CitizenM has found a way to create the budget traveler's Shangri-la: a low-cost hotel with high-end design. There's no concierge, no room service, and you check yourself in. But the stylish, compact rooms are decked out with high-tech gadgetry and plush, king-size beds--and all the free on-demand movies, bottled water, and Wi-Fi you could ask for.

The hotels are the creation of Rattan Chadha, a New Delhi-born entrepreneur who sold his Dutch clothing company, Mexx, to Liz Claiborne in 2001. Since launching citizenM in Amsterdam in 2008, Chadha has opened four more hotels in Europe, to rave reviews. In April, he launched his first U.S. hotel in New York City's Times Square, and more are on the way. Chadha recently spoke with Inc. about how he got started.

The Idea

Coming from outside the hotel industry means I can challenge it. It also means I get to create a hotel I'd actually want to stay at.

I got the idea for citizenM while I was working at Mexx. We had about 100 young designers who traveled to all the big cities for fashion shows and flea markets. We didn't have the budget for them to stay in five-star hotels, and they didn't like the image of Holiday Inn. I wanted to create a hybrid: great style for a price a 25-year-old designer could afford. That concept existed in fashion but not in hotels. Originally, I wanted to call it One Star and recreate the concept of the one-star hotel. Instead, I went with citizenM--the M stands for mobile.

Room Redesign

We threw away everything we didn't like about hotels, starting with the rooms. I've stayed in hotel rooms so big I could have lived there. That's useless space. I'm here for a night--all I need is a comfortable bed. At citizenM, every room is exactly the same--same square footage, same-size window. We decided to focus on what's relevant for the customer: a fantastic mattress, high-thread-count linens, blackout shades, a fantastic shower, free Wi-Fi and entertainment--and free bottled water. And every room is the same price. Rooms in New York City are less than $250 a night.

One-Minute Check-in

Like most of our ideas, this one came from frustration. Check-ins at regular hotels are terrible. I've stood in queues in Hong Kong behind 20 Japanese tourists waiting for my key. After a long flight, why do I have to wait when the hotel already has all my information? At citizenM, you stick your credit card into a kiosk in the lobby and get your key. One-minute check-in and check-out--your invoice is automatically mailed to you.

Location, Location, Location

Finding the right locations is the most difficult part of this concept. Our hotels must be centrally located, and we're only opening in places where people who are image-driven but have limited funds like to visit. Bigger cities, like New York, Paris, London.

Glasgow was a mistake. After opening our first two properties in Amsterdam, we were looking in the U.K. in 2007. London prices were sky high, so when we found a prime place in downtown Glasgow, we said, "It's not ideal, but let's try." It's the No. 1 hotel in Glasgow, but it doesn't attract our target customers. Most people come from England or other parts of Scotland, and like to drink. When the bars close, they bring the party back to the hotel. That's not what we intended. Every evening, we have someone falling down the stairs. We've had to hire extra security.

In the U.S., we have plans to open more locations in New York City. We'd also like to expand to Boston, Miami, Los Angeles, and San Francisco.

The Lobby as a Living Room

Hotels are your home away from home, so we designed the common spaces with the living room in mind. Most hotels are shrinking the common space and making bigger rooms. That doesn't make sense. How much time do I want to spend in my room? I go there to sleep. But I also want to hang out, network, and meet people.

We partnered with [Swiss design company] Vitra, so all the furnishings in the common spaces are modern and stylish. We said, why not use our hotel lobbies as your showrooms? I collect art, so there's artwork--from my collection, and commissioned by local artists--everywhere. We also teamed up with MENDO, a Dutch company that specializes in books on photography, fashion, and interior and graphic design. Our living spaces double as libraries: You can borrow or browse. I wanted to make citizenM more woman-friendly than any other hotel, so a woman can sit down and relax with a glass of wine or a latte and read a book without feeling awkward.

Ambassadors, Not Bellhops

At our New York location, there are 35 employees for the whole hotel, and seven or eight ambassadors working at all times. There's no reception, no concierge--our ambassadors are there to help you find whatever you want, whether that's opera tickets or the best tacos. They don't grab your bag or bug you every five minutes. If you need something, ask. Otherwise, we leave you alone.

Our ambassador training takes 6 to 10 weeks and begins with a casting on the hotel site. Many of our ambassadors in New York are from drama school--we don't often take people from the hospitality industry, because they pick up bad habits. We look for people who are genuine, who might even become friends with the client. The senior management team comes in from Holland to do culture training. We send our ambassadors to restaurants and retail stores and do group sessions afterward to discuss the experience: Who was treated well? Who wasn't? Then we go into other hotel lobbies and hang around and talk about that experience. We also do workshops on creativity and trust. Then we fly everyone to Amsterdam for 10 days to train in our hotels there.

Self-Service Replaces Room Service

There are no minibars in the rooms. There's a fridge with free bottled water. I don't know what you like, so I can't fill up a fridge for you. And who knows how long that minibar stuff has been there. A month? Three months? We have a canteen where you can grab a glass of wine and a sandwich, or a bowl of soup--or breakfast, which is available 24/7 because we don't know where you just flew in from. All our food is brought in by local purveyors--freshly made and highly curated. We find the best each city has to offer, and do daily catering. And all of our ambassadors are trained baristas--so they can make you coffee the way you like it.

The hotel industry thinks we're crazy because we don't have a restaurant. My response is, "We sell a night of sleep." Besides, when is room service ever good? It takes forever. The coffee is always cold. So instead, come down to the canteen, get your cappuccino the way you like it, and enjoy it there or back in your room.

In the end, I'm a businessman. I'm not paying for a chocolate on your pillow that you're just going to throw away.