About Us
Executive Summary
Collective Hospitality, one of the fastest growing hostel groups, is pleased to offer prospective investors a compelling investment opportunity in an overlooked asset class. This combination has presented a once in a lifetime opportunity to consolidate the hostel asset class to create a global hostel brand at heavily discounted entry prices, as there are very few players with the resources to operate in the current climate. As such, CH is looking to attain the resources necessary to further capitalize on this opportune market timing and become a first mover and industry leader in the global hostel industry.
Simply put, Collective Hospitality intends to be the largest hostel company in the world.
Simply put, Collective Hospitality intends to be the largest hostel company in the world.Today the industry is fragmented with more than 16,000 hostels in the world run by “mom and pop” teams that have no global brand. We will create the world’s only global hostel brand with a strong loyalty program, professionalize and standardize it, and exit in 5-6 years through a sale to one of the global hotel groups keen to grow their distribution network to capture Millennial/Gen Z travelers.
Here is how we are going to do it:
Professionalize
The industry is currently made up of predominantly “mom and pop” shops, independent hostels, or “cowboy” entrepreneurs. These businesses lack the back of house professional infrastructure, global marketing clout, and governance to efficiently scale their operations. The hostel industry presents an opportunity for Collective Hospitality to professionalize their business operations.
Fragmented Industry
With more than 16,000 hostels around the world, the industry remains fragmented with no large- scale hostel operators. Collective Hospitality is now the second-largest hostel company in the
world with only 65 hostels in our portfolio — yet we intend to have more than 600 hostels in the next 4 years. Though there is no major global hostel brand today, we see an opportunity to use our hospitality and hostel experience. By consolidating independent assets and established small chains, branding them with our hostel brands and plugging these into our global marketing distribution channels, we predict higher occupancies and bed rates to produce higher yields.
Lack of Financing
Unlike indepdent “mom and pop” or “cowboy” hostel operators who have historically been unable to attract substantial financing or institutional investment, Collective Hospitality warrants attention and financial backing at an institutional scale. Our assets produce strong cash flow, are secured by long-term leases, and run by professional management teams. Collective Hospitality has long-term cash flow generating capability, with significant upside potential for IPO or sale to third-party global hotel operators on exit.
Uncaptured Market
Global hotel groups such as Marriott, Accor and others have failed in the hostel business. Industry feedback shows that traditional hospitality leaders are perceived as “old men” who don’t understand how to entertain the 18- to 25-year-old customer segment. These hotel groups have not been able to create the fun vibe younger demographics are looking for in their accommodation selections. To capture the youth market, Collective Hospitality has tailored its strategy around three main pillars — social experiences, safe environments, and affordable offerings. Hostels are young people’s first hotel experience.
Proven Track Record
Collective Hospitality was established in 2012 and has organically grown to 65 hostels across Southeast Asia. We expect to have more than 150 hostels by the end of 2023. Our principals have 40+ years experience in the hotel and hostel industry. Our robust and experience-focused business model has allowed us to diversify the hostels and grow revenue streams beyond just selling a bed. This strategy has proven to be successful with CH assets — often outperforming their competitors during the past 10 years.
Why Us?
By now, we hope that the opportunity has been made clear and that the prospects are exciting. The opportunity is undeniable — and so is the resounding evidence to show that we, Collective Hospitality, are going to be the market leader as a global hostel brand.
Centralized Operations
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
Our front of house service focuses from start to finish on engagement and authenticity. Our Customer Experience personnel are specifically hired and trained to connect with customers on a personal and social level, providing real, relatable service. In addition, our events and experiences are created to connect our guests with each other and provide unforgettable memories that are filled with authentic culture, exotic adventures, and our signature, unbelievable parties.
Back of House Infrastructure
Uniquely, our back of house infrastructure is both grounded in the needs and requirements of hostel-specific operations, which differ from that of traditional hotels, and also powered by cutting-edge technology platforms and expert staff. This allows us to draw on our central resources for HR, Finance, Purchasing, IT, Marketing and other departments in a way other hostel operators can’t. At the same time, we can adapt and deploy our systems and processes with more understanding, finesse and personality than hotel brands. This “plug-and-play” model works well — as we expand, we simply plug new hostel acquisitions into this infrastructure.
Technical & Human Infrastructure
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.
