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.