Capsule Hotel Market by Traveler Type (Solo and Group), Booking Mode (Offline Mode and Online Mode), Age Group (Generation X, Generation Y, and Generation Z), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021–2028

Global Capsule Hotel Market Analysis

The global capsule hotel market size is predicted to garner $211.7 million in the 2021–2028 timeframe, growing from $135.2 million in 2020, at a healthy CAGR of 6.0%.

Market Synopsis

Solo travelers are steadily increasing worldwide. These travelers are looking for a budget hotel with modern amenities. The capsule hotel commonly provides free wireless internet, complimentary drinks, dining facilities, communal baths, laundry facility, game room, entertainment room, and library facilities. These facilities are attracting many solo travelers, thereby the demand for capsule hotels is growing worldwide.

However, growing presence of cheaper/budget hotel might be a restricting factor for the market.

According to the regional analysis, the Europe capsule hotel market is anticipated to grow during the review period and expected to generate revenue of $15.2 million in 2028, with a CAGR of 8.6%, due to increasing tourism in the region.

Capsule Hotel Overview

Capsule hotel is also known as pod hotel in the western world. These types of hotels originated in Japan that feature many small bed-sized rooms known as pods/capsules. These types of hotels provide cheap/budget overnight stay for travelers who cannot afford expensive rooms offered by convenient hotels. The first pod hotel opened in 1979 and was named Capsule Inn Osaka, located in the Umeda district of Osaka, Japan.

Impact Analysis of COVID-19 on the Global Capsule Hotel Market

The novel coronavirus pandemic has affected several industries across the globe, and the capsule hotel industry is among the hardest hits. Due to complete lockdowns and fear of spreading coronavirus, many countries imposed travel bans, affecting the growth of the pod hotel industry. Furthermore, many companies have adopted a work from home strategy, and restriction on business travel to contain the spread of novel coronavirus had severely affected the growth of the hotel industry.

Japan is the largest market for the capsule industry in the world. Besides, both international and national travelers and tourists have declined drastically and postponing of Olympic Games had a devastating effect on the industry. According to the official OYO blog published on 29 April 2020, the number of foreign tourists visiting Japan declined by 93% in March 2020 compared to the previous year in the same period. South Korean visitors, the second-largest contingent of tourists in Japan also diminished in the same period. Visitors from China, accounting for the largest portion of the total number of tourists to Japan, have reduced by 98.5%.

Surging Demand for Affordable Hotel is anticipated to Fuel the Market Growth

The economic development in the Asia-Pacific region has led to an increase in the middle-class population. With the changing lifestyle, psychograph, and ambition for life, the middle-class population seeks overseas travel. Furthermore, the middle-class population is increasingly spending on leisure activities, including travel & tourism. As per Julius Baer, a leading Swiss wealth management group, the U.S. World Tourism Organization estimated that the Chinese spent around USD 277 billion overseas in 2018 and is expected to reach USD 462 billion in 2025.

To boost the travel and tourism industry, the government of India had announced various tax exemptions which would lead to savings, which according to industry people will convert into a traveling budget for the people. Furthermore, millennials are increasing spending on leisure activities. Many millennials prefer solo traveling to explore new places and cultural diversity. This trend is anticipated to fuel the demand for affordable hotels, including the capsule hotel market.

To know more about global capsule hotel market drivers, get in touch with our analysts here.

Growing Presence of Affordable Hotels to Restrain the Market Growth

Increasing leisure travel and rising disposable income of the middle-class population have resulted in bolstering mid-price hotels. The influx of domestic and international tourists in India, Japan, Thailand, and China is also fueling the demand for affordable hotels. With the growing demand for mid-priced hotels, several international brands are entering the mid-price hotel industry. Moreover, to stay in the competitive market, these hoteliers are providing all standard amenities, including free internet, dinner, separate rooms with attached washrooms, and gym & spa facilities. The mid-priced range hotels provide all the amenities at USD 20 - USD 30 for a night stay. The capsule hotel industry also provides all these amenities at the same price range, thereby restraining the market growth during the forecast period.

Growing Hospitality and Tourism Industry Hotel to Create Massive Investment Opportunities

The hospitality & tourism industry is gaining momentum in Asia. The sector is playing a pivotal role in bolstering the economy in the region. The rising middle-class and increasing disposable income have resulted in increased spending on leisure activities. The millennial population is steadily increasing, so is their importance. These people are looking for ways to travel three or four times a year on a budget.

Changing reforms and implementation of ease of doing business policies have attracted several companies to set up their manufacturing plants in the region. This has led to an increase in business travel. To reduce travel expenses, these companies have a tie-up with budget hotels. This trend has boosted the demand for affordable hotels.

To know more about global capsule hotel market opportunities, get in touch with our analysts here.

Source: Research Dive Analysis

The solo sub-segment is predicted to have a dominating market share in the global market. The sub-segment is expected to register a revenue of $177.4 million during the forecast period. Many youngsters prefer solo traveling to explore new places and cultures. They prefer staying in affordable accommodation with all the necessary amenities. The capsule hotel provides all the amenities such as dining, restaurants, free Wi-Fi, and spa facilities at USD 20 - USD 30 for an overnight stay. These factors are driving the demand for capsule hotels over the forecast period.

Source: Research Dive Analysis

The online mode sub-segment of the global capsule hotel market is projected to have the fastest growth. It is also projected to surpass $46.9 million by 2028, with an increase from $27.5 million in 2020. Growing penetration of internet service is the main factor driving the market for online booking mode. Furthermore, several capsule hotels have developed apps and provide online booking facilities. These factors are driving the market for online mode of booking.

The offline mode sub-segment of the global capsule hotel market is projected to have the dominant share. It is also projected to surpass $164.7 million by 2028, with an increase from $107.7 million in 2020. Most of the travelers prefer the offline mode of booking option for booking capsule hotels, as they find it easy.

Source: Research Dive Analysis

The generation Z sub-segment of the global capsule hotel market is projected to have the fastest growth from 2021 to 2028 timeframe. It is also projected to surpass $69.9 million by 2028, with an increase from $42.9 million in 2020. Generation Z prefers solo traveling and likes to explore new places worldwide.

Source: Research Dive Analysis

The Market for Capsule Hotel in Asia-Pacific to be the Most Dominant

The Asia-Pacific capsule hotel market accounted $117.3 million in 2020 and is projected to register a revenue of $179.1 million by 2028. Asia-pacific has the highest number of capsule hotels in the world. Japan dominates the Asia-Pacific capsule hotel market with a 73.0% market share in 2020. An increasing number of capsule hotels in India, Singapore, and Thailand is expected to drive the capsule hotel market during the forecast period.

The Market for Capsule Hotel in Europe to be the Fastest Growing

The share of Europe capsule hotel market is expected to rise at a CAGR of 8.60%, by registering a revenue of $15.2 million by 2028. The growth shall be a result of an increasing number of capsule hotels in the UK, Netherlands, and Germany. In addition, a growing number of tourists seeking budget hotels is expected to drive the market for capsule hotels in Europe.

Competitive Scenario in the Global Capsule Hotel Market

Product launches and mergers & acquisitions are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading capsule hotel market players are THE CAPSULE HOTEL, Book And Bed Tokyo, Urbanpod Hotel, The Bed KLCC., FIRST CABIN HD CO., LTD., Riccarton Capsule Hotel, Pangea pod hotel, THE POD SYDNEY, Nonze Hostel Pattaya, Dream Lodge, Lavender, Singapore, and InBox Capsule Hotel

Porter’s Five Forces Analysis for the Global Capsule Hotel Market:

• Bargaining Power of Suppliers: Changing consumer preference, aging pollution, and migrating millennial population is expected to mitigate supplier power.
  Thus, the bargaining power of suppliers is low. 
• Bargaining Power of Buyers: The tourist can search for the affordable hotel through online mode. They can explore and find the most competitive option that best suits the pocket.
  Thus, the bargaining power of the buyers is high. 
• Threat of New Entrants: The initial investment is high, thereby creating a unique entry barrier for the capsule hotel. In addition, the switching cost for customers is usually nil.
  Thus, the threat of the new entrants is moderate. 
• Threat of Substitutes: The increasing presence of mid-price range/budget hotels is a major substitute for the capsule hotel.
  Thus, the threat of substitutes is high.
• Competitive Rivalry in the Market: The competitive rivalry among industry players is rather intense, especially between the mid-price hotels. These hotels provide value-added services to strengthen the footprint worldwide.
  Therefore, competitive rivalry in the market is high.