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Youth Hostels : urban bound

While the average occupancy at Hostelling International youth hostels is 36% in France, 52.3% in the United Kingdom and 63% in the United States, this result hides a certain disparity between regions and big cities where occupancy often surpasses 80%. In Paris, the Jules Ferry Youth Hostel of the FUAJ has no vacancies almost every any given day. Opened recently, St Christopher’s Inn in Paris already posts occupancy at 95%, while its parent the Beds & Bars group, has an overall average occupancy of 87%. Such impressive levels alone explain why the most ambitious players concentrate their development strategies in major European cities (see below). The same strategy has also been adopted by the chain Che Lagarto Hostels, which is present in most South American tourism capitals.Offering dormitories, double, triple and quadruple rooms, youth hostels play on the flexibility of their inventories and lengths of stay to optimize results. Considering the market, for their distribution strategy, Internet clearly holds an increasingly important share. Hostelling International successfully converted its members to this new source of clientele. “Property directors, who alone control the occupancy of their hostels, must be good professionals, playing on allotments put online,” explains Edith Arnoult-Brill, director of the IYHF. But hostels’ profits are not just derived from the volume of reservations but also from the sale of annexed products and, above all, from the incontrovertible bar. A meeting place for sharing experiences and good deals between “routards”, the bar is an important source of revenues for operators. All Beds & Bars incorporate the signature bar Belushi’s, which contributes to making the average spending of each guest reach 62.50€ for a length of stay of 2.5 days. A&O (Germany)The group A&O juggles two scenarios with a portfolio made up mostly of mixed hotel-hostel properties, with both dormitories and very simple rooms adapted to small budgets and double rooms with the comfort of a 2* hotel, in addition to shared services. Present in Germany’s primary cities as well as in Prague and Vienna, the group, which now has 15 and soon 17 properties, sees mid-term potential for 25 hotels/hostels.Beds & Bars (UK)Especially dynamic, the British group now has 17 properties for 2,200 beds. Its star brand, St Christopher’s Inns is developing throughout Europe with a recent opening in Paris, after Berlin, Amsterdam and Bruges. But its expansionist strategy may also assume other forms such as the acquisition of the brand Flying Pig and its 3 properties in 2008 in Amsterdam or the JV with Bohemian Hotels for the operation of Mozaic House, an eco-friendly design hotel/hostel in central Prague.Generator (UK)Founded by Kingsley Duffy, this British player does not do things halfway. Whether in London or Berlin, its two properties offer more than 800 beds each. Thematic evenings, entertainment every evening: the bar at Generator properties are entry products for young people looking for fun. It regularly announces its plans to invest other European capitals.Meininger Gruppe (Germany)Originally addressing individuals and school groups, the German group is opening up to another target: the business traveler. With a portfolio of 10 hotels for nearly 3,200 beds, the group has two projects in the works for 2011/2012 at the airports in Frankfurt and Berlin BBI. The concept of the Meininger Gruppe, with designer rooms like those that began to make their appearance in the economy hotel segment, should please this clientele that will also have meeting areas available to them. The group also expects two openings in 2011, in Salzburg and Vienna. These should accompany the growth of the German group that saw its sales grow from 10.9 million euros in 2007 to 18.54 million in 2009 and expects 26.99 million by the end of 2010.Wombats (Austria)With its “The City Hostel” concept Wombats is pursuing its growth from 50,000 nights in 2001 to 400,000 nights at the end of this year. Founded in Vienna, the history of the Austrian group expanded to Berlin and Munich before returning to Vienna where a third property has just opened. The eighth Wombats is expected next year in Budapest and the group is also looking at other European cities (Barcelona, Rome, Paris, Brussels, Prague, Venice) to continue its expansion.Journeys (UK)With 9 properties of which a majority are located in London, Journeys is focusing its development on English pubs which have been financially hard set since smoking was banned in them. To convince owners, its franchise package promises a turnover of 15,000£ a week to those that transform the upper floors of their properties into– fairly perfunctory– dormitories. But the group does not limit itself to its original market and has expanded its footprint to Asia, in Hanoi and Kuala Lumpur.Robert Savage, PR of Beds & Bars: “We won’t compromise on certain things”“ We own and lease properties, but we prefer to lease. We are after all a professional hostel company – not professional property buyers. We are open to joint ventures, partnerships and stand alone operations however when it comes to our development strategy there are certain things that we won’t compromise on. Our new sites need: to be in major European cities; to be a set up where we can provide our customer base with the services and amenities that they require – including discount meals, internet services, laundry facilities and entertainment ; space to develop dorm room accommodation where the rooms have a 4 to 6 bed average ; to give our customers an experience where they can stay in a major European city for less than €20 a night, with breakfast included; to be big enough to fit 350 beds and a bar operation. And to continue cross selling – between the bar and the hostel, and between the hostels across Europe.”Base Backpackers: when a hotel group dabbles in youth hostelsWith Nomads, Base is one of the two players that have developed a structured branded offer in Australia and New Zealand. Accor was initially involved with establishing Base back in 2002. The hotel group supported the development of the brand and the network through a separate entity led by a team of specialists. Today, while the hotel group still has a hand in the business, it significantly reduced its participation when there was a merger four years ago of Base and Beyond Backpackers, property of the New Zealand group ACB Group Holdings. “Hotels and backpacking hostels remain quite independent components of the accommodation industry. Backpacking is about an “experience” and attracts a very different audience from that of the hotel industry”, justifies spokesperson of Accor Asia Pacific to explain the group’s disengagement.Nizar Rokbani, Executive Manager of Meininger: “ The best of the both”“Meininger is a hybrid product. We combine the best of both, hotel and hostel: the service and comfort of a hotel and the open, uncomplicated approach of a hostel. At Meininger you can book a room but also just a bed in a dormitory. Our hotels have a intelligent and flexible bed concept. So we can transform a double room into a 4-bed room easy within minutes. We designed a special sofa that can be transformed into a bunk bed very easily. On weekdays a business guest can use the room and at the weekend a hole family. So we can fulfil the needs of our guests, use our rooms optimal and keep the costs low at the same time”Internet: Hostelling International vs HostelworldGuarantor of the original spirit of the hostelling trend, Hostelling International, HI, has long remained the only significant player in the midst of a vast galaxy of small owners. But Internet has changed things. Online reservations led to the rise of new competition such as Famous Hostels, a kind of “Leading Hostels of the World” that distributes the best hostels in Europe, or, even more, Hostelworld. This commercial platform was born in 1999 out of the meeting of an IT professional and the owner of a YH. In a dozen years, Hostelworld became incontrovertible and now distributes, in over 23 languages, 24,000 hostels worldwide, in addition to Hostelling International properties since the federation is not in favor of the double affiliation with the commercial website. Its booking engine is linked to 2,000 sites and even interfaced with TripAdvisor, Lonely Planet, Ryanair and AirAsia.

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