According to a new report by global hotel consultancy HVS, the cost of hotel accommodation in major visitor locations is keeping the hostel and limited service concept at the forefront of the property market. In addition, flexibility of design and ease with which small businesses can be established mean that the sector is now providing a viable investment alternative to office space or other income-producing asset classes.
The HVS report, The Hostel and Budget Traveller Market in Europe – Gaining Momentum, released to coincide with the inaugural Hostel & Budget Traveller conference, outlines the fact that larger hotel companies are moving into the hostel and limited service space—such as Hub by Premier Inn and Tune Hotels—forcing other operators to become more innovative to stand out from the crowd.
The largely risk-averse investment market, and a more socially aware corporate market, are also contributing to the rapid innovation of the limited select service hotel sector, with many operators now having aggressive expansion strategies for Europe and overseas.
Economic conditions over the past seven years have lead to a polarization of the hotel market—with the limited-to-select service segment gaining traction at the same time as the luxury full service segment and much of the full service mid-market having been squeezed.
“The vibrant hostel and limited service segment now presents the consumer with more options and the investment market with more considerations. As a result, transaction activity is particularly healthy in this sector and this is likely to continue,” says report co-author Harry Douglass, senior associate of HVS.
