The hotel sector is an ever-evolving beast with businesses constantly trying to innovate to get ahead. Since the pandemic there has been a push for more basic accommodation so travellers can spend their money in the cities and towns they travel to. The latest development in this line of innovation is the pod hotel, with the newest company trying to popularise the concept in Europe being Australian business LyLo. LyLo has recently announced a partnership with real estate agent P-Three to seek out opportunities to bring the brand to London, its first site in Europe. The LyLo brand is a part of EVT, a major Australian operator of cinemas, hotels, restaurants and an alpine resort.

What is LyLo?

The LyLo concept is aimed at solo travellers, groups aged 18-35, digital nomads, sports groups and families. The venues consist mostly of self-contained sleeping pods but the company also provides ensuite rooms and private suites. The concept also includes various communal spaces such as communal living spaces, rooftop hangouts and bars.

Tim Alpe, LyLo managing director, says: “The LyLo experience focuses on what our guests want, where the essentials are thoughtfully designed, and the layout allows for greater social interaction in communal areas. It’s ideal for travellers who want a practical, affordable, and stylish option without compromising on quality, convenience or privacy.”

The pod hotel concept is also a very sustainable business model. Alpe states that the model maximises the use of space at whichever venue it is in, allowing for more guests than a traditional hotel and the design is fairly low cost with low overheads meaning LyLo can offer rooms at a lower rate than other companies, quite often in very desirable locations for tourists.

Why is now the time to expand?

The question is why is now the time to expand to Europe. Alpe states that the concept has been successful in Australia and New Zealand as “both countries have a large backpacker and budget-conscious traveller market, who are naturally drawn to more affordable and social accommodation options”. In short Alpe states that the European expansion is being driven by what LyLo sees as a “clear demand for affordable, yet high-quality, accommodation options in both pods and private rooms that cater to leisure and business travellers”.

From a real estate perspective, now is the right time for LyLo to expand as there are so many opportunities to find office buildings to convert into a LyLo hotel. Thomas Rose, P-Three co-founder, explains: “It’s harder to get people back to the office particularly in secondary type office buildings. So if your office building isn’t really great and doesn’t attract people who want to go to the office then there’s no use for those office buildings anymore. It means it’s a really opportune time to look at real estate that possibly wasn’t available before or was more expensive.”

Why the UK specifically?

It must be noted that LyLo has chosen the UK to be its first port of call for its European expansion. Alpe states that the UK, specifically London, “has a rich history of backpacking, budget travel, the “gap-year” adventure”. London also attracts a lot of travellers from Australia and New Zealand where the LyLo brand is already established which could give the brand a leg up.

From P-Three’s perspective, Rose sees London as the international capital of Europe travel-wise. This means it is a popular place to open for lots of brands and has many real estate opportunities. “There’s so many brands wanting to open hotels in London at all levels whether it be budget hotels or luxury. There is a huge weight of demand and I think once you’ve done London, you are open to the rest of the UK. Edinburgh and Manchester both have really, really great hotel scenes now,” says Rose.

What are the challenges?

Any expansion, especially one in a completely new continent, will be fraught with challenges and setbacks. From LyLo’s perspective, the company is expecting that navigating different regulatory environments will be one of its main challenges. However, the brand will at least benefit from a shared language and similar cultures between Britain and the ANZAC region. That may make the transition smoother than if the brand had tried to open in Germany or The Netherlands first.

“The UK and mainland Europe have a diverse cultural landscape so we may need to tweak our LyLo offering to fit the specific needs and preferences of each local market, but we believe LyLo has a unique offering that will stand out in every country,” Alpe says.

From a real estate perspective, Rose expects that competition for space and planning laws will be the main stumbling blocks. “It’s very well publicized that Whitbread are being really aggressive across Premier Inn and Premier Inn Hub, they’re looking at every single available building, the weight of demand from operators is huge.

“The planning system in the UK, especially the change of use from offices to hotel or from retail to hotel, is still archaic. It still takes far too long, and we need to speed that up as a country. Our clients from abroad, particularly American clients, are constantly surprised by how slow our planning system is here in the UK,” Rose explains.

Should all these challenges be overcome, Rose is hopeful that the first LyLo will be operational by 2026 at the latest. Should the UK launch be successful, Alpe expects the brand to look towards Paris, Amsterdam and Berlin for future LyLo sites and thinks LyLo will also look to expand in North America and Asia too.

Liam J Moran