New developments in the accommodations sector

, ICEF Monitor discussed student accommodations, specifically, dormitories and their influence on prospective students’ school choices, the increased investor activity related to financing and building such facilities, and the specific types of students certain dorms are designed to attract. Today, we expand upon three other types of accommodations available to international students: apartments, homestays, and hostels.

Apartments: conversions and shortages

Many students prefer to live in an apartment-style setting, but such offerings can vary greatly cost-wise. Companies like Vita Student, based in Britain, provide luxury accommodations. The company’s properties (in Exeter, Liverpool, Manchester, and Bristol) feature Wi-Fi, integrated kitchen appliances, en-suite showers and flatscreen televisions. Such examples abound. Germany’s Youniq builds residences exclusively for upper tier students, and in Windsor, Canada, the companies Domus Student Housing, Inc. and Vrancor Group recently teamed up to convert a former hotel into upmarket student apartments. But while the luxury rental market may be expanding, universities and companies are also building more accommodations for students with typical budgets. In the UK, the University of Derby bought a £3 million luxury apartment complex in order to rent them at a maximum of £135 a week to mature, postgraduate and international students. And in Berlin, for example, German developer Jörg Duske and partners Holzer Kobler Architecture from Zurich are converting 410 metal shipping containers into multi-story student housing, with each unit containing a living room, sleeping area, kitchen, and private bathroom. Other conversions into mid-market student housing, either in the planning stages or completed in recent years, include port facilities in Hamburg, commercial buildings in the Netherlands, an office tower in Southampton, England, the landmark Waverly Hotel in Toronto, and grain elevators in Oslo. Aengus Investment Properties, which has already converted buildings into student accommodations in South Africa, is eyeing US $300 million worth of similar projects in Botswana, Kenya, Zambia, Lesotho, Ghana and Uganda. And for the budget minded, new facilities are likewise appearing, as well as creative housing solutions that sidestep the need for construction or conversion. For instance, in Germany one plan has made vacant rooms in retirement homes available for rent, a move that has had benefits for both students and older residents. But in many countries there remains a shortage of affordable student housing. The Canadian website The Globe and Mail called Canada’s rental housing shortage a national disaster. Last year, students in Copenhagen protested the lack of options by sleeping in the mayor’s office; many international students arrive to the city without housing and end up living in hostels or even returning home. Affordable, purpose-built student housing is also short in England, France, Australia, and Sweden. The housing shortage in Sweden has prompted innovative designers to create new micro "Smart Student Units" measuring a mere ten square metres in floor space; they will appear in the university town of Lund in 2014. Meanwhile in France, the government has taken action. It has interceded in the private rental market on behalf of students, acting as guarantor for those having difficulty gathering deposits. The programme, which was announced by Minister for Higher Education and Research Geneviève Fioraso, will initially help up to 2,000 students, and the government’s intention is to expand aid to between 140,000 and 200,000 students by 2014/15. Governments and entrepreneurs are not the only ones driving change - ambitious Millenials are taking matters into their own hands, such as the students from The Netherlands who started Housinganywhere.com, an online platform that allows students to rent out their rooms to other students while they are overseas for an internship, short-term course, or exchange semester. The website boasts that "in the past five years, over 5,000 rooms have been offered from local students to international students on the platform, and in this time, no scams or problems have been reported."

The homestay option

Often, though not always, homestays are an economical housing option for students. Costs depend on location. For example, in London accommodation with a host family can begin at a reasonable £135 per week, according to the website HFS London, a company that works with more than 850 homestay providers in the city. However, a search of other providers showed prices in London of £350 per week. But inexpensive options are out there. In addition to sometimes being less expensive than renting, homestays are good for those who want to be immersed in the language and culture of their host country, and as such, are widely utilised by language students. Homestays are also a great choice for younger learners, so parents feel as if their children have a "home away from home" and they are also a good choice for students who might be shy and have a hard time making friends - the homestay family can introduce them gradually to a new culture, and allow them to practice their new language in a safe, comfortable setting. One provider, California English Homestay, even enables parents and children to live together with another family in a homestay environment, where the host is an English teacher. In the US, the homestay sector is expanding, but according to Ron Davis, CEO of the Seattle, Washington-based American Homestay Network, need is outpacing supply. Davis told Business Examiner, “The existing homestay industry in America has not been able to keep up with the growing demand for international students.” Difficulties with homestays do occasionally arise. In Canada, a homestay company that had misrepresented its services to Chinese students led to the shutdown of the operation. Carefully researching providers to be sure they are licensed, vetted, and screened to ensure safety and quality is the key to finding good placements for students. Below are several homestay resources:

• American Homestay Network - the first nationwide, standards-based homestay organisation in the US, offers paid compensation to hosts that provide accommodations for visiting college students.
• Australian Homestay Network - Australia’s largest homestay provider, commended by the Australian government for its efforts to ensure good standards.
• The Canada Homestay Network - CHN works in 25+ communities across Canada, and has an online portal dedicated to agents.
• Homestay Finder - an international homestay database where potential hosts post photos of their homes and offer detailed information, and potential guests request hosts. The site is organised by country, state/province, and city.
• Homestay.com - a website enabling students and host families to create online profiles so that students can search and book directly in six different countries.

Hostels: upgrading and expanding

Various countries define “hostel” differently (for instance, in India and Pakistan the word is synonymous with boarding schools and dormitories) but hostels are understood by most people to be no-frills, budget accommodations, comprised of shared rooms and facilities (though private rooms are common also), designed to cater to travellers, backpackers, and students. Along with this general knowledge of what a hostel, is a general idea of what a hostel looks like. But that has been changing. The hostel industry is experiencing a broad upgrading of facilities. This includes not just the rooms themselves, where en-suite provision is increasingly becoming the norm, but amenities, design, location and more. A new trend - luxury hostels designed to compete with budget hotels but at an even lower cost - is taking hold in Europe and has the potential to radically reshape the hostel industry. These new hostels are still basic in their rooming arrangements, typically offering only beds and Wi-Fi in the sleeping spaces. But increasingly, they feature carefully designed communal spaces such as cafes or bars, and expanded amenities such as yoga classes. This niche market has also grown in Africa, Asia and South America, largely due to the efforts of local companies, but increasingly by well-known accommodation brands. For example, Generator Hostels, said to be the fastest growing hostel brand in the world, has announced the purchase of a building in Paris, which it plans to renovate and open as a 1,000-bed hostel/hotel in 2014. It also has a property it plans to open in Rome, and is working toward owning 15 locations by 2015, including a US expansion. A recent article by Slate gives visual evidence of Generator’s high-style, award-winning concepts. This diversification among hostel providers is designed to expand their reach beyond their traditional backpacker/student client base and attract travellers who opt for low budget hotels such as older adults, families and even business travellers. However, more options in budget lodging is always good news for students. Short-term students, such as those taking part in language courses, or older students may find these new brands of hostels ideal, especially those offering private rooms. European hostel brands are racing to expand in the US, which, according to Hostelworld, has around 275 active hostels, compared with 3,570 in Europe. However, US laws could have an effect. For example, in New York City, it is illegal for more than four people who aren’t travelling together to stay in a room at the same time, and placing more than two bunk beds in a room is also prohibited. Undeterred, Generator has earmarked US $200 million for US expansion, and is working with local legislators in an effort to change the law. American companies are in the market as well. US-based Freehand, which owns a boutique hostel in Miami, plans to spend US $250 million on as many as ten US locations, including in Brooklyn, Los Angeles, and Chicago, where it has purchased a landmark hotel. Another significant piece of news occurred in the hostel sector when, in early 2013, the online accommodation booking company Web Reservations International (WRI) announced the acquisition of HostelBookers.com. WRI already owns the Hostelworld.com and Hostels.com websites, the number one and two most used hostel booking sites worldwide. During the following months Hostelworld and the thousands of global lodging providers with which it needed to sign agreements disagreed over contract terms, but those problems were ironed out in September when Hostelworld backed away from its original requirements after providers refused to sign the new contracts and as of last month, most issues have been resolved.

Opportunities await

The accommodation sector presents a variety of opportunities for further expansion, as outlined above and also confirmed by new research from STAY WYSE, the not-for-profit industry association representing the global Youth Travel Accommodation (YTA) sector. Their latest YTA Usage Survey, found that "market growth seen in terms of the growing number of YTA suppliers is matched by the growth in accommodation spending by consumers." Accommodation providers are confident demand will run high, with many planning expansion in the home country of the YTA operator, as well as looking overseas to open new establishments particularly in Spain, Brazil, and the US. With so much rapid development in this sector, ideally, agents should visit the accommodation options in the vicinity of their partner schools in order to be equipped with informed recommendations. And it is good practice for educational providers to keep communication lines open with their agents to ensure that they are aware of all possible accommodation options. As education costs rise, students need to be creative in finding accommodations within their individual budgets and managing those expectations is a key consideration for all educational providers.