• Hostels pursue growth

Safestay announced that it had acquired a hostel in Athens for EUR1.5m, taking it to 17 sites. Meininger also reported an addition to its portfolio, with its second property in the UK, as the hostel market continued to attract investors to serve ever-evolving guests.
At Safestay, the group paid for an 18-year lease on the 150 bed AthenStyle hostel, which has been trading as an independent hostel since 2008, and features a rooftop bar.
Larry Lipman, chairman, Safestay, said: “The last four months has been an active transaction period with new sites added in Pisa, Venice, Glasgow and now Athens.
“Importantly, the hostel market continues to grow and Safestay is carving out its own reputation for offering guests stylish, safe accommodation in beautiful often listed buildings, in the centre of the principal cities of Europe and still for just c. GBP20 per night. In a short period, the bed capacity of the portfolio has expanded by one third and is on the cusp of really showing the benefits from our increasing economies of scale.”
Safestay’s most-recent results, for the half-year to 30 June, saw expansion drive total revenues up by 24% to GBP8.1m, with like-for-like sales up 4% and average bed rate increasing by 6% to GBP19.50.
The increase in the bed rates was accompanied with a first-half reduction in like-for-like occupancy rate to 71.1% reflecting a deliberate yield management decision to favour rates over volume in the UK and Spanish properties and also a softer market in Lisbon and Prague. The company anticipates reversing this trend with occupancy for the full year.
At Meininger, the company signed to open a property in Liverpool, UK. The 277-bed conversion from an office block should be ready to open in spring 2021. Meininger’s UK pipeline also included an opening in Manchester in 2021.
Hannes Spanring, CEO, Meininger, said: “There is no doubt that the UK capital is very popular with visitors, and we had a 94% occupancy rate last year at our Hyde Park hotel. But the UK is very rich in attractive destinations with enormous development potential elsewhere too. We are therefore delighted to have signed the contract for a new Meininger Hotel in Liverpool.
“In Liverpool, the figures for overnight stays and hotel offerings have shown a sustained upward trend in recent years, and the forecasts are also very positive.
“The current range of rooms consists mainly of four-star and budget hotels, hostels account for only one percent of all accommodation in Liverpool to date. Our goal is to become the UK market leader in this segment with our unique hybrid hotel concept, which combines the service and comfort of international budget hotels with the exceptional amenities and flexible room structure of hostels.”
A study conducted by HostelWorld found that there had been an “evolution” in the types of people using hostels, switching from the majority of customers traveling during a Gap Year, to fitting in their adventures in planned breaks from work or university.
The group said there had been a 42% increase in people travelling while employed, compared to when they’re a student or during a gap year. Linked to this, the company said that backpackers were increasingly less money conscious than previous generations. While 49% of future backpackers referenced price as what would attract them to stay, it had decreased in importance by 14% for current backpackers vs past backpackers. In particular, British, American and Australian future travellers all cited that price was much less important to them than their counterparts before them.
Whereas past backpackers were simply happy with a clean bed to sleep in, there was a 44% increase in importance of décor when making a choice on booking and 11% saw having a co-working option as an important consideration when making a booking.
Another strong appeal factor that’s seen a steady increase was activities, with 19% saying that they favoured those who offered them.

HA Perspective [by Katherine Doggrell]: The growth of brands has done much to make hostels attractive to investors, aided by growth in travel by experience-hungry travellers who are not just looking for somewhere to dump their backpack, but somewhere they can enjoy spending time when their sight-seeing is done.
Brands such as Generator and Jo&Joe have appreciated that having decent public spaces makes the hostel attractive not only to guests, but to locals, who in turn provide some of that authentic travel fun which backpackers apparently crave. And make those spaces more revenue generating.
Hostels have evolved to accommodate shifting traveller types, offering not only rooms lined with bunkbeds, but private rooms, although still on a floor plan which gives the reassurance of pile ‘em high, sell ‘em cheap yields. Growth is unlikely to be curbed soon.

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