Capsule hotel market size was close to $135.2 million by revenue at the end of 2020 and is anticipated to surpass $211.7 million by 2028, at a notable CAGR of 6.0%.

Covid-19 Impact on Capsule Hotel Market

The global hotel industry is dealing with an unprecedented crisis due to the outbreak of novel coronavirus globally. Furthermore, the ban on domestic and international travel to contain the spread of COVID 19 had a devastating effect on the market growth. Moreover, in Japan, the hotel room occupancy rate decreased by 30% in March 2020 compared to the previous year in the same period. Besides, the postponement of the Olympic Games and a limited number of spectators and tourists visiting Japan to watch the Olympic Games led to devastating effect on the market. Also, the number of tourists arriving from China and South Korea in Japan had declined drastically during COVID-19. This had led to a negative impact on the growth of the capsule hotel market.

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Capsule Hotel Market Outlook

The global travel and tourism industry is steadily growing. The hotel industry is one of the major revenue contributors to the service sector. Increasing middle-class along with disposable income is driving the growth of the capsule hotel industry. Furthermore, most millennials prefer solo traveling to explore the culture and new places. Most of the middle-class prefer mid-price range hotels due to budget constraints. With the increasing penetration of the internet, they search for affordable hotels through online mode. They can explore and find the most competitive option that best suits the pocket. The capsule hotels provide necessary amenities at $25 to $ 35 for an overnight stay.

The growing presence of affordable lodging is expected to hinder the growth of the capsule hotel market. Affordable hotels such as OYO, ibis budget hotels, and Holiday Inn are increasing their presence worldwide. Furthermore, luxury hotel brands are entering the affordable hotel market. This is expected to hinder the market growth of capsule hotels during the forecast period.

The tourism industry is growing in Europe. The European Commission is working on several initiatives to improve sustainable tourism, accessible tourism, tourism for seniors, and the low-season tourism industry in the region. As per the NDTV press release, around 6.8 million people visited Milan in 2018, of which 65% were foreigners. The growing number of tourists is expected to provide growth opportunities for the capsule hotel in the coming years

With exploding tourist numbers, the demand for cheap/ affordable hotels in cities like Milan has increased. These hotels are convenient, cheap, and provide digital connectivity to the guest. Each capsule has a mattress with a duvet and pillow, two charging plugs for mobile phones or laptops, a lockable cupboard for luggage, and a bedside table. All this for between 19 euros a night ($21), including breakfast. Capsule hotels provide all standard amenities at affordable prices owing to which many guests prefer staying in a capsule hotel.

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Global Capsule Hotel Market, Segmentation

The global capsule hotel market is segmented based on traveler, booking mode, age group, and region.

Traveler:

The traveler segment is further classified into solo and group. Among these, the solo sub-segment is expected to have the largest share and cross $177.4 million by 2028, with the rise from $114.8 million in 2020. The notable growth of the solo sub-segment is mainly driven by an increasing number of solo travelers. The capsule hotel provides all necessary amenities at an affordable price. Moreover, capsule hotel best suits the pocket, thereby fueling the popularity of capsule hotels among solo travelers.

Booking Mode:

The booking mode segment is further classified into offline booking mode and online booking mode. Among these, online booking mode sub-segment is expected to have the lucrative growth and surpass $46.9 million by 2028, with the increase from $27.5 million in 2020.
Increasing penetration of the internet has fueled the demand for booking through online platforms. Online booking mode is convenient and easy to use. Furthermore, several hotels have developed a user-friendly site and provided an actual view of the capsule/pod. This factor led to the increased adoption of online mode.

Age Group:

The age group segment is further classified into generation X, generation Y, and generation Z. Among these, generation Z sub-segment is expected to have the huge growth and surpass $69.9 million by 2028, with the increase from $42.9 million in 2020. Generation Z people prefer exploring new places thereby they travel solo. They also seek affordable accommodation that suit pocket.

Region:

Asia-Pacific region held a major market share of the global capsule hotel in 2020. Asia-Pacific was the highest revenue contributor, accounting for $117.3 million in 2020, and is estimated to reach $179.1 million by 2028, with a CAGR of 5.7%. The region is expected to maintain its dominant share throughout the forecast period. The growing popularity of affordable hotels is the main factor, driving the demand for capsule hotels in the region. Furthermore, the growing middle-class population and increasing spending on leisure activities including traveling is expected to provide growth opportunities for affordable hotels including capsule hotels.

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Top 13 Major Key Players in the Global Capsule Hotel Market 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
InBox Capsule Hotel
Along with the company profiles of the key players in the market, the report includes the Porter’s five forces model that gives deep insights into the competitive environment of the market.