With 30% growth in bed supply within a year, hotel chains and investors eye hostel offerings, segment on way to becoming key competition to budget hotel market.

The hostel market last year experienced skyrocketing growth of 32% in bed inventory, amounting to 63,632 beds in 1,766 properties
across Southeast Asia.

Thailand, with its prolific tourism numbers, continues to lead the sector with a 41% share. With mounting demand in the sector, there is no sign of deceleration as investment is being embraced by an increasing number of hospitality groups and institutional investors.

In past years, hostel developers maximized profits by developing properties with high bed inventory and no private rooms. However, micro-private rooms in hostels are becoming essential and impactful to rate yields.

This can best be seen in the growth of hostels with private rooms in Indonesia, Thailand and Vietnam which now exceed 50% of overall room inventory.

Despite an elevated growth of supply, one considerable complication to the hostel market is the ambiguous rules and regulations; these have become a major concern in leading destinations such as Thailand, Malaysia and even Japan. While government regulation is starting to evolve, this remain a key sector issue.

Trends Forward Outlook

• Laos leads regional supply growth with a 58% increase in bed inventory y-o-y, followed by Cambodia and Malaysia at 52% and 43%, respectively.
• Conventional hotel companies investing into the hostel sector, highlighted by Lub d which is region’s largest/fastest growing hostel group.
• Despite influx of capital into branded hostels, independent properties remain predominant in the market with soaring y-o-y growth of 87%.

Read the full report here.

About C9 Hotelworks
C9 Hotelworks is led by founder and Managing Director Bill Barnett, who brings over 30 years' experience in the Asian hospitality and real estate sectors.

Prior to founding C9 in 2003, Bill held senior executive roles in hotel operations, development and asset management. He is considered to be a leading global authority on hotel residences, and has sat at almost every seat around the hospitality and real estate table.

Bill promotes industry insight through regular conference presentations at key events and contributes to numerous industry publications. www.c9hotelworks.com