Southeast Asia’s booming tourism industry is leading to the rise of a new breed of hostel catering for the so-called “flashpacking” market, a new report has found.
In its latest ‘Hotel Market Trends in Southeast Asia’ report, C9 Hotelworks revealed that there was a 42% surge in new beds in the upmarket hostel sector between 2015 and the third quarter of this year. Thailand, Malaysia and Vietnam are now the top three players in the region, but Indonesia experienced among the strongest growth at +73%.
There are now 1,200 of these flashpacking properties in the region, comprising almost 52,000 beds.
“Hostels are unlike hotels as average rates are calculated on a per bed basis, compared to hotels which use a per room rate. Our research across Southeast Asia shows that if comparing the two accommodation models side by side, the average room rates in newer hostel properties are matching or exceeding those in the more established budget hotel tier,” said C9’s managing director, Bill Barnett.
What has surprised many analysts is the growth in upscale hostels that also offer private rooms, thus combining the hostel and hotel concepts.
“Ultimately the mix of accommodation and bed types in what are being term ‘poshtels’ attracts not only solo travellers and couples, but also taps the fast tracking friends and family group. Hostels are also set to take advantage of Asia’s low-cost airline carrier trajectory in a significant way,” added Barnett.
C9’s research reveals that different business models work in city and non-city locations. Although the market average is 4.1 beds per room, this number jumps to six beds per room in urban markets like Singapore. This is largely due to high land prices in these cities. The report also revealed stated that hostels can easily be converted and adapted from other types of building, hence the rapid growth of the sector.
Summing up, Barnett said; “In Europe chains such as Generator and Meininger have attracted institutional investment to spur expansion, and we are already seeing private equity players in Southeast Asia start to chase the trail of what is arguable the region’s must exciting travel space.”
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