What can boutique hotels learn from capsule hotels? Enter new markets and target specific guests

Learn from great market examples - capsule hotels. How did they enter NEW markets and target specific guests of completely DIFFERENT social statuses and how can boutique hotels do it too?

In these economic and social eventful years, boutique hotels choose that "any business is better than no business". And dare I say it, this is dangerous illusion.

Reposition wisely and prove your value in the specific segment of market. People who are searching for a hotel still want to find the right one and if everyone are for everyone, no one will be fully satisfied and have repeat business with ease.

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Video Transcript:

Hello everyone. Welcome to Remarkable Boutique Hotels where we talk about outstanding experiences and everything that leads to them.

Today’s inspiration – capsule hotels. Capsule hotels were very innovative at the time when they appeared. And they still are in a way. So, today we’ll talk about how capsule hotels differentiate in the market and how they can be inspiration for boutique hotels. Let’s dive in.

Capsule hotel as a concept is clear. There are many small bed-sized rooms known as capsules or pods. It’s affordable, basic overnight accommodation. Like hostels, there are shared amenities, but unlike them, there is privacy and private room space.

But when does it become interesting? The number of capsule hotels increased dramatically, they’ve become popular among broader population and the group of users significantly changed then what it used to be when they first appeared.

So, today successful capsule hotels manage to stand out on the market among many other capsule hotels by guess what, getting to know their guests, their needs and as a consequence they niched down.

I’ll give you many examples. But let’s start with criticism and reception of these hotels in hospitality industry. Not because of history or anything similar, but because of important point here.

So, once capsule hotels appeared they were criticised for corpse like design, like in morgue which has those long body length drawers. They were described as claustrophobic, with no air flow, also security was low. And the list goes on especially as demand grows.

So, once a very basic capsule hotel was enough for their customers at the time who were mostly unemployed or drunk working men who missed the last train, or even homeless people, you get the picture. So for those guests, everything was probably perfect, their highest value was price point.

But as the story develops, other people get interested too, non customers are about to become customers. So, these new groups of guests notice different things as they have different values. Then there’s criticism and market responds so hotels evolve over time, meaning new concepts appear, service is enhanced, new features are implemented and so on. This gets them more popular among businessmen, traveling young people, couples, also women travelling alone and so on. Again these groups have their own impressions and preferences and part of capsule hotels adapt again, while some still continue to serve original customers of course.

So, everything should develop and evolve throughout time as we get to receive new data, observe outcomes, listen to the feedback so that we can loop back and make improvements to the original product or service. And niching down and providing service that goes above and beyond for a guest, as we like to say today, is actually just that. It’s intentionally discovering what brings more value for your current guests or future guests from your desired segment of market if you’re currently repositioning. Once you truly understand that added value for a guest without underestimating it, you can emphasise it and develop the whole concept around it.

So, what’s up with capsule hotels in the market today?

First, they begin working on design and aesthetics, from ordinary ideas to creating an atmosphere of a space ship for example and being style-conscious. Then some enhanced the actual services like 24 hours open front desk, providing towels and toiletry, even introducing spa amenities.

For example, there is this capsule and sauna concept with indoor hot baths, open air baths, sauna, even possibility to book a massage. They would give complementary tea, provide towels, slippers, bathrobe. And remember this is still very affordable capsule hotel.

Another interesting direction is innovation but simple one, like book and bed concept of one capsule hotel which is part library and part hotel where you get to sleep in capsules located behind bookshelves. You can read popular Japanese comic books and enjoy free tea, coffee and biscuits. It’s fun and authentic, right?

Now, because of how everything started with capsule hotels which were used by men primarily, opening women only capsule hotels was very popular at one moment. But some hotels really went a step further. So, besides having, I don’t know like, colourful pastel design inside, this one hotel is well known for high hygiene standards and high security measures which they identified as two priorities for women. There is also laundry room, well equipped kitchen as well as mirrors in rooms. Like those small but important things, even though in this example it may look like generalisation, but it’s a successful one.

On the other side, some hotels have gone for technology implementation such as opening capsules with an application which is also used for controlling lights inside. They would provide in-house cinema and coworking space with PCs and tablets. Some even offer beds that you can set in an upright position to watch movies or to wake you up at certain time like a silent alarm system.

Then there are hotels which increased the vertical size of the pods so a person can stand up in the capsule, which was unusual for the concept itself, but turned out as a perfect solution for claustrophobes. In contrary some other hotels are placed in those big concrete pipes but designed to look urban with lots of beautiful street art on it. While some others create luxury experience with dark wooden tones, rich velvet curtains, gold details, high quality sheets, you get the picture. And still these are all affordable capsule hotels providing similar type of service. And these are just random examples among many, but they are all different, have distinct character and are definitely first choice of specific types of guests.

So, the point is, the importance of listening to your guests and their needs even when it seams they are not the target group, meaning they are not actual guests yet but you want them to be. Think how they can become actual guests, what holds them back, what they value in the existing concept and what they are missing. Then keep the things they value, change the ones they don’t like and then add the things they need.

Digital nomad, Generation Y, millennials, middle age businessmen, they all have different vision of a good hotel. And you should definitely not even try to be for everyone.

So, by niching down, specifying your concept, inventing unique ways you do things or certain standards in service or atmosphere, you are actually positioning your hotel on the market for the specific groups of people who care about those things and who you want to host, who you see as your ideal guests. They will recognise you as a place they would feel good at and they’ll come but you need to be clear and devoted to those values so they persist among many other hotels on the market.

And this is not only about luxury properties. Luxury is so complex nowadays, because it’s changing and it’s different for different groups of people, so it needs context. But for this video, we’ll call it relevant quality. For example, if a mid range hotel which targets families with small children has many playgrounds and kids activities and babysitting services and different kinds of entertainment for family bonding, let’s say they even organise date nights for parents, that’s what high quality service and relevant market response is all about. They observe what their guests need and they respond. It doesn’t have to be fancy, but it has to be relevant, valuable to your guests. This is the moment when quality becomes luxury for your guests, no matter what your actual hotel category says. This is when a hotel becomes worth every penny!

And only from this point on, you can choose the level of detail for those services, how much effort like training and feedback and improvement you want to make regularly, do you encourage your people to notice small things and use that information to create special moments. So continuing the previous example, one family hotel can choose to be simple and straight forward, without engaging too deep with each family but having fixed offer and dissent quality of each activity. Or they can choose to get to know them and provide even more specific activities like organise swimming lessons or clown and cake if it’s someone’s birthday, or they can be more authentic to their values and have cake baking classes or safari school. So these details influence your operations and economy even deeper and then this is something that leads to premium offer, higher prices, attention to detail, and so on. But relevant quality should be there from the very beginning, no matter what. Just as it is, in capsule hotel examples, we talked about.

This kind of leads to another topic about luxury nowadays and specific quality, so follow up for the next video and I think this is it for today. Until next occasion, have a beautiful experiences my friends.

Thank you for listening. Here at Remarkable Boutique Hotels, we want your hotel to be worth every penny and every second of your guests. Schedule a discovery call to find more about our remarkable methodology which is unique in the whole hospitality industry. I would love to hear your hotel story. See you there.