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Southeast Asia   Hostel  Market  Trends   December  2015  

Fast growing  segment  erupts  into   mainstream  accommodation  market   Domesticated  travel  sectors  key  to   hostel  supply  expansion     “Skyrocketing  growth  of  low-­‐cost  airlines  and  an   evolving  middle  class  in  Asia  are  leading  a  second   generation  of  new  hostel  offerings.    At  the  upper   end  of  the  product  range  poshtels  and  hybrids  are   now  becoming  a  competitor  to  the  traditional   budget  and  economy  lodging  sector.       The  market-­‐size  of  international  level  hostels  in   Southeast  Asia  stands  at  770  properties  with   36,480  beds.  Hostel  owners  compete  through   incorporating  innovative  designs  and   accommodating  facilities  to  create  greater  appeal.       Our  methodology  for  market  research  into  the   sector  has  been  to  Jilter  out  guest  houses,  B  and  B’s   and  homestay  accommodation  to  establish  a   market-­‐wide  metric  to  benchmark  data  in  this   emerging  segment.  

Market Size  by  Country   Properties

Beds

300    

16,000      14,000      12,000      10,000      8,000      6,000      4,000      2,000      -­‐        

250      200      150      100      50      -­‐        

Total Number  of  Properties  

Total Number  of  Beds  

Source: C9  Hotelworks  Market  Research  

Our forecast  calls  for  owner/operator  groups  to   consolidate  inventory  in  order  to  capture   economies  of  scale  and  to  tap  into  a  rapidly   growing  demographic  of  emerging  consumer   class  travelers  in  Southeast  Asia.”   Bill  Barnett,  Managing  Director,  C9  Hotelworks  

       Market  Trends

Forward Outlook

•  Market-­‐wise the  Average  Daily  Rate  per  Bed  is  US $10  but  the  Average  Daily  Rate  per  Room  is    US $40.  

•  More hostel  operators  are  trading  in  both  hostel   and  conventional  hotel  space  to  capture   expanded  target  markets.  

•  Properties in  proximity  to  CBD  areas  or   locational  demand  generators  are  travelers’   preferred  choices.  

•  Domestic  inter-­‐country  travel  within  most  SEA   nations  is  the  most  proliJic  growth  segment  in   the  budget  and  economy  tier.    

•  Rising demand  from  friends  and  families   traveling  together  as  well  as  school  and  sporting   groups.  

•  Further regional  integration  such  as  the  AEC  will   propel  growth  of  more  cross-­‐border  hostel   investments.    


MARKET OVERVIEW   Highlights  on  Regional  Operators   •  Most  hostels  are  owned  by  individual  investors  and  generate  income  by  means  of   conversions  versus  new-­‐build  properties.  There  is  an  increasing  trend  of  chain  hostel   operators  such  as  Thailand  based  Lub.d.     Top  Regional  Hostel  Operators  

Malaysia and   Singapore     leaders  in  multi-­‐ hostel  groups  

Properties 8

Beds 800

7

700

6

600

5

500

4

400

3

300

2

200

1

100

0

0 International  Inn   Hotels  Group   (Malaysia)  

5footway.inn (Singapore)  

Fernfoft         (Singapore  &   Malaysia)  

Number of  Properties  

Reggae                 (Malaysia)  

Number of  Beds   Source:  C9  Hotelworks  Market  Research  

City and  Leisure  Market  Comparison   •  City  properties  offer  a  signiJicantly  larger  number  of  beds  compared  to  leisure  hostels   which  is  a  reJlection  of  high  land  value.     City  vs.  Leisure  Composition   %  Properties   100   90   80   70   60   50   40   30   20   10   0  

City properties   typically  offer   more  facilities   than  leisure   products  

City

Leisure Source:  C9  Hotelworks  Market  Research  

2

 C9  SEA  Hostel  Market  Trends:    December  2015


PERFORMANCE INDICATORS   Key  Characteristics   •  The  pricing  drivers  of  hostel  offerings  is  relevant  to  operating  costs,  real  estate  and  the   quality  of  the  product.     US$

Average Daily  Rate  per  Bed  (ADRB)  

25

Average entry   rate  per  bed  in   region  is  US $10  

20 15   10   5   0  

City

Leisure Source:  C9  Hotelworks  Market  Research  

•  Whilst shared  rooms  with  common  bathrooms  continue  to  be  the  legacy  hostel  model,   operators  are  now  increasing    the  number  of  private  rooms  with  individual  bathrooms   as  well  as  design-­‐led  facilities  in  order  to  attract  a  wider  clientele  which  puts  hostels   increasingly  in  competition  with  budget  and  economy  hotels.   Average  Beds  per  Room  (ABR)    Ratio  by  Country    7.0    

Average ABR   across  SEA   markets   stands  at  3.9    

6.0      5.0      4.0      3.0      2.0      1.0      -­‐        

Source: C9  Hotelworks  Market  Research  

                                                     C9  SEA  Hostel  Market  Trends:  December  2015  

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About C9  Hotelworks   C9  Hotelworks  is  an  internationally  recognized   consulting  Jirm  with  extensive  experience  in  the   Asia  PaciJic  region.  Its  core  business  focus   includes: •  •  • 

Hotel and  Resort  Development   Asset  Management  /  Ownership  Representation   Project  Feasibility  and  Analysis  

Key competencies  include  international  hotel  operator  search,   selection  and  contract  negotiation,  mixed  use  hotel  and  residential   planning  and  operation  reviews.     A  wide  range  of  both  institutional  and  private  developers  and  a   comprehensive  portfolio  of  completed  projects  give  C9  the  skill  set   and  background  to  focus  on  key  issues,  evaluate  complex  ones  and   assist  clients  in  achieving  solid  results.  Based  in  Phuket,  Thailand   and  led  by  Managing  Director  Bill  Barnett,  who  has  30  years  of   experience  in  Asia  PaciJic,  the  Jirm  is  well  positioned  to  serve  an   increasing  demanding  marketplace.  

C9 Hotelworks  Company  Limited   9  Lagoon  Road,  Cherngtalay,  Thalang,  Phuket,  83110,  Thailand     (OfJice  located  at  the  entrance  of  Laguna  Phuket)   T:  +66  (0)76  271  535   F:  +66  (0)76  271  536     www.c9hotelworks.com   info@c9hotelworks.com  

Southeast Asia Hostel Market Trends December 2015  

Skyrocketing growth of low-cost airlines and an evolving middle class in Asia are leading a second generation of new hostel offerings. At th...

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