Making budget fashionable

Indonesian hospitality companies are increasingly responding to new trends in the budget accommodation sector, reports Tiara Maharani

As millennials and transit visitors drive a new standard in budget accommodation, more companies in Indonesia are foraying into the sector to capture the growing business opportunities.

The hostel market is expected to grow seven to eight per cent through 2018, reaching roughly US$7 billion, according to a Phocuswright study.

Nomad Kemang, the inaugural property of Archipelago International’s new hostel brand

Most hostel guests are millennials, with three out of four travellers under the age of 35, according to a joint study by Phocuswright and booking engine Hostelworld.

Recognising the huge business potential young travellers bring, Archipelago International launched its newest brand, Nomad Hostel.

John Flood, president and CEO of Archipelago International, explained: “We know that young travellers try to save as much as they can (when it comes to) hotels and flights, but they are willing to spend more on experiences, so we give what they want and need.”

Millennials tend to embrace the social and sharing aspects of travel. For some of these travellers, dormitory-style accommodation – which better allow guests to exchange travel tips and information – are preferred over closed and private hotels.

Flood added: “Young travellers love to be in close contact with people (and experience a sense of) community. You need to have communal spaces, where they can gather and do stuff together.”

Instead of having a traditional lobby, Nomad Hotel offers a communal space designed for interaction and engagement. There is also a backyard barbecue zone with ping-pong tables, live music, a pool and sun loungers.

Sahid International Hotel Management & Consultant also added brands under the Dotnet concept to appeal to travellers who want less service and more connectivity – both technologically and socially.

Vivi Herlambang, Sahid’s director of sales, marketing and business development, said: “High-speed Wi-Fi is a must for (millennials). The always-connected generation needs to be able to easily share their experiences.”

Miranda Haryoanto, owner of Kini Capsule, found a captive market in transit passengers in Jakarta when she decided to open the hotel. For some travellers, Jakarta is not the main destination, but a gateway to places such as Bali and Yogyakarta.

According to Miranda, who is also the general manager of Kini Capsule, transit visitors do not need facilities typically found in star hotels. For them, the most important criteria are safety and cleanliness.

Another crucial element is experiences. She said: “When you’re travelling, the communal experiences could turn out to be the most memorable part of the trip. Nowadays it’s about real interactions. Younger travellers want to join a community where they can feel the uniqueness of place.”

To cater to experience seekers, even affordable hotels need to be in the vicinity of activities such as movie nights, batik-making lessons,  cooking classes and culinary tours.

Angkasa Pura II, state-owned airport services company, has opened the Digital Airport Hotel on the first floor of Terminal 3 of Soekarno-Hatta International Airport.

Muhammad Awaluddin, president director of Angkasa Pura II, said the idea for a capsule hotel was based on a survey finding that lodging at the airport did not need to be large and luxurious.

There remains a myriad of challenges that must be tackled by hostels or capsule properties. Miranda said many still perceive budget hotels to be dirty, and with poor locations and service standard.

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