'Poshtels' set to drive hostel growth in 2015

By Carina Perkins contact

- Last updated on GMT

Design-led 'boutique' hostels are taking the UK market by storm
Design-led 'boutique' hostels are taking the UK market by storm

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A new generation of boutique hostels will challenge the traditional hotel market in 2015, according to the latest report from Euromonitor.

The Global Trends Report 2014 identified ‘poshtels’ as a major trend to hit the UK travel market next year as consumers continue to seek for low-cost, high value accommodation with a difference.

It pointed to operators such as Clink, St Christopher’s Inn-Village, Safestay, The Dictionary and Generator, which are already giving boutique hotels a run for their money by offering stylish, low cost accommodation with an emphasis on technology and social spaces.

“Hostels are making a bid for the cost-conscious but style-seeking consumer, glamourising communal living, rooms and atmosphere to compete with the boutique hotel offer,” it said.

“Many are emphasising modern and luxurious design with high-tec facilities, offering restaurants, twin en-suite rooms, free Wi-Fi and breakfast, while coining the term  ‘poshtels’

“This concept is popular with the young, families, business and single travellers who appreciate the social aspect of staying at hostels for a price tag starting at £12.”

Wide appeal

Although Generation Y is an obvious target market for hostels, Euronomitor said they are proving increasingly popular with older age groups and business travellers seeking a cheaper and ‘more authentic’ experience.

Demand for low-cost, high value and non-conventional accommodation should drive further demand for hostels in the future, with domestic tourist expenditure on accommodation due to fall to £82 per capita by 2018.

According to the report, the UK hostel segment will grow 3 per cent over 2013-18 to reach sales of £216m in 2018, with a total of 653 hostel outlets by the end of the same year.

Euromonitor travel and tourism research manager Michelle Grant told BigHospitality the hostel segment should also steal market share in 2015.

Future challenges

Euromonitor said the ‘major threat’ to hostels would come from budget and mid-market hotels, which are increasingly competitive on price and service.

"The poshtels that are most likely to succeed are those that keep operating costs down," said the report.

 “One way of doing so is by adopting alternative distribution, such as adding online features that allow guests to book directly from social media sites or via mobile devices.

“Embracing Airbnb is another approach for minimising expenditures and booking charges.”

Some hostels are already experimenting with Bitcoin payment, and Euromonitor said digital payment options would help them diversify their client base and compete with OTAs.

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