TO DISCUSS YOUR PROJECT OR LEARN MORE ABOUT OUR SERVICES:

  • This field is for validation purposes and should be left unchanged.

Posh Hostels Edging Into Southeast Asia’s Mainstream Hotel Sector

Category: Hotels, Posted:15 Jan 2018 | 11:15 am

C9 Hotelwork’s new market report questions if cookie cutter hotel groups will again fall asleep at the wheel as they did with OTA’s and Airbnb?

Call them poshtels, hostels or hybrid hotels, but one of the most exciting travel spaces across Asia is the emergence of socially-focused accommodation. Not only have millennials embraced the shift, but a rising number of older explorers are jumping the shark and abandoning traditional properties.

Taking a deep dive into the current set of economics across Southeast Asia is hospitality consulting group C9 Hotelwork’s newly released Hostel Market Update 2018. With 1,766 international standard hostels in the region with over 63,000 beds, year-on-year growth last year shot up by an impressive 32%.

What is a notable in this changing landscape is that with mounting demand in the sector, there are no signs of deceleration, as investment is being embraced by an increasing number of hospitality groups and institutional investors. Within Southeast Asia, the tourism tigers of Thailand, Malaysia, Indonesia and Vietnam are key players.

Analyzing the state of play,in days past hostels typically sat in the sub-budget accommodation tier but with the recent evolution of properties now becoming hybrid hotels with a mix of private rooms, it’s an entirely new ballgame.

Our metric for hostels is average daily rate per bed (ADRB) versus the traditional hotel focus on average daily rate (ADR) per room. What is clear in our research is that in a growing number of cases the investment returns of these hybrid properties are superior to budget hotels in the same market. This is of particular interest to developers who are motivated by real estate return efficiency.

While there is movement afoot for consolidation and mainstream players either acquiring or developing their own brands, C9’s research shows that 87% of current supply remains independent. This is amplified by the reliance on external online travel agencies (OTA’s) to drive bookings, with the leading player being U.K.-based Hostelworld.

Reflecting on changes in Southeast Asia’s hostel scene over the past twelve months, growth in resort destinations is far exceeding urban locations. Rising real estate values are clearly at play here but on a broader basis many investors view the strong recurring cash flow position, with lower investment than hotels as temping.

What will be interesting is how effective budget and economy hotel chains adapt to the competition, and will they eventually have a moment of clarity on how hybrids reflect a marked departure in consumer travel patterns. Based on hotel groups stunningly slow reaction to OTA’s and Airbnb, I’d say hybrids look to be one of the more interesting accommodation tiers in the next few years.

To download the entire report CLICK.

Other News

Read more

Phuket Lifts Travel Restrictions For Bangkok Travelers

Category: Tourism, Posted:24 Jan 2021 | 20:35 pm Good news. Phuket province has eased travel restrictions for visitors from Bangkok and Samut Prakan to the island. The move effectively removes the 14-day quarantine period. A key catalyst in the policy change has reportedly been expected high levels of travel during the Chinese New Year period next month. Travelers are still required to use […]
Read more

Go Ahead. Get Your Ya-Ya’s Out

Category: Tourism, Posted:17 Jan 2021 | 06:00 am Close your eyes. Go ahead. Remember a time when you were young. The magic as a kid, taking blankets, sheets, or even boxes and creating a fantastical tent or unique crazed getaway in the house. Letting your imagination go wild and take you on a journey to incredible places. Or pitching a tent in the […]
Read more

Is Thailand Ready For Legalized Gambling?

Category: Tourism, Posted:16 Jan 2021 | 13:38 pm Topping Thailand’s economic news are comments by the Prime Minister that he is willing to consider opening up gambling, according to the Bangkok Post. With the Thai economy struggling at funding an economic recovery process that has been under extreme duress by Covid-19, the question now will the pandemic be an accelerator of a long-lasting […]