Generator jump starts new view of hostels

Generator plans to change the perception of hostels with a new visual identity and design-led buildings focusing on encouraging fun and social interaction. Executive chairman Carl Michel explains how the European chain intends to grow and grab more than the backpacker market.

carl michel
Generator executive chairman Carl Michel sees a great opportunity for the hostel brand.

Marketing Week: Why is now the right time for Generator to introduce a rebrand?

Carl Michel: We did a lot of focus group work and realised the image of hostels has been a little downmarket. We want to create stylish, service orientated and technologically orientated environments and make them social spaces. The old hostels used to be at the end of a long underground line, now they are city-centre driven and a lot of space is given over to social interaction. We are trying to create more of a community feel – for instance we have just had a local artists exhibition at our Copenhagen hostel.

MW: What is the thinking behind the new look logo and identity?

CM: Our old design with its greens and blues and letter ‘G’ looked a lot like other people’s identities. We did our research and worked with Bisqit to test out the bright pink/magenta logo with consumers. It’s light and fresh and suggests energy. It stands out in the marketplace – most of our guests come from a multitude of nationalities so we had to make sure we had a colour that really worked for them and is very modern.

MW: What else is changing in the hostels?

CM: Next year will see a lot of refurbishment and opening – we have Barcelona in March and there will be eight hostels in all by the spring. There will be local DJs, artists and bands in hostels to create a degree of excitement. We will be changing the food and beverage programme.

MW: Will launching in the face of a global economic downturn with a European-based chain be a challenge?

CM: We think the global economic downturn will play to our advantage. People are not exactly downtrading but have realised what the value proposition is {when booking accommodation}. Budget hotels have been a big driver in the past 10-15 years but people are missing that social piece of the experience. We are being on the front foot and saying people can see the value we are offering – people are looking for something new and different.

MW: Will Generator remain price competitive in the market?

CM: We keep a close eye on our competitors and look to be competitive with pricing but possibly over time we may be able to establish a price premium., We will establish ourselves as a stylish proposition. At present we can offer as low as 10 Euros a bed but customers can spend a little more for a comfortable smaller room. Our new hostel builds will have some rooms with en suites.

MW: What can you say about the new traveller and potential new customer base?

CM: The new traveller is till very heavily weighted towards the 18-30 year-old demographic. There’s a mixture of about 40 per cent group business – that’s university groups, hen and stag parties and people travelling for educational purposes. There’s a balance with the classic backpacker and the entrepreneurial independent traveller. Going forward we think we will see our appeal broaden and we will see the age go up a little. In some of the new hostels we are seeing some families coming to stay.

MW: What are the main channel for communicating the Generator proposition?

CM: For us it’s the website and we are very busy with all the social media – we are the leading hostel with Facebook likes and have a Twitter feed. We are talking about a demographic walking around with at least one, if not two mobile devices and expecting all time to connect with each other.

MW: How are you using data to build up loyalty and repeat business?

CM: The new website is the way to get data. We are putting a CRM programme in place and we are getting 30 per cent repeat business. We think we can expert a lot more repeat customers as we build more hostels. Once we get a network we get the benefit effect of people wanting to travel round the chain. We will be launching more promotions to encourage repeat custom – if people visit multiple hostels there will be rewards.

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