With the rise of solo traveling, Europe-based company Generator, a hostel-hotel hybrid, is entering the U.S. market with its first location in Miami
The luxury hostel has arrived.
Generator, a Europe-based hostel chain with 13 properties in cities like Rome, London, Paris and Barcelona, is opening up its first boutique hotel in the U.S. on Aug. 15 in Miami with prices as low as $20 a night for one bed in a shared guest room.
“We’re merging the hostel vibe with the professionality feel of a hotel,” Jason Rieff, the CMO of Generator, told Moneyish of its new hybrid concept.
Like any hostel, where travelers rent a bed (typically a bunk bed) in a dormitory-style room and share a bathroom and common lounge area, Generator Miami has a similar rooming concept with just four people per room. The property has a beach-resort feel complete with a pool, rotating art on display — for example, a mural painted by renowned South African artist Chris Auret — and three food and beverage venues with cocktails and kombucha.
Located on the bustling strip of Collins Avenue, Generator Miami will have 300 beds in 105 rooms with 24/7 programming, like yoga classes and mixology demos, all included with the stay. And those who don’t want to share a room with strangers can rent a private one starting at $95 per night, with an bathroom in each suite.
While travelers must be open to the MTV “Real World”-like experience of meeting new bunkmates in a room share, the price is unbeatable compared to other Miami beach properties nearby. Other hotels along Collins Avenue, like the Ocean Spray charge around $67 per night, and at standard room at Dream South Beach is $119 per night.
There’s also been a rise in solo traveling. Roughly one in four people said they would travel solo this year, according to a survey by marketing firm MMGY Global. And more women are booking trips alone compared to men: 65% are taking vacations without their partners in the U.S., a Booking.com survey found. About 65% of the guests at Generator are women, so providing all-female dorms was a priority at all its locations.
“It’s a product really for the millennial traveler and Gen Z traveler who is looking for social spaces and to meet travelers from all over the world,” said Generator CEO Alastair Thomann, adding that the hostel has a 45% repeat-stay rate for guests.
With the rise of shared services like Airbnb, the hybrid hostel-hotel segment — which has been popular in Europe for years — has recently taken the U.S. market by storm. The Freehand in Miami opened in 2012 just a block away from South Beach resorts with shared-room prices starting under $50 per person. Similarly, Hilton Hotel’s Tru brand and Marriott’s Moxy concept both boast low prices, small rooms and massive lobbies with ample opportunities to socialize with fellow travelers. The hostel-hotel market is valued at $5.2 billion in revenue and is projected to grow by up to 8% next year, according to last year’s first-ever Hostel Trend Report by Hostelworld.
“Millennial travelers don’t want to spend all this money on a hotel room, because for them it’s like six hours of sleep and then they’re exploring the city,” said Thomann. “We’re finding that this generation doesn’t care about where they’re sleeping as much; they’d much rather save the money to do something else.” He stressed that safety is a priority: There’s security 24/7 on property at all Generator locations.
More than 70% of hostel travelers are millennials, and of those, 15% have stayed in one in the last 12 months, according to Hostelworld. And hostel travelers spend $4,474 on average annually — more than the average traveler, who spends around $3,155 per year, according to the same trend report.
Millennials spent $4,594 on vacations in the past 12 months with an average of $1,312 on each vacation, an 8% increase from 2016, according to a survey by marketing firm MMGY Global.
The hostel’s business model relies heavily on revenue generated from its food and beverage programs, which has about an 80% profit margin from travelers and locals — a big reason why Generator can afford to charge so little for the rooms.
“It’s going to be a very big disruption to the market,” said Rieff.
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