotel rooms, Sydney has 19,000 hotel rooms. So for a comparable city, we have very little stock. And it’s a big problem, that’s why prices are so high in Sydney,” says Branch.

“It’s a direct driver. To buy an apartment in Sydney is expensive, to buy an apartment in Tokyo, in London in New York, it’s all expensive.

“Therefore, to stay in a hotel room is expensive because that can also be an apartment. So the only solution is smaller hotel rooms or higher prices.

“Just like living in Sydney, everyone wants to live in a nice house on Cremorne Point but not everyone can afford that. So therefore you’ve got a choice: you either move outside… or you choose less space.”

Branch says that what he’s trying to provide is essentially a better version of economy — or “premium economy” — where people are getting something better than a standard room which is still within their budget.

Dining room at Dalziel. Photo: Supplied.

Part of his inspiration comes from the model laid out by citizenM hotels — a line of trendy boutique hotels in Europe and New York — and their “idea of small rooms, in great locations with cool communal facilities”.

“If you’ve ever backpacked, when you go to a hostel you’ve got that nice convivial atmosphere, you go and meet people but what you’re also getting as a backpacker is eight people in a dorm room and drunken kids at 3 in the morning,” says Branch.

“What I’m trying to do is gain that convivial atmosphere but at the same time, provide accommodation that’s a little bit nicer.

“You stay at your Holiday Inn, you go down to a generic restaurant, you eat a generic buffet and you just leave and go do what you want to do.

“So it’s trying to gain the best of the budget hotel and the best of the backpacker and try combine it into something that’s really quite nice.”

Introducing budget boutique hotels

The penthouse at Cremorne Point Manor. Photo: Supplied.

The former banker’s first foray into creating a “budget boutique” hotel was Cremorne Point Manor which he bought 10 years ago. Branch spruced up the Federation building which was built in 1906 and turned it into a 30-room hotel. He even added in a penthouse which was built into the roof space two years ago.

It’s considered a four-star hotel with the price ranging from $150-$200.

“What I’m trying to push is the budget side because it’s a market that people I don’t think are doing very well,” he says.

“They’re doing it but they’re not doing it well. So you come here, it’s got a great vibe.

“You can feel it’s a nice environment, it’s a good place to stay, people are comfortable staying here and what you don’t get is – obviously, we say on the website – you don’t get your bathroom, you don’t get all the luxury things but you’re in Kirribilli.”

The transition into the hospitality was not easy at the beginning, he said, noting that there were a lot of things he had to learn from scratch including how a boutique hotel should look through to the management.

He added a second hotel, Glenferrie Lodge, two-and-a-half years ago. The hotel is comprised of two buildings, built in 1912 and 1933, and comes with 70 rooms. It’s the “clearest example of my goal which is flash-packer and or boutique budget hotel”, Branch says.

His third and most recent purchase is Dalziel Lodge in North Sydney. It has only been in operation since November last year and is smaller than the others with just 16 rooms.

Most of them have a very homey vibe with lounge areas and couches in the reception area. Branch has gone to great lengths to add local touches to the hotels including those from Robert Dalziel, a photographer in the 1890s who built the Dalziel Lodge.

Branch says he managed to get his photos from the State Library of the North Sydney area during the 1860s and 1870s and blew them up to hang throughout the building.

Not for your average traveller

The view from the penthouse at Cremorne Point Manor. Photo: Supplied.

He says the target market varies but it’s generally older people who have the time to go on long trips aboard but who don’t want to splash out on a five-star hotel. His budget boutique hotels come with all the necessities one needs but with less amenities than a luxury hotel.

“Cremorne is a middle-aged crowd… we’re definitely not a backpacker type of place because they’d stay in the Cross or something like that,” Branch says.

“In Glenferrie, we put a playground in the back because you get a lot of families. And I was really surprised because originally I thought: ‘Who with a family would want to stay with a shared bathroom?’ And yet we get tons of families and they’re going on one-year trips and things like that.”

He says that there are people who have been backpacking in their 20s, have had a great time, but now want more in their later years.

“You’re now in your 30s, 40s, 50s and 60s, and especially at Glenferrie you’ll see we get 50-, 60-year-olds who go on long trips and they have stayed in your five-star hotels but a combination of one, not wanting to pay $400 a night and two, wanting a different experience means they actually on purpose choose something cheaper in order to get a more interesting experience.

“Anyone can stay at the Park Hyatt at $700 a night. It’s lovely, you can look at the Harbour Bridge, but if you’re travelling for three months, not everyone’s going to be able to pay those prices for three months.”

The selling points

Queen room at Glenferrie Lodge. Photo: Supplied.

Branch says giving less space to each room and keeping the prices low allows people to stay in these great areas.

“Cremorne Point is a lovely place to stay,” he says. “The houses across the road are worth five to 10 million bucks. And $150 gets you a stay in a beautiful old building.

“Kirribilli’s even better for that. It’s in Kirribillli, one of the densest parts of Sydney, you’ve got the cafes and the restaurant lifestyle of Kirribilli, you’ve got the ferries but the rooms are small and they’re not luxurious. And you don’t get an en suite, you don’t get room service, you don’t get a lot of stuff that costs a lot of money to provide.

“The bathroom is down the hallway — it’s essentially the cost benefit in that you have a bathroom down the hallway, no one really likes that but at the same time, you’re in Kirribilli for under $100. That’s what you sort of have to accept.”

Courtyard at Glenferrie Lodge. Photo Supplied.

“Last time I was at Glenferrie on Friday night in February. It has a big backyard in Glenferrie. I walked out there and there was quite literally an acrobatics troupe practicing, so there was a bunch of kids you know teenagers doing acrobatics, there were a couple of groups of people having a drink on a Friday night, there was a guy on a guitar just strumming away. I walked out there and was like ‘Wow, this is really cool.'”

“And I try really hard to create a nice feel and nice ambiance and something that’s a little bit different to your Holiday Inn because I think they’re my competitors. Not just Holiday Inn but it’s your Travelodge and Ibis and stuff like that.

“What I try to create is something that has a bit of charisma.

“And the idea is to create something that has a bit of soul, a bit of interest. You get all the benefits of your Airbnb so you get the nice environment but at the same time, most of our premises has a full-cooked breakfast, so you got breakfast included, someone to clean your bed.”

While we’re on Airbnb

Single room at Dalziel. Photo: Supplied.

Airbnb has been a popular alternative for travellers looking to dodge exorbitant hotel prices and find cheaper rooms and while Branch says “it has its place”, he doesn’t think a lot of them are of “particularly good value”.

“Airbnb is definitely part of the market. We sell some of our rooms, our better ones, through Airbnb,” he says.

“The problem with Airbnb is that you have to want to interact with your host, you go into their home. And a lot of people just want accommodation. They don’t want to see, you know, ‘I’m staying at Jim’s house and this is his sofa and this is a photo of his cat and things like that.

“I find with Airbnb you waste a lot of time, from a hotelier’s point of view, going back and forth. ‘Do you have this? What about that? Where’s the nearest cafe?’ All the stuff like that that a hotel has on its website, you can book for tonight, you know it’s available and you just do it.

“I think the valuation of Airbnb is over the top, in my opinion. I don’t think it’s going to be the disruptor people think it’s going to be because it’s not as convenient as one would hope.”

Plans for expansion

Cremorne Point Manor with the Harbour Bridge in the background. Photo: Supplied.

Branch says he is looking to expand with hopes of adding another hotel next year but says it will depend on whether he can get his hands on any property.

“Wherever I can get. It’s just too expensive in Sydney,” says Branch, who even put a bid on the derelict Terminus Hotel in Sydney which recently sold for $5 million.

“The problem with hotels is that most of them are going to property developers for residential apartments because essentially, if you can build a hotel, you can build an apartment there… what’s happening is that hotels are getting shut down not because they are not profitable, it’s that the residential developers can make more money in a shorter time.”

Although he has traditionally bought heritage buildings, he say it’s mainly because “heritage is hard, and people get scared of heritage”.

“What I want to do with expansion… is to try and find, and that’s the difficulty, a great premise that’s close to everything” with the compromise being that the room space is smaller.

“At the end of the day, that’s the most expensive. It’s the square meterage that you occupy.”

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