From the way chief executive officer Fredrik Korallus talks about his hostel group Generator, you’d think he was heading up a trendy Shoreditch club night. He speaks about “having the right art, the right music, the right culture” and even aspires to turn the £20-a-night shared accommodation hubs into “living art centres”.
But exceeding expectations is what Generator is all about, even if the bar is set pretty low in the hostel industry. Its mission since the first one opened up inside an old police station in Bloomsbury in 1995 has been to use design nous to upgrade the often-grotty hostel experience to better suit the needs of contemporary, young travellers.
In short, Generator has made staying in a hostel cool. “We always offer strong wifi; for us, it’s more important than running water,” Korallus jokes. “I think some of our guests would be happy to go without a shower, but they’d kill themselves if they didn’t have wifi.”
Strong Snapchat game aside, Generator has discovered a sweet spot between no-frills necessity and the current trend for industrial, Scandi-chic. Packed with artworks, a long-standing relationship with Canadian firm The Design Agency has produced an aesthetic you’d expect from a Hoxton hipster let loose with neon paints in Ikea.
Generator Berlin followed in 2002 before the group caught the eye of real estate investor Patron Capital Partners, which acquired the company five years later. It brought Generator to 11 more European cities, adding Amsterdam, Stockholm and Rome to the portfolio last year.
With the rise of casual working and self-employment, Generator is also attracting an increasing number of young professionals travelling on business, especially consultants and freelancers who don’t have the luxury of an expense account.
“We identified a sector in hospitality that nobody was thinking about,” says Korallus, who joined in 2015, having headed up Radisson Blu and The Hotel Collection. “The word hostel 30 years ago was a dirty word, so the investment community didn’t look fondly on the sector.”
But he believes they’re waking up to it now, due to a saturated luxury market. “You look at five star hotels, six stars, who knows what they’ll invent next? There are too many brands competing for that consumer. For hostels or shared accommodation, there’s really no competition.”
Not even Airbnb, I ask? Surely, if a young traveller can’t afford a hotel these days, they rent someone else’s house. “I don’t view Airbnb as direct competition,” he replies. “We offer an extremely sociable experience – in Generator London you’ll be surrounded by 200 to 300 people. Our guests are coming to socialise and that’s not what Airbnb is offering yet.”
It plans to build on this niche by investing in its existing infrastructure – adding more rooms, ever-more-ambitious restaurants and in-house entertainment. London has a cinema, Amsterdam has a nightclub and Generator Paris will be opening one of the only year-round rooftop terraces in the city in two weeks.
“We design them for the local community,” Korallus says. “If we get that right, our in-house guests love it because they want to be where the locals go.” To this end, staff receive ‘secret city’ training so they can recommend attractions off the beaten track.
Meanwhile, management has also embarked on a rapid expansion plan, committing to doubling the size of the business – from 14 sites (including the ones that haven’t opened yet) to 30 – in the next five years. Eastern Europe and Tel Aviv are on the shopping list, but first, Generator has to break America.
It already has a strong presence over the pond as the USA is its third largest source of trendy travellers. A prime spot in South Beach, Miami, has already been snapped up by the group. “It’s an international gateway, which means that the consumer is more open-minded about the shared accommodation model.”
LA, New Orleans and Washington DC are also desirable destinations, yet the Big Apple is out of reach as long as it has such stringent laws on shared accommodation. “We cannot go to New York right now even though we want to. We’re actively involved in the lobbying process to support the change in legislation to allow us to enter.”
Whether it conquers Stateside or not, Generator has certainly managed to power up investment interest in an industry that’s no longer hostile to hostels.