Capsule Hotel Market Expected to Reach $460.7 Million by 2033

According to a new report published by Allied Market Research, titled, “Capsule Hotel Market," The capsule hotel market size was valued at $216.50 million in 2023, and is estimated to reach $460.7 million by 2033, growing at a CAGR of 7.9% from 2024 to 2033.

A capsule hotel is a type of accommodation facility that provides small, individual sleeping compartments known as capsules or pods. These capsules are typically arranged in a modular fashion, often stacked on top of each other or placed side by side, resembling a honeycomb or beehive structure. Each capsule is designed to provide a compact yet functional space for guests to sleep and rest, typically equipped with a bed, lighting, and sometimes basic amenities such as a small television or storage space.

The emergence of bleisure travel, combining business and leisure elements in a single trip, has become a significant driver for the growth of the capsule hotel market. Business travelers increasingly seek accommodations that offer both functionality and affordability, aligning with the compact and cost-effective nature of capsule hotels. With bleisure travelers looking to maximize their time and budget, capsule hotels provide a convenient solution, offering comfortable sleeping arrangements and essential amenities while allowing guests to easily transition between work and leisure activities.

Moreover, the central locations of many capsule hotels near transportation hubs and urban centers cater to the needs of bleisure travelers, who often have limited time to explore a destination's attractions. By providing accessibility and flexibility, capsule hotels enhance the overall travel experience for bleisure travelers, enabling them to efficiently balance work commitments with leisure pursuits. As the trend of bleisure travel continues to grow, the demand for capsule hotels is expected to rise further, driving the expansion of this segment of the hospitality industry.

Expanding the capsule hotel market into untapped regions presents a multitude of opportunities for growth and innovation. By venturing into less saturated markets, capsule hotels can capitalize on burgeoning travel trends and meet the growing demand for affordable and convenient accommodation options. Emerging travel destinations, both domestically and internationally, offer untapped potential for capsule hotels to establish a presence and cater to a diverse range of travelers seeking unique and budget-friendly lodging experiences. capsule hotel market trends is expected to create more opportunities for the key players in the upcoming years.

Moreover, penetrating untapped regions allows capsule hotels to target new customer segments and adapt their offerings to meet local preferences and cultural nuances. This localization strategy can involve tailoring amenities, design elements, and services to resonate with the specific needs and preferences of travelers in each region. By fostering a deeper connection with the local community and leveraging partnerships with regional businesses, capsule hotels can enhance the overall guest experience and differentiate themselves in competitive markets. Ultimately, market expansion into untapped regions not only stimulates growth for the capsule hotel industry but also fosters economic development and capsule hotel market opportunities in previously underserved areas.

According to the market analysis, the capsule hotel market analysis is segmented into traveler type, booking mode, age group, and region. By traveler type, the market is classified into solo and group. By booking mode, it is divided into online booking and offline booking. By age group, the market is segregated into Generation X, generation Y, and Generation Z. Region-wise, the market is analyzed across North America (the U.S., Canada, and Mexico), Europe (Germany, France, Italy, Spain, the UK, Russia, and rest of Europe), Asia-Pacific (China, Japan, India, South Korea, Australia, Thailand, Indonesia, and rest of Asia-Pacific), Latin America (Brazil, Argentina, and rest of Latin America), and the Middle East and Africa (South Africa, Saudi Arabia, UAE, and rest of MEA).

By traveler type, the solo segment accounted for more than 85.2% of the capsule hotel market share, in terms of revenue, in 2023. The unique design and novelty offered by capsule hotels attract large crowds, especially solo travelers. Also, these hotels are budget-friendly and offer all the necessities to deliver a comfortable stay experience. In addition, capsule hotels allow sufficient space utilization, while providing adequate resting space for solo travelers, Therefore, these hotels are gaining popularity among solo travelers. This in turn makes way for the growth of capsule hotels in the solo travel segment.

By booking mode, the offline booking segment led the market and accounted for more than 87.2% of the global capsule hotel market in 2023 and is expected to maintain its dominance during the forecast period. The conventional centers often include travel agents who assist travelers in booking capsule hotels for themselves. Also, the airports in various countries such as Turkey, Japan, Canada, Mexico, the U.S., Singapore, Malaysia, and others offer the option to reserve capsule hotels or sleeping cabins via offline booking at the terminal or railway station to the travelers inside the airports and train stations on an hourly basis to relax before their next flight or train. These factors have fostered the capsule hotel market demand for the offline booking segment.

By age group, the generation Y segment led the market and accounted for more than 45.6% of the global capsule hotel market in 2023 and is expected to maintain its dominance during the forecast period. Generation Y are avid travelers comprising a large number of people traveling worldwide. On average, they spend $527 a day on a trip, which is 62% less than their older counterparts. They generally look for cultural and leisure breaks. Generation Y is driven by wanderlust and breaking life’s monotony; this group of youngsters prefers short trips to culturally rich countries that offer inexpensive accommodation. Thus, capsule hotels are ideal for shorter trips and offer inexpensive accommodation along with providing different basic amenities.

Region-wise, Asia-Pacific was the largest market in 2023 and had the highest market share of 81.3%. Asia-Pacific has been known for its diverse culture and attractive destinations. Countries in the Asia-Pacific region have the highest outbound trip concentrations among the higher household income brackets. This can be attributed to the rapidly growing economy and new job opportunities promoting an increase in household income in the Asia-Pacific region. Thus, this in turn is expected to offer immense opportunity for the growth of capsule hotels in countries such as India, China, Malaysia, Singapore, and Taiwan.

Some of the key players profiled in the capsule hotel market analysis include The Capsule Hotel, First Cabin HD Co., Ltd., UZ.Hotesl, Book & Bed Tokyo, Urbanpod Hotel, The CUBE Hotel Group, Riccarton Capsule Hotel, Nadeshiko Hotel Shibuya, The Bed KLCC, and Pangea pod hotel.

Key findings of the study

• By traveler type, the group segment is projected to witness the highest CAGR of 8.7%, in revenue terms, during the capsule hotel market forecast period.
• By booking mode, the online booking segment is projected to witness the highest CAGR of 8.8%, in revenue terms, during the forecast period.
• By age group, the generation X segment is projected to witness the highest CAGR of 8.3%, in revenue terms, during the forecast period.
• By region, Latin America is anticipated to witness the highest growth rate, registering a CAGR of 9.8% from 2024 to 2033.