Second generation upmarket hostels – dubbed 'Poshtels – are recording rapid growth in Southeast Asia and also out-performing budget hotels on room rate.
A new report from C9 Hotelworks says the sector has grown 42% over the past two years, attaining a market size of more than 1,200 properties and nearly 52,000 beds.
"Thailand, Malaysia and Vietnam are now the top three players in the region, with Indonesia narrowing the margin with year-on-year growth of 73%,"said C9's Managing Director Bill Barnett.
He explained that: "Hostels are unlike hotels as average rates are calculated on a per bed basis, compared to hotels which use a per room rate.
"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."
Barnett said as a result of this – and also the fact that hostels, unlike formulaic budget hotel brands, can easily adapt to retro-fits and re-purposed real estate – the sector is attracting increased investment.
"An increasing number of groups are now developing a critical mass of properties while we are already seeing private equity players in Southeast Asia start to chase the trail of what is arguable the region's must exciting travel space."