In 1979 the first capsule (or rather pod) hotel opened in Japan. Since then capsule hotels have become synonymous with thriving Asian megacities. But now this relatively new category of accommodation is popping up more frequently in European cities. Below we will explore the industry numbers, outline the key drivers for this trend and why now is the time to climb in to this burgeoning market.
Let’s dive into the industry numbers. The capsule hotel market, with a value of USD 205 million in 2021, is projected to reach USD 327 million by 2031, growing at a CAGR of 8.15% (Straits Research). Asia will remain at the forefront of this growth, however Europe is also projected to benefit from a CAGR of 8.6% in the period of 2021–2028, generating a revenue of $15.2 million in 2028 (Research Dive Analysis). This is an impressive expansion, particularly when compared to projections for other conventional accommodation categories, clearly indicating a growing desire for budget-friendly solo travel offerings
So who is driving this trend? These hotels appeal primarily to solo travelers, particularly from Generation Y, offering cost-effective, short-term stays. They target a variety of traveler types, including business and leisure travelers (Data Bridge Market Research). This is because capsule hotels present these guests with a unique combination of qualities, they provide the comfort, privacy and security, which are associated with a typical hotel room, whilst at the same time offering a more laid back atmosphere and pricing that is expected from a hostel. As the experience economy thrives, it is easy to see how capsule hotels fit neatly into this trend, in which travelers are choosing to spend on fine dining and local activities over fancy hotel rooms and first class flight tickets.
At the same time from the perspective of hoteliers, the capsule solution offers an attractive way to maximize their use of space, through providing significantly more guest accommodation per square meter and also utilizing a rooms height, rather than being limited to floor surface area. This becomes particularly relevant for high density urban settings, in which real estate rental rates can be extremely high and competition for securing property locations is fierce. It can be obvious for many hotel operators that there is a significant potential economic benefit to be had by switching to the capsule hotel business model, which explains to some extent why interest in investing in this form of accommodation just keeps growing.
The capsule hotel industry, marked by rapid growth and promising future prospects, provides an attractive investment opportunity. These types of stays have the ability to cater to the changing preferences of modern travelers while ensuring efficient space utilization. As an investor, tapping into this dynamic market promises not only a foothold in the evolving hospitality industry but also the potential for significant returns. Since this innovative accommodation concept is still in its early stages of adoption in Europe, Investors who seize the moment to enter this market are poised to gain a significant first-mover advantage, positioning themselves at the forefront of this market trend.
As solo traveler numbers are set to steadily increase globally, capsule hotels are perfectly positioned to meet this untapped market in Europe. These small but wonderfully innovative accommodations that do not compromise on comfort or safety, address the desires of guests seeking modern affordable accommodations, hotel owners aiming for streamlined operations, and investors pursuing innovative opportunities in the rapidly changing hospitality sector. They really represent a small wonder with big growth potential just waiting to be unlocked!
To find out more about how Capsule Services is at the forefront of this opportunity, and how you can be part of it, reach out to us today.
Contact
capsule services AG
Hirschengraben 40
6003 Luzern
info@capsule-services.com
+41 77 526 3375