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Upmarket hostels filling- and creating- a market

29 July 2015
29 Jul 2015 -
Hostel sign

As Saturday night turned into Sunday morning, I returned to the lobby of the Chicago Freehand hostel to find it filled with hip 20- and 30-somethings, relaxing on sofas and sipping cocktails with names like “Ricky Business” and “Chicago Politics.”

Bypassing them, I swiped my card key to activate the elevator and headed to my shared quad. In an attached mahogany-paneled bathroom, I showered under the rain head using the French toiletries provided, then stowed my valuables in the in-room locker. Navigating around suitcases, I climbed into my cozy bunk, plugged my iPhone into the outlet on the attached shelf, shut the privacy curtain and settled in for a good night’s sleep.

I had entered the new world of upscale hostels, bridging the gap between backpacker basic and four-star chic.

In prime locations, they maintain the social aspect of hostels by providing affordable shared rooms, common areas and communal kitchens. But they shatter preconceptions with their funky furnishings, free Wi-Fi, safety precautions and attention to detail. Many offer private rooms, en suite bathrooms, free breakfasts and even concierge assistance. The bar at the Freehand in Miami was twice a semifinalist for a James Beard award.

“The $100 hostel I’m at turned out to be a kick,” Claudia Tapia, 39, a massage therapist from San Francisco, texted to a friend after spending the night in a coed quad. Booking her trip at the last minute, she said she had a choice between a hotel “in the middle of nowhere” where a cab to downtown would cost $30, or the Chicago Freehand, blocks from the Magnificent Mile district.

Chatting while trying to eat dry cereal from a plate (the free cold buffet breakfast ran out of bowls and spoons), she nonetheless said she was happy with the experience, which differed from her previous hostel stays in Cancún, Mexico, Paris and New York.

“It’s clean and it’s modern,” she said. “It sure brought hostels up a notch in my book.”

It’s a trend sure to become more visible in the United States, as a long list of boutique hostels position themselves. Freehand made its debut in Miami in 2012 and expanded to Chicago in May. It plans to open in Los Angeles late next year and in New York City within three years, said Andrew Zobler, the chief executive of Freehand and the founder and chief executive of Sydell Group, which owns the NoMad Hotel in New York. Some other coastal cities and Austin, Tex., are also of interest, he said.

The London-based Generator expects to expand into Miami and at least two other American cities as part of a plan to increase to 20 properties worldwide in three years. In a nod to American sensibilities, it plans to offer more private rooms in North America than it does in its 10 European hostels, said Josh Wyatt, the chief strategic officer at Generator.

St Christopher’s Inns believes “New York is our priority” in moving into the United States, but first wants to see a law amended that prohibits more than three people sharing purchased accommodation unless they are family, said Robert Savage, a spokesman for the London-based Beds & Bars, which operates 16 St Christopher’s Inns in Europe. If a move into New York is successful, then Miami, Los Angeles, San Francisco and Washington will also be on the radar, Mr. Savage said.

There are already about 350 hostels in the United States, according to Russ Hedge, the chief executive officer of Hostelling International USA, which began in 1934 as American Youth Hostels. The nonprofit HI USA, as it refers to itself, based in Silver Spring, Md., plans to open its 55th hostel in the United States this fall in Richmond, Va.

But hostels in the United States are dogged by an unflattering reputation, at least among American travellers. HI USA has spent the last two decades “focusing on the hostel stay experience as more than a cheap sleep,” Mr. Hedge said. It closed scores of outdated buildings. It emphasised design, technology, programming, sustainability, security and high standards. Nonetheless, the majority of HI USA guests, 60 percent, are from abroad, and most domestic travelers are with youth or school groups, he said.

“When we hear about private investors coming to the U.S., or in the U.S. investing monies in creating high quality hostels, that’s a good thing for us,” Mr. Hedge said. “Once people come to understand what today’s hostels are all about it will encourage youth travel.”

While hostels don’t cater exclusively to the millennials, that generation is paramount to the hostels’ success. In 2014, the under-30 travel market was valued at $230 billion worldwide for lodging, transportation and meals, Mr. Hedge said, a 40 percent increase over 2007.

Although young Americans haven’t traditionally travelled with the zeal of their European counterparts, that is changing, said Mr. Wyatt of Generator.

“I think what you’re seeing now is more and more younger Americans in college or right out of college willing to jump on a plane by themselves,” he said. “This sort of intra-domestic travel in the United States is increasing.”

He predicted that it will have a ripple effect.

“We also think that as people start to adopt hostels at a greater pace in North America, we’ll see families and young corporates” staying at hostels too, Mr. Wyatt said.

Amanda Bourlier, a research analyst with Euromonitor International, a market research company, said that might just happen. Millennials aren’t necessarily tied to corporate brands and may seek a “more local, authentic experience; not necessarily as prepackaged as traditional hotels might be,” she said.

Because the HI USA hostels are focused less on the bottom line and more on the cultural exchanges, socialising happens differently at their hostels compared with what are known as “poshtels.” While HI USA selectively allows alcohol and seldom sells food, encouraging interaction to take place in the host community, the investor-backed hostels try to entice locals as well as guests to spend their drinking and dining dollars on-site.

Indeed, St Christopher’s Inns makes 50 percent of its revenue from food and bar sales, and 46 percent from accommodation, the company said.

The difference couldn’t have been more pronounced on a recent weekend in Chicago.

At the HI Chicago, people played pool, Ping-Pong or watched TV in the common area (accessible only with a key card) while a Girl Scout troop visiting from Champlin, Minn., made a free spaghetti dinner for a handful of other guests.

Meanwhile, a mile away at the Chicago Freehand, four Irish students on J-1 visas, who are living at the hostel for the summer, sat in the communal kitchen in the basement drinking a case of beer. At street level, the lounge decorated in totem poles and other American Indian motifs sold $20 entrees of pan-roasted quail in African piri piri sauce and $15 plates of Spanish seared octopus.

There are also differences in the price of accommodation. My basic, clean and spacious HI Chicago quad cost $53 for the night including breakfast, and I joined its free two-hour walking tour of Chicago the next day. My comfortable, attractive 220-square-foot quad at the Freehand cost $83. (A private queen at the Freehand would have cost $210, while a standard room at the nearby Hotel Monaco would have cost about $300.)

“I could afford to stay any place I want,” said Abigail Woodward, 55, who was staying at the HI Chicago while visiting from Washington. “I do like to stay at hostels as a solo woman traveler,” she said, because it’s easy to meet other travelers. She then invited me to join her at the city’s blues festival.

With hundreds of hostels to choose from, it is important for guests to know what to expect, Ms. Woodward said. She checks reviews on HostelBookers.com and Hostelworld.com to ensure that the hostels she books are quiet and friendly.

“We might get to the point where a poshtel might not even be the cheapest option for a room on a nightly basis,” said Ms. Bourlier, the analyst. “But depending on the amenities you’re looking for, it could be a positive experience.”

Source: Karen Schwartz, New York Times