AccorHotels lures millennials with new Jo&Joe brand launch

Seeking to capture that increasingly important millennial market (and to fight the growing power of Airbnb and other home-sharing services), AccorHotels is launching a youth hostel brand called Jo&Joe. The new brand, AccorHotels said in a statement, will "blend the best of private-rental, hostel and hotel formats to totally reinvent the hospitality experience."

The company, Europe's largest hotel group, said on Tuesday that it would open new hostels in Paris and Bordeaux in 2018. More are planned for Warsaw, Budapest, Rio and Sao Paulo with a target of 50 by 2020. The brand's venues will be geared for city-center locations that are close to public transport and less than 15 minutes away from the major points of interest. Concerts, yoga classes and do-it-yourself workshops will be available for guests and locals alike.

Accommodations at the hotels will be available for people traveling alone, as a couple, as a family or in groups. Rates will start at €25 per night.

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“It wasn’t an easy brief to put into practice, particularly when you’re primarily targeting millennials, who can be very difficult to win over,” Sébastien Bazin, chairman and CEO of AccorHotels, said in a statement. “But with the launch of our new brand, Jo&Joe, we have now more than met that challenge. I’m extremely proud of the work accomplished by the AccorHotels teams in mobilizing the energy necessary—both inside and outside the Group—to bring this enormous project to life.” 
 
“More than just an accommodation solution, Jo&Joe has been conceived as an experience enhancer thanks notably to its offbeat design, innovative digital ecosystem and catering offerings,” added Frédéric Fontaine, SVP, global marketing innovation lab. Fontaine cited the brand's “open house” concept that lets guests and locals alike treat Jo&Joe venues as an annex of their living room. 

Capturing the Millennial Market 

In a recent report, research firm KPMG said that the youth hostel sector is undergoing “profound change,” with renewed interest from investors. “In this traditional not-for-profit sector, investors see new prospects for profitability through changes in quality and product offering,” the report claimed, noting that a large number of beds, coupled with lower operating expenses, allow youth hostel managers to generate attractive profitability levels.

According to travel industry research firm Phocuswright, a full 18,000 hostels are operating worldwide, and the market was worth €5.2 billion in 2014. That figure could grow to €7 billion by 2020, driven by an annual growth of 7 percent to 8 percent, Le Figaro said.

The new brand is only AccorHotels' most recent effort in capturing the lucrative millennial demographic. In April, the company purchased UK-based home rental start-up Onefinestay for an estimated $168.45 million. At the time, AccorHotels said that it would invest a further $73 million in the group to help it “scale internationally.”

Sébastien Bazin has said in the past the company "made a mistake" when it passed up the chance to invest in Airbnb. “We are accelerating the transformation of our business model to capture the value creation linked to the rise of private rentals and also strengthening our presence in the luxury market with a complementary offer,” he said in a statement when the Onefinestay acquisition was announced.