5 reasons the hotel industry is nervous about ‘poshtels’

Affordable but not too shabby, these products are the next rung in the evolution of travel space

As if Airbnb was not enough of a shakeup to the Asian hotel industry, posh hostels or “poshtels” are coming close on their heels.

Poshtels sit in the gray area between hostels and boutique hotels. Like short-term rentals, poshtels are winning the hearts of travelers, the only difference being that these travel spaces are regulated.

In Southeast Asia, poshtels are becoming forces to be reckoned with, garnering a market size of more than 1,200 properties and almost 52,000 beds, according to a recent report on hotel market trends by hospitality consultancy C9 Hotelworks. It is “the region’s must exciting travel space,” said Bill Barnett, the consultancy’s managing director.

So why are poshtels gaining so much ground now? Let’s examine the reasons:

The age of flashpacking

Traveling today is all about flashpacking. This won’t align with your vision of typical threadbare backpackers, content to slum it wherever they go. Rather, flashpackers come with a higher disposable income and with fancier luggage.

C9 Hotelworks reported a 42 percent surge in new beds coming online in the flashpacker category between 2015 and the third quarter of this year.

“Ultimately the mix of accommodation and bed types in what are being term ‘poshtels’ attracts not only solo travelers and couples, but also taps the fast tracking friends and family group,” said Barnett.

Affordability

This is perhaps the biggest drawcard of poshtels. “Hostels are unlike hotels as average rates are calculated on a per bed basis, compared to hotels which use a per room rate,” Barnett said. “Our research across Southeast Asia shows that if comparing the two accommodation models side by side, the average room rates in newer hostel properties are matching or exceeding those in the more established budget hotel tier.”

Poshtels are able to keep rates down by expanding vertically, i.e. more beds to a room, and harnessing multiple income streams, e.g. laundry facilities and food and beverages.

Combined with the rise of low-cost airline carriers in Asia, posh hostels could bring “predatory” competition to budget hotels, Barnett told Forbes. “The cashflow from that is a game-changer and will fast track the development further.”

More: Airbnb is now banned in New York City

Up-to-the-minute amenities

Just because they are affordable doesn’t mean poshtels are pushovers in terms of amenities. The Lub d Patong chain of hostels in Southeast Asia, for example, boasts coffee bars, outdoor decks, movie rooms, game rooms, and luggage storage areas. At least one branch offers a “see-through” swimming pool.

Flexible locations

Poshtels can spring up anywhere because the model is flexible. Warehouses, industrial buildings, or even shipping containers could easily be converted into poshtels, Forbes reported.

They’re also springing up in Southeast Asia’s biggest tourist destinations. Thailand, Malaysia and Vietnam make up the top three markets for accommodations under the flashpacker category, according to C9 Hotelworks’ report.

Rapport with other travelers

In such relatively small spaces, poshtels offer a plethora of opportunities to meet other travelers. Co-working spaces and wide communal areas are ubiquitous features in many poshtels. Lub d even has a ring for Thai boxing classes, Forbes reported.

What do you think about poshtels? Let us know in the comments below.

Read next: 5 reasons HNW travellers are opting for luxury apartments over hotels

Source: Property Report