Identify rising stars
Engel & Völkers Hotel Consulting has spent years tracking trends in the hotel sector, and our 2018 Hotel Market Report shows continued growth in the European market. Visitors increased by 8% in 2017, although increases in RevPAR (revenue per average room) were particularly strong in Eastern (+10.5%) and Southern Europe (+9.5%).
Outside of Europe, however, Colombia could be the rising star hostel investors are looking for. In the 2018 HOSCARs, it was flagged as being relatively new to the list of countries offering hostels and immediately became one of the most booked destinations. Bookings have surged 46% year-on-year, and the capital of Bogota was listed among the top cities.
Find an untapped market
Such gaps in the market are the perfect opportunity for savvy property buyers seeking alternative investments, and they exist in a number of forms. The rise in solo travellers visiting adventurous locations, for example, has created demand for authentic travel experiences that deliver local knowledge, support and a feeling of security and safety.
It’s no coincidence that big players like Safestay, which provides boutique hostels for families, business and solo travellers, reported a 60% rise in turnover last year. Taking this model outside of Europe to countries in Africa and South America, especially to one of those places identified as rising stars, could prove a lucrative opportunity for property investors.
Spot investment potential
You don’t necessarily need to find a fresh market to successfully invest in the growing hostel market, however. You can also identify cities and spaces where traditional players are struggling to take advantage of growth.
Hamburg is a great example. ADRs (average daily rates) were up 5.3% in 2017, RevPAR was up 6% and overnight stays up 4.1%. But the best news for hostel investors is that big developers are finding opportunities scarce, which leaves gaps for inventive buyers to turn unique properties into smaller-scale ‘hybrid’ hostels. These combine the authenticity and friendly feel of a hostel with the style and comfort of a hotel. They’re increasingly popular with investors, and could prove a smart way to soak up excess demand in cities like Hamburg.