HB ON THE SCENE: Generator sheds hostel image as it debuts in U.S.

NEW YORK—For those of us who have traveled around Europe, especially in our late teens and early 20s, hostel living was a way of life: an inexpensive bed in a city-center location, a place to store your stuff and catch some sleep for a few hours in between jam-packed days experiencing the local culture. But while this type of travel is the norm in Europe, it’s less common here in the U.S.—which is why Generator, the hospitality brand that has part-hostel/part-hotel properties throughout major European cities, has dropped hostels from its name as its debuted its first U.S. property in Miami.

“For us, dropping the hostel name is not that we want to distance ourselves from hostels—not at all—because it gets us the cool client, the millennial, the Gen Z, which is essentially what we’re all about,” said Generator CEO Alastair Thomann. “But I think Generator is in its own space now, floating in between hostels and boutique hotels.”

Thomann pointed out that there’s a convergence in the industry. “The boutique hotels are adding dorms, even aparthotels want to be lifestyle hotels, and everyone is coming together,” he said. “There’s something happening in this industry at the moment.”

Generator properties offer public spaces designed to bring people together.

While Generator is dropping its emphasis on hostels, that doesn’t mean it’s abandoning its strategy. Like its sister properties, Generator Miami will offer a mix of private rooms and shared dorms—including female-only dorms—but that mix will look a little different than its European counterparts. “Some 65-75% of the rooms are private rooms,” Thomann explained, noting that he thinks that will strike the right balance for future U.S. properties. “We’re also adding another room category, the flex room, which is a private twin or double during certain times of the year, and other times of year, there’s another bed coming out of the wall.” This will enable the property to increase occupancy during times when it can command rate.

Thomann noted that, as the first U.S. property, Generator Miami will be an experiment to see what the right mix is for the U.S. market. “The U.S. is going to be different, I’m sure, and we’re going to have a lot of learnings in a year’s time,” he said, adding that the property’s GM, Glenn Valencia, came from the Freehand Miami “so he knows how it works here.”

With 300 beds in 105 rooms, Generator Miami will offer three curated food & beverage venues with local roots; public spaces designed to enable spontaneous interactions; and 24/7 programming, from yoga classes to rap battles to mixology demos. It’s also the first Generator property with a pool and a leisure-resort feel.

“It’s definitely not your traditional hostel,” Thomann said. “There’s a games room, a lot of fun elements, a lot of elements that bring people together. It’s really easy to get to meet people over a game of pool, shuffleboard or a foosball table.”

London-based Argent Design was tapped to reimagine the space, creating a property inspired by a 1940s-era condo. Generator’s in-house team has art-directed the property’s 105 rooms and multiple public spaces, including the main mural on the facade facing the swimming pool designed and painted by South African artist Chris Auret, famed for his Mandela paintings and murals, street art, and styling of AfrikaBurn, the Burning Man regional event in Africa.

Miami mixologist Gui Jaroschy, best known for launching Broken Shaker, has been named director of bar and restaurant concepts at Generator, while Chef Daniel Roy, a Florida native whose resume includes 3030 Ocean and the Matador Room, will run Generator Miami’s kitchen. “We’re just letting these guys come up with something really exciting,” Thomann said.

“One thing where our concept makes so much sense financially, from the investor perspective, is that whereas in a traditional hostel, ancillary spend is only around 8%, for us it’s about 30%,” the CEO said. “People really do spend a lot of money in the destination bars, clubs and restaurants.”

Both private and shared rooms are available at Generator Miami.

Generator has 13 European properties in addition to its Miami offering. The CEO noted that now is the right time for Miami to debut. “Miami has come out of a really rough two or three years with Zika; the convention center closed, but it’s opening this fall, so you get all of these additional high demand days,” he said. “Everything is moving in the right direction in Miami.

“Our whole business model works because we go into markets that perform 80% or more occupancy year round, but where the four-star market is performing $170 and above; that’s where it works best,” he said. “That’s where if you add a couple of more beds, you’re left with a higher room rate and a higher return… Everyone is looking for the highest return per square meter on a piece of real estate in a certain location, and adding more beds is one way of achieving that.”

Not surprisingly, additional U.S. markets Generator is looking at include San Francisco; Los Angeles; New York; Austin, TX; and Portland, OR. “We just signed our second one in the U.S.,” he said. “Queensgate [Investments, Generator’s owner] really wants to spend money in the U.S. themselves to drive the expansion, get the first couple of major markets started.”

That being said, for the first time, the company is open to management contracts and franchising. “We get requests every single week,” Thomann said. “That’s something you’ll see us do in the next six to 12 months; we’re going to have select partners in certain locations where we’ll find some third parties to operate and franchise or that we manage for them. I think some of that will help us with growing the brand, because if we have to do all of the investment ourselves, it’s going to take too long.”

For Thomann, it’s the perfect convergence of timing for a brand like Generator. “This whole generation coming up, they do travel differently and they’re looking for different experiences,” he said. “They don’t want to spend that much money on the bedroom, and they prefer to spend it on food and beverage, and experiences.”

But it’s not just young travelers Generator caters to. “Families are really big for us; when you have more than one child, usually you need two rooms, and that gets really expensive,” he said. “Five- and six-bed dorms are a fantastic solution to make some of these locations affordable. At the same time, we have a lot of people who use it as a coworking space. We have some guests in London who have been there for five months now. They work in our public areas and use it as a coworking space, and crash in the bedrooms.

“We’re combining the best of all worlds, and we’re open for all sorts of different guest segments,” he continued. “Millennials and Gen Z are definitely the largest age group they’re coming from, but it’s also more about this millennial/Gen Z mindset. I think you’re going to see that happen across a lot of accommodation offerings now. You’ve got to open yourself up to more target groups.” HB

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