QUIETLY expanding is the Southeast Asian hostel market which has seen a substantial 42% increase in bed inventory across the region this year, Bill Barnett, managing director of C9 Hotelworks said in his company’s latest research paper.
Not very surprisingly Thailand has the biggest market with 41% share from a regional total of 51,795 beds in 1,201 properties.
Mr Barnett expects this sector to see heightened competition with this leading to a consolidation push as more traditional hospitality groups embrace the product.
Although hostels in urban areas benefit from more stable trading at higher rates, 78% of the supply in 2016 came from non-city entries.
However city operators turned to conversions and re-purposing to cope with soaring land values in key city areas.
Diverse demand has also led to the evolution of hybrid hostel/hotel properties that cater to a broader demographic yet have yield-driven operations.
Private rooms are now widespread at hostels in non-city locations with 74% of such properties in Southeast Asia offering this room category. Hostels in urban areas generally have more shared rooms versus private rooms due to higher rental or land cost.
However Mr Barnett warned that the increase in the supply of private rooms is putting hostels and hybrids on a collision course with budget hotels.
Interestingly, pods and capsule beds are trending in urban markets as operators try to maximize beds per room while providing privacy for guests which traditional hostel bunk beds do not.
Moreover it is not just budget travelers who seek hostels with other groups, such as social experience seekers, also being drawn to them.
This year’s hostel supply growth was the biggest in Indonesia which saw a jump of 73%, followed by Thailand with 55% and Vietnam 51%.
Currently there are 82 groups with multiple properties across Southeast Asia operating a total of 10,242 beds. Independent operators dominate the regional hostel market with 41,553 beds representing 80% of total supply.
Singapore is right at the top of this sector with this year’s per bed rate average being US$20, which is a drop of 1%, and beds per room ratio of 6.4, an increase of 3%.
Across the region the median per bed rates of city hostels are 46% higher than those of non-city properties.
Top: Hi Sukhumvit Hostel in Sukhumvit soi 38. Photo: Neajjean (CC-BY-SA-2.0)
Inset: Mr Barnett says hybrid hostel/hotel properties have evolved.