By Dominique Vidalon
PARIS (Reuters) - AccorHotels is launching a youth hostel brand called Joe&Joe to tap the spending power of young adults, part of its response to the challenges posed by Airbnb and an entry into a high-growth sector.
Europe's largest hotel group said on Tuesday it would open hostels in Paris and Bordeaux in 2018. More are planned in Warsaw, Budapest, Rio and Sao Paulo with a target of 50 by 2020.
Joe&Jo is designed "to meet the expectations of millennials (people who became adult around and after 2000 and now are in their 20s and thirties) all those who value sharing, spontaneity and experience," and will complement the group's portfolio of budget brands such as Ibis, the statement said.
Cost-conscious but style-seeking millennials are increasingly choosing hostels offering higher standards of accommodation than the traditional backpacker fare.
Joe&Joe hosts will offer services such as yoga classes, craft beer and music gigs as well as travel tips and DIY workshops. A nightly stay will start at 25 euros per bed.
"The youth hostel sector is undergoing profound change, with renewed interest from investors. In this traditional not-for-profit sector, investors see new prospects for profitability through changes in quality and product offering," said research firm KPMG in a recent report.
A large number of beds, coupled with lower operating expenses, allow youth hostel managers to generate attractive profitability levels, the report said.
According to travel industry research firm Phocuswright, there are 18,000 hostels worldwide, a market worth 5.2 billion euros in 2014, which could grow to 7 billion euros by 2020 driven by an annual growth of 7-8 percent, Le Figaro daily said.
France has been lagging behind other countries like Britain in the youth hostel sector but in 2015, state-owned bank BPI France invested in New Nomads, a brand that is developing youth hostels in France since 2013 while property group Fonciere des Regions has set aside as much as 400 million euros to invest in European hostels through 2018.
AccorHotels CEO Sebastien Bazin has long warned that revenue from traditional hoteliers is under threat from companies like Airbnb, which offer travellers accommodation options other than hotels, and from online booking websites like Expedia.
His response to the threat of the so-called sharing economy has been a flurry of recent acquisitions in the sector.
