Hybrid hotel platform Kabannas has acquired its fourth site, in Edinburgh, just nine months after launch as it sets about creating a Europe-wide portfolio for the brand.
Already open in London, Liverpool and Newcastle, the brand is designed to deliver accommodation into what the company terms the ultra-affordable segment, something it says is currently underserved: “This segment accounts for over 35% of all global travel, and approximately EUR200bn in annual spend, but on average represents less than 10% of available accommodation supply in gateway cities.”
An office conversion
The Edinburgh property, Hayweight House, is an office block in the city centre, dating from the 1990s, that will be converted to provide accommodation. It was sold by charity Scottish Action for Mental Health.
The Kabannas hybrid model, in common with others in this space, combines hostel style rooms containing up to eight beds, with more conventional hotel-style accommodation. Shared rooms have up to eight beds. Uniting guests whatever their accommodation are vibrant, social common areas designed to encourage connections.
The Kabannas platform is backed by support from investor RoundShield, a European private investor with holdings across sectors including residential, healthcare and student accommodation. Together, the investor and operator are looking for more sites in European city centres. Typically they will expect to spend EUR10-50m buying hospitality or office properties, with flexibility on building size. With full funding in place, they say they will be able to offer sellers certainty that a transaction will complete in a timely manner.
Kabannas launched its brand in the UK by acquiring three sites from the Youth Hostel Association. These were swiftly rebranded and launched to get the brand into the market. Now, with business established, Kabannas is planning refurbishments to ensure properties are more tailored to their needs. The site in London’s St Pancras is due to close at the end of July 2024, for a comprehensive makeover.
Backers spot hybrid opportunity
Kabannas joins a busy segment of the market. In Edinburgh, for example, both hybrid operator Meininger, and hostel brand Safestay have properties under refurbishment ahead of launching into the market. Safestay is also expanding across Europe, having already in 2024 acquired new locations in Brighton, Calpe and Cordoba.
And major hotel investment group Azora, which has long had success with hotel investments, has also made its move into the hybrid space. Its Latroupe brand promises to combine the value of hostel accommodation with the service and feel of a four star hotel. Earlier this year, it bought Jacobs Inn hostels in Barcelona and Dublin for conversion, and more recently acquired two adjacent hotels in Brussels, to refurbish and switch to Latroupe.
