Investing in Bricks and Bunk Beds

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Fast-growing backpacker hostel company looking for investment to capitalise on current opportunity.

As we’re hit with the news that house prices have taken another turn for the worse and warned they could fall by another 10% by the end of next year there is an area of property investment that is booming during the downturn.

With food companies such as Subway and Pizza Hut thriving in the economic downturn, whilst more upmarket establishments have struggled to stay afloat, so too in the accommodation sector where hotels have struggled to fill their beds, with a 61% increase in the number of hotels failing in 2009, whilst hostel and ‘no frills accommodation’ are seeing numbers on the increase - the SYHA Hostelling Scotland reported of 2009 “Our network of hostels has experienced a dramatic rise in bookings, with sales up 12 per cent on the same period last year."

And the trend looks set to continue for at least the next ten years as the tourist market for the 16-34 years old seems robust and resistant to external shocks, currently accounting for 45% of all inbound tourism to the UK and set to outpace overall tourism growth rates until 2020 (Source: World Tourism Organisation).

So if you’ve been eyeing up a property investment, but are nervous of the current climate, then you could do a lot worse than put your money into bunk beds…
Journeys are a new and exciting hostel company, who have quickly made a mark on the market with eight hostels in the UK and several abroad, two in Kuala Lumpur and one in Vietnam. Whilst they own several of their hostels they also work a franchisee scheme and have a rapid expansion plan. As part of implementing this plan they have franchise expert Brian Carroll, who was behind Coffee Republic’s successful franchising scheme.

They are currently looking for potential franchisees, who own suitable locations to convert into hostels, but also savvy investors to aid the purchase of new property, for which operators can be brought in.

The numbers certainly seem to add up for any interested investors. Visit Journeys London Bridge hostel has now been running for two years and was created in a dilapidated pub. In just its second year of trading it turned over £630k, yielding a profit of £221k.

Company Director Derek Bodman explains “The numbers work and in most cases hostels are able to pay off the cost for conversion within the first year. We hope that 5 years down the line from now Journeys will have done for accommodation franchising what Subway has done for fast food franchising. “

For further details on investment opportunities please contact Journeys on 020 7231 4672.