How ‘poshtels’ are reinventing the budget accommodation sector

Article by Natalie Holmes

how-poshtels-are-reinventing-the-budget-accommodation-sector

At a time when budget travelers are increasingly experience-driven, the hospitality industry is responding with a concept that caters to this new guest profile: the ‘poshtel’.

Unlike traditional hostels, poshtels typically combine a design-led ambiance with small, often shared sleeping areas and a focus on innovative communal spaces.

“This reimagined hostel meets the needs of the modern traveler,” says Graham Craggs, Managing Director of EMEA Hotels at JLL. “It offers flexibility on the room product, and, often, organized events that encourage guests to meet and mingle.”

Independent properties have been blazing a trail with concepts such as The Wallyard in Berlin, which merges a design hotel aesthetic with dormitory accommodation, an onsite art salon, cafe and bicycle hire. In Japan, a set of two GRIDS hostels accentuate their role as a “travelers’ hub”, with comfortable communal spaces and a selection of basic but appealing accommodation including pods, dorms and family rooms.

Copenhagen’s Urban House is a hotel-hostel hybrid with bunk beds and private rooms, plus a tattoo parlour, bike shop, self-service kitchen and free walking tours. Again, social areas and opportunities for immersive experiences are the main focus, anchored by a diverse range of local cultural events such as vintage markets and music concerts.

Big brands eye poshtels

“A number of major brands are now looking to move into this space,” says Craggs. “The so-called poshtel not only taps into some of the spending power at the younger end of the market, but is also, to some extent, a response to the influence of AirBnB and the challenges that disruptive business has had on the hotel industry.”

While big names like Marriott’s Moxy and CitizenM have made bold moves towards a new type of budget-conscious, social hotel, Accor is taking the idea a step further with Jo&Joe.

Announced in September 2016, Jo&Joe is a new approach to accommodation that puts design, food and user experience at the forefront. According to Sébastien Bazin, Chairman and Chief Executive Officer of AccorHotels, the idea is to “break with tradition, forget old habits, be surprising, authentic, unexpected, bring a breath of fresh air to AccorHotels.” The chain hopes to open 50 properties in urban locations across the world by 2020.

Jo&Joe is aimed squarely at Millennials, but as Craggs notes, the concept has the potential to appeal to a much wider market. “Despite a smaller sleeping space overall, the poshtel offers flexibility on room type, which may also appeal to older guests, families, and groups, who might typically book into more traditional hotel accommodation.”

Though poshtels answer demand for the type of experiential travel offered by the likes of AirBnB, the concept also provides a consistency in quality, and, ultimately, a very different experience to that offered by the sharing economy. “These new hostels are very interesting,” says Craggs. “They offer value and an experience that you don’t get within a residential unit.”

Strong business potential

For developers and hoteliers, poshtels offer a number of advantages. “This type of property is generally cheaper to build and operate, and therefore has higher profitability,” says Craggs. “What’s more, they may go into buildings and locations that are not suitable for traditional hotels.”

For modern travelers, vibrant communal areas, interesting experiences, and inexpensive rates are a winning combination when it comes to accommodation. “The concept has a lot of merits across the spectrum of guest types,” concludes Craggs. “And from a development perspective, the metrics make sense.”

As global tourism numbers continue to rise, poshtels are carving out their niche as the place to be for both the money-conscious traveler and the profit-conscious hotelier.

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