Aug. 5, 2005 - LONDON -- With rooms barely larger than a double bed, the easyHotel that opened in the heart of west London on Monday is London's, and Europe's, closest equivalent to the Japanese capsule hotel.

The newly refurbished 34-bedroom establishment, converted from a former independent 20-roomed 19th century bed-and-breakfast, is the brainchild of Stelios Haji-Ioannou -- the self-proclaimed "serial" entrepreneur and face of brand easyGroup -- and boasts rooms from just 20 pounds ($35) per night.

Each made-to-measure bed and bathroom unit with unique plumbing and electricity costs 20,000 pounds to fit and 18 months to develop in line with the "easyGroup standard." The 38-year-old Greek tycoon, who financed the venture himself, says, "It's not rocket science -- the room's really just the size of a bed and then the bathroom."

"Japan's capsule hotels were a key reference point but I thought in order to sell amongst Europeans and Westerners it needed more than that," he explained.

"I think the Japanese version is deficient in two respects: first of all they have no private bathrooms which I consider to be a minimum brand standard; and secondly they don't even allow you to stand up," Haji-Ioannou said.

But with rooms coming in three sizes, described as "small," "very small," and "tiny," measuring just 7.4, 6.5 and 5.6 square meters respectively, standing up and sleeping is about all guests can do.

There is no parking, no hotel bar or restaurant, no communal areas, no lift, no telephones or wardrobes in the rooms and just one member of staff on duty at the tiny reception desk.

One thing there is plenty of, however, is easyGroup's trademark orange color which adorns walls, doors, floors, bed bases, signs and even wash basins.

Guests are provided with a Japanese-style double mattress with clean sheets, pillows and a duvet, towels, shower, lavatory, washbasin with mirror and two pegs for hanging clothes.

With only three of the bedrooms having windows, the hotel does have air conditioning but the temperature can only be changed at a central control point, and if guests want their bed linen and towels changed during their stay, they will have to pay an additional 10 pounds.

The only luxury is state-of-the-art flat-screen televisions positioned on the wall at the end of the bed in each room, but this too comes at a cost of five pounds for 24-hour viewing.

Haji-Ioannou is confident about the appeal of the "no-frills" basic thinking behind the London hotel -- which he intends to be the first of a worldwide chain.

"It doesn't bother me having no window -- I don't like light when I'm sleeping... we are applying certain standards and a brand, so people will recognize that they are getting a safe and clean bed for a night," he retorted to critical journalists.

The hotel's first guests -- brothers Pius and Peter Fan, aged 24 and 19 respectively, backpackers from Melbourne, Australia -- seem to share Haji-Ioannou's no-nonsense mentality.

"It's good, very acceptable and great to have a private washroom... our requirements were somewhere clean and tidy with a comfortable bed and it's quite budget so we're happy," Fan told Kyodo News, noting they will be out sightseeing for the majority of their stay.

And with the hotel full to capacity on its first night and further bookings coming in over the Internet at an "unbelievable rate" despite zero marketing or advertising it appears that the founder of the budget airline easyJet has hit on another winning formula.

"We started at 10 pounds but it was selling so well that we couldn't really keep it available for too long... I wouldn't expect less than 90 percent occupancy at any time," Haji-Ioannou said. Room costs will fluctuate on a "yield management" system -- between the advertised 20 pounds and a current maximum of 50 pounds -- depending on demand and how far in advance the booking is made.

Eschewing market research, Haji-Ioannou can only predict who his hotel's target audience will be -- a group he describes as encompassing backpackers and price-sensitive tourists as well as businesspeople on a tight budget and short stay.

Bookings -- which can only be made in advance on-line using a credit card -- are so far being taken only up until the end of November to gauge the pattern of reservations.

"I wanted to see how the demand goes before I release the peak season over Christmas... what happens in January will be a different story again," he said.

Haji-Ioannou has used his easyCruise budget cruise liner project as a case study for his hotel venture.

"It's the system we offer on the cruise ship and it doesn't seem to be a problem. People accept it and they understand it. They walk into a fresh clean room without having to do anything," he said, explaining that the hotel is part of the modern "living out of a suitcase" phenomenon.

It is a phenomenon that Haji-Ioannou would like to see expanding, acknowledging that he is keen to maximize the potential of redeveloping so-called "brown-field" urban sites -- his easyHotel formula being designed to mould to any capital city where prime-located property is at a premium.

His plans are to expand the hotel company through franchises and he is working quickly: already a franchise of the easyHotel is due to open in Basle, Switzerland on Sept. 5 and further negotiations are under way for hotels throughout London, Britain and Europe.

And it appears that the concept will not just stop at Europe.

James Rothnie, director of corporate affairs for easyGroup, believes the company has found a niche in the market and the hotel will follow the success of some of the group's other ventures including internet cafes, cars, cellphones and pizza delivery.

"The easyHotel would definitely work in the U.S. and even in Japan for Western customers who want to stand up and have a private bathroom but want the ease and budget cost of the capsule hotel," Rothnie said.

The only competition the easyHotel faces in the near future in terms of space-saving short-term accommodation comes from YOtel, which is proposing similar prefabricated units with a maximum size of 10 square meters.

However, YOtel -- the brainchild of Simon Woodroffe, the man responsible for introducing conveyor belt sushi on a large scale to Britain with his YO! Sushi chain -- is still in its planning stage and is likely to target a more discerning, affluent customer.

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