Skift Take

With huge demand for stylish and affordable single rooms in high-demand cities, The Poshpacker is attempting to create a community around upscale hostels and budget design hotels.

First popularized in Europe, the budget design hotel and upscale hybrid hotel/hostel model, with single and multi-bed units, are answering growing demand for cheap, cool and centrally located lodging in high demand cities.

Brands previously covered in Skift who are driving this trend include Generator in Europe, Freehand in America and Grupo Habita in Mexico.

Meanwhile, independent properties are also sprouting up worldwide to attract consumers who want to stay in a popular neighborhood without blowing their travel budget on a room. Many of them are also not necessarily interested in Airbnb as a low-price option because they want the sense of community, F&B and/or programming that a hotel environment provides.

Servicing this growing market, is a booking site with about 200 hybrid hotel/hostels and budget hotels in its inventory with the majority selling for $100 per night or less. The portfolio consists of about 65% hostels and hybrids, and 35% true hotels.

Poshpacker began in 2010 when twentysomething friends Anna Kojzar and Tania Cruz were traveling through the Canary Islands, feeling flustered because they couldn’t easily find a hip, affordable place to stay.

“There was a lot of research and guessing, and we didn’t know who to trust, but we finally found a really nice place right near the beach,” says Kojzar. “It was 50 euros, and we couldn’t believe how great it was. We thought there had to be so many other places like this hidden around the world, and so we wanted to come up with a way to make it easy to access and book them.”

Not long after, Kojzar wrote her 100-page master’s thesis in global management at the University of San Francisco based on a potential Poshpacker digital platform. Cruz, meanwhile, finished her masters of design strategy at California College of Arts in San Francisco.

In November 2012, the two women launched solely as a collection of hotel photos and descriptions. In January this year, they embedded booking functionality into the portal and the ability for guests to share photos, while continuing to add more participating member properties.

“The hotel owners are receptive because a lot of hotels and nicer hostels are trying to find a way to differentiate themselves, because they’re typically thought of as lower-end accommodations,” says Kojzar. “But they offer an experience that’s not low end at all. It’s a different type of experience for a different market…. A lot of the hotels have started putting our logo on their websites, or even physically at the hotels, like a badge of validation.”

Lisbon Challenge

Looking ahead, the two cofounders feel that in order to scale they need to further develop the backend of the website and add sophisticated interaction functionality for guests, potential guests, owners and staff to share questions and feedback about both the accommodations and the destinations.

Kojzar and Cruz are presently in Portugal as one of 30 startups who won acceptance into the annual Lisbon Challenge accelerator program out of almost 500 applications. They were also attracted to Lisbon because the city is considered the birthplace of the budget design hotel/hostel market, signaled by the popularity and abundance of high-concept properties like The Independente.

“We’re seeing this trend growing and expanding where so many hostels are trying this hybrid concept because it really works,” says Kojzar. “They’re creating experiences that are very meaningful to Millennials and like-minded travelers who are at the stage where they want a private room.”

She adds that the growing popularity for hybrid hotel/hostels within the alternative hospitality space is based on the interaction with a community of similar travelers, which she asserts you don’t have renting someone’s private house or room.

“Here in Lisbon, we’re talking to a lot of people about Airbnb and hybrid hotels, and it seems at least with the Europeans, they’re saying Airbnb is more for long term rentals and families,” explains Kojzar. “But we’re seeing with the younger Millennial market that the hybrid hotels and budget design hotels are more of the direction those people are going toward.”

Surprising to both Kojzar and Cruz, Poshpacker is attracting significantly older travelers as well in their 40s and 50s.

“Originally we were thinking about students but now it’s a bit of a mix,” says Cruz. “These types of travelers are about people, and if you’re really about people, you want to be part of a larger scene. I think a lot of travelers today like that, with all of the social media and social networks built into the experience.”

Cruz adds that another shift in consumer behavior among her client base is an appreciation for cool design at low cost, like the cardboard chairs and cork lamps at the Lisbon Challenge offices.

“They have really good eyes for design,” she says. “It’s not like anyone is saying, ‘Look, I paid $700 for this chair.’ It’s much more cool these days to be able to say you created something innovative and interesting without spending a lot of money.”

Indiegogo Campaign

Part of the Lisbon Challenge teaches startups the basics about how to raise funds and approach potential investors. With that in mind the cofounders launched an Indiegogo campaign this month to raise $4,200 by June 30.

“We want to develop our site further,” says Kojzar. “Building community and customer engagement is the next step, and we’re ready to take this to the next level.”

Cruz sums up, “We just don’t want to start a business, we’re creating a movement. A movement of people who want to interact with people, and people who are looking for awesome travel experiences. So many of us have this same mindset. This is how we travel, and this is how we want to experience travel.”

Greg Oates covers hotel/tourism development and travel brand media. He has toured over 1,000 hotels in 50+ countries. email / twitter

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Tags: hostels

Photo credit: Hoax Liverpool Hostel offers single rooms in the heart of the city for around $100. Hoax Liverpool

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