Chasing Growth In Travel’s Hybrid Hotel-Hostels Segment

For those in the lodging industry, the last 16 months have been all about evolution as such businesses have struggled to recreate themselves and their offerings for the era of COVID-19 and all the restrictions and consumer anxiety it has spurred.

But evolution has been a constant over the two decades that A&O Hotels and Hostels has been in business as the company has expanded its offering and footprint around the world.

According to A&O Founder and CEO Oliver Winter in his Connected Economy chat with PYMNTS, the hospitality company is now developing a “hybrid-mode” that offers consumers the choice between more hostel-like offerings with rooms for four to six people all sharing a common bathroom or a more hotel-like offering with a private room and bathroom. A&O currently runs 35 establishments in 21 cities and seven countries (Germany, Austria, the Netherlands, Hungary, Czech Republic, Italy and Denmark). The goal is growth.

“We are in progress in many more cities,” Winter said. “So, for example, Barcelona, Florence, and Heidelberg. We are also very, very happy that we will enter the U.K. in Edinburgh. Our aim is still from Istanbul to Rome to Copenhagen. We want to be covering all major cities.

But even though the company kept opening locations, Winter noted, the year 2020 was one of changes for the A&O brand, including a focus on buildings that were safer, more accessible and more connected than ever before.

The New A&O

The year 2020 was one of changing the A&O business to meet the needs of the time, Winter said.

The company created the position of social distancing specialists to help guide guests to the best places to eat or best activities where guests could count on strong social distancing or to make sure their hygiene requirements were in line.

Business functioned mostly as usual over the summer, when case counts were down, and consumers started traveling again. But when the second, third and fourth rounds of COVID-19 began sweeping through Europe in the fall, and lockdowns began again, A&O worked with municipalities to provide lodging for the local homeless and medical workers in need of a place to stay.

The company learned an important lesson about consumers and their will to get out on the road again, Winter said.

“What we see is that people in general are not afraid to travel; they are willing to travel,” Winter said, provided one can offer them the right conditions to do so and make them feel safe while they are doing it.

Critical to creating that feeling is investing in connectedness, he said.

Today, Winter said, some 50 percent of bookings are made online via the website, app, social media channels, etc. The aim is to increase that percentage to 70 percent by the end of this year. Digital streamlines the guest journey — from making a reservation to check-in itself to using their phone to pick up their room key totally contact free when they arrive. That’s if they need a key at all; at seven of the locations, users can use their mobile device as their key via Bluetooth.

Connectedness “is critical to optimize this contactless guest journey” that guests are increasingly looking for, he said.

What’s Next

A&O is entering the summer optimistic about what’s next, and hopeful that by late in the season or early fall, more normalcy will be back to the European market as vaccine distribution regularizes and the great reopening can get more fully underway. The company is now serving a business traveler client base, something it didn’t see much pre-pandemic and that it is going to keep trying to grow post-pandemic.

Moreover, Winter noted, the hope he has going into 2021 and beyond is that hotels, hostels and other lodging players, having seen how much they were able to change and upgrade their properties and experiences in 2020, will take that innovative attitude to solving the industry’s next big problem once the pandemic has passed.

“I would be happy to see this effort end with a pick-up in trying to create sustainability,” he said. “Hygiene measures are still the main focus of everybody. But I always say that after contactless, we will need to start speaking about emission less and how we can create a very little footprint when we travel over the next decade.”