Global Hostel Operator
The hotel party is over.
What was once a vast market ripe for the taking, with opportunities to acquire and consolidate independently owned hotels around the world, we are now left with an oversaturated market, with little opportunity for big consolidation plays. The number of branded vs. unbranded hotels is now near 54% globally as all major players pursue their growth strategies through acquisitions, organic growth, or diversification. Hotel operators are finding it more and more challenging to place their brands in an already flooded market of brands – they are creating new brands to grow their business. The incremental room rate premium that a branded hotel historically enjoyed is diminishing as more and more hotel brands under the same reservation system compete for the same customer in the same market. Hostels are different, as there is no global hostel brand and the potential to achieve premium bed rates in branded hostels over independent hostels is significant.
Hostels are the last bastion of the market that has flown under the radar, has been relatively untouched, and is set to explode with the right business model.
There is a significant gap left uncaptured in the current hostel industry, with only 1% of all hostels worldwide branded, as compared to 54% of hotel rooms, presenting the right investors with an overwhelming opportunity. The hostel market truly is the last frontier left in the hospitality industry to consolidate and establish predominance. With the pre-pandemic rate of growth in hostels worldwide and the unprecedented landscape presented by attractive post-pandemic investment opportunities, we feel the opportunity is one of urgency. This is a hot market with aggressive growth forecasted, waiting to be dominated by the right operator with the right resources and the right team.
Centralized Operations Offers Scalability
By Centralizing Back Of House functions to our Head Office, it allows us to provide our locations with institutional-level BOH support without taxing their payroll.
We don’t duplicate roles across locations like a typical hotel.
Instead, we let the outlet staff solely focus on what’s important:
Creating amazing guest experiences.
We have centralized our finance and accounting, sales and marketing, purchasing, human resources and property management functions in our regional offices in Bangkok. Centralization allows us to operate business across all of our hostels on a lower-cost basis and keep control.
In each hostel, our staffing model is significantly different to that of traditional hotels, which allows for significant reductions in cost. As opposed to a traditional 4-star hotel staff-to-bed ratio of two staff for every three rooms, most of our hostels operate with fewer than 10 people. This has a major impact on overall cost comparisons. This staffing model also emphasizes cross-training and multi-functional staff roles facilitated by keen spatial layout and flow design, allowing for much leaner staff numbers and better efficiency in skills.
Furthermore, we have mastered reducing cost through design. We maximize income per square meter by thoughtfully designing spaces that look great but cost less. We use materials that are durable and won’t fall apart, reducing wear-and-tear costs over time.
When we outfit our hostels, we operate our own construction crews with more than 30 workers. We have our own painters, cleaners, welders, electricians, plumbers and other specialists. We supervise the construction works ourselves, buy the materials and pay the workers directly, eliminating third-party contractors. This enables us to reduce our capital costs of hostel renovations to a fraction of what our competitors experience. Our investment goes further.
We have also centralized our operations in our Bangkok head office as a low-cost work environment to leverage our expansion into other more labor-intensive markets in Europe, the United Kingdom and the United States.
Our Approach Is Better
It’s important to acknowledge the other industry players that have tried to enter the market — and why they’ve not been successful.
In recent years, major hotel groups have introduced new hybrid concepts to attract young customers by offering hostel-like products to fill the gaps in their brand portfolios. These hybrid brands include Accor’s Jo&Joe, Hilton’s Motto, and Marriott’s Moxy, among others.
The hotel chains that have attempted to diversify and infiltrate the hostel or hybrid hostel market have failed because of a fundamental disconnect with the core wants of the young hostel customer. They have scaled their existing model to look superficially like something that would be attractive to Gen Y & Z, while not altering their service model at all. Without creating the right atmosphere in their hostels or the right experiences, the experiments failed to catch on among younger markets. Simply stated, traditional hotel executives couldn’t show young travelers how to have fun and party. Instead, their mentality led to overspending on the property but failing to execute on the youth guest experience.
Front of House Vibe
Back of House Infrastructure
Focused Tech Adoption
At Collective Hospitality, we have put a significant focus on innovating our Tech Stack and operations to be truly in line with modern hotel solutions. Gone are the days of outdated systems, cumbersome technology relying on expensive hardware and servers with teams of staff on-site to maintain, and otherwise archaic systems and processes. These often remain in large corporate entities because of the strenuous approval system for conversion as well as costs.
Instead, we have started as we intend to expand. That means an ecosystem designed around cloud-based software that does not require large teams to maintain on-site and allows us to centralize many of the functions into a head office without worrying about security or tedious remote access platforms. This gives us more agility, better performance and security and lower long-term labor costs — all having a major positive impact on our bottom line.
Back of House Ops
Cloud-Based PMS System: All of our hostels run on our cloud-based PMS system, which acts as our central operations hub. From there, we can seamlessly manage our rooms and reservations, our online inventory, and our housekeeping and engineering team communications, which adds operational efficiency and transparency. Our sales, revenue management, and purchasing and inventory are all centralized through the PMS, allowing us to gather real-time data on who is buying and what they are purchasing. The system also streamlines our data distribution to our ERP finance system, successfully monitors our rates and availability, leverages negotiated contracts and pricing for all locations, and offers real-time monitoring on actual inventory on-site. We can generally provide better forecasting through all of the aforementioned techniques.
Front of House
Touchless Technology: We have deployed Touchless RFID wristbands for all guests, which act as both their room key and their contactless payment system. For guests staying in the hostel, all of their purchases and transactions are seamlessly pushed through to their guest folio on our PMS, where it is tracked and analyzed for better data segmentation. Psychologically, preloaded payment appeals to guests and drives up our spend per head as guests do not feel the same hesitation as handing over real money. It also greatly reduces the volume of cash on site, which drastically reduces the risk of petty pilfering.
Guest Communication: As soon as a guest makes a booking at our properties, they are entered into our Group-wide CRM. We can communicate with them directly via online messaging, WhatsApp, or email and track their stay and purchase history. Once guests are booked in a property, the CRM prompts them to open up a customized app, which is tailored to their traits that have been registered through the CRM platform. (The app can track their favorite food or drink, whether they are a VIP spender, and whether they prefer a bottom bunk). This allows us to enhance the customer journey with advanced shared knowledge. Customized products, specially timed push notifications, and upsells are offered to them via this app, where they can book the products immediately, making additional ancillary purchases more likely.