Capsule Hotels - A Regional Japanese Fad or the Next Pokémon GO?

Capsule Hotels - A Regional Japanese Fad or the Next Pokémon GO?

Market Overview

Capsule Hotels: Overview

Japan is one of the most expensive countries in the world to live and work in. According to an Atlas and Boots study, the capital city Tokyo jumped six places from number 11 to number 5 in the 2016 ‘most expensive city for expatriates’ ranking. Hotel room prices average around $250 per night in central Tokyo, which makes it a challenge for both companies and their employees to bear. Thanks to the ingenuity of Kisho Kurokawa, the first capsule hotel named Capsule Inn Osaka was opened in the city in 1979. The main objective of capsule hotels is providing cheap accommodation for clients who do not need all the services offered by more conventional, star-rated hotels. The guest room is roughly pod or ‘capsule’ shaped and may include a TV, gaming console and Wi-Fi Internet connection. Capsules are stacked side-by-side on two levels with steps providing access to the higher level. Privacy is provided with a curtain or fibreglass door, the washrooms are communal and there may be separate capsules for male and female guests. The capsule hotels sector varies in size from hotels with 50 capsules all the way up to hotels with 700 capsules.

Factors Influencing the Growth of Capsule Hotels

Cost effectiveness is the main factor impacting the growth of the capsule hotels sector. Capsule hotel rooms typically range from $15 to $35 per night. This makes it highly affordable to those customers who may not need or want all the services offered by traditional hotels. They can simply spend the night at capsule hotels which provide no-frills barebones accommodation. The second driver is the relatively high prevalence of poverty in Japan as compared to other developed nations. According to Japanese government data, 16% of the population was below the poverty line in the year 2015. The poverty line in Japan is defined as a person who earns less than half the average national income. These people tend to be long term customers for capsule hotels. They have either lost their homes or jobs and cannot afford the sky-high property prices or rent in Japan. They hire out a capsule hotel room on a monthly or even yearly basis since the rent there is much lower than a hotel.

Capsule Hotels: Upcoming Trends

Two new trends in the capsule hotel sector are trendy, upmarket luxury capsule hotels and airport capsules. The first is targeted at affluent, business people and foreign nationals seeking a unique living experience. These are located in popular, upmarket bar areas and are frequented by salaried Japanese men who may be unable or unwilling to go home after a night of drunken revelry. They are provided accommodation for the night since it is far more convenient to stay in these hotels rather than take a train to their houses which will typically be on the outskirts of the city. The second focuses on corporate customers and jet-setters who are hopping from one country to the other for board meetings in different locations. They are located very close to airports and provide cheap accommodation with easy connectivity options to both the airport and the city serving their clientele’s primary need. Airport capsule hotels, in particular, have been adopted by several countries around the world because of their cross-cultural application.

Capsule Hotels: Where are They Found?

Japan invented the concept of capsule hotels and hence it is the largest global sector at present. While most capsule hotels are located in the country, they have also been opened in places as diverse as China, Singapore, Taiwan, Malaysia, Bali, Brazil, the U.K., Russia, Belgium and Iceland.

Capsule Hotels Sector

Report Highlights:

  • Detailed overview of parent market
  • Changing market dynamics in the industry
  • In-depth market segmentation
  • Historical, current and projected market size in terms of volume and value
  • Recent industry trends and developments
  • Competitive landscape
  • Strategies of key players and products offered
  • Potential and niche segments, geographical regions exhibiting promising growth
  • A neutral perspective on market performance
  • Must-have information for market players to sustain and enhance their market footprint

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Capsule Hotels - A Regional Japanese Fad or the Next Pokémon GO?