If you’ve ever backpacked around Europe, you know how terrible hostels can be. But 20-something travellers aren’t likely to put a bunch of money down for a hotel. Billionaire Ron Burkle decided that there’s got to be something in between, so he’s partnering his private equity firm, Yucaipa Cos., with the hotel developer Sydell Group to create “premium” hostels in U.S. cities, according to the Wall Street Journal, which also reports that:
The venture is looking to spend $250 million to acquire and renovate as many as 10 low-cost hotels over the next two years. It plans to reposition them as high-end youth hostels in places such as New York, San Francisco, Washington and Los Angeles. … Roman & Williams, the firm behind interiors at New York’s Ace Hotel and Standard Hotel, will be the designer.
His hostels will have four to six beds per room, and will cost 30% more. The first one, set to open in Miami Beach next fall, will cost $40 a night (versus $30 for a typical hostel in the area). That’s a small price to pay if you’re getting a much nicer space.
Burkle is taking a risk on a new concept — especially in the U.S., where hostels aren’t as popular. He’s also betting on the domestic and foreign travel industry in an uncertain economy. But even if this doesn’t shake out, he’s got other investments to fall back on.
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