Beds & Bars is turning its attention to expansion in Europe, rather than its native UK, due to the much more attractive return on investment, CEO Keith Knowles tells MCA.
“The UK isn’t currently an attractive place to invest. It doesn’t mean we’re not looking, but we get a 25% return on investment in Europe and a 15% return on investment in the UK,” he says.
Developing a resilient workforce and utilizing innovation are also key pillars in Beds & Bars’ strategy, as the hostel and bar operator continues to expand across Europe.
The group currently runs backpacker hostels in eight countries, alongside its bar brand Belushi’s. The operation includes 11 total units in the UK with 10 further sites across Europe including St Christopher’s Inns and Flying Pig in Amsterdam.
Strategy and development director Luke Knowles explains that the target has also shifted toward larger scale sites of 300-400 beds.
The business will focus on consolidating in locations such as Paris, where it already operates, to utilise its cost base as much as possible.
“If something does come up in Budapest, or Lisbon for example, where we don’t operate, we would look at it. There is certainly a lot of opportunity out there at the moment,” he says.
Capturing a new market
Economic instability has allowed Beds & Bars to capture a fresh market as a changing consumer group emerges, Luke Knowles says. “We’re a budget option, so our customer base is not necessarily under the same pressures - they’re young and don’t have mortgages, some may still live at home”.
“But also, you will have a slightly different segment coming through in hostels, where people might have less disposable income, but still want to have the holiday experience”.
He sees a consumer that would usually sit in the two-to-three-star hotel market, choosing to “opt for budget” accommodation so they have more to spend on their overall trip.
“They now think, I will try a hostel. They then realise it’s a great experience and are happy to come back”.
Targeting innovation
Herbert feels a consumers are increasingly seeking a more innovative offering. “I think anytime we look to build a new product, we always try to find an imaginative, creative story.
The group’s hostel in Edinburgh was on the site of an old safe, so it worked with the developer to turn it into a secret escape room.
“The thing that we are focused on at Beds & Bars, is to create an atmosphere in our venues. That is what hospitality sells” Keith Knowles adds.
“People come from all walks of life, all ages, and all nationalities, so we never get stale in our venues. That is one of the wondrous things about what we do, is seeing that energy.”
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