By Guevara A. Susana, MBA | September of 2024
In July, Selina Hospitality—which operates a sizable number of "hostel"-style businesses in Costa Rica and 21 other primarily Latin American nations, catering primarily to Millennials and Generation Z—was compelled to declare bankruptcy and withdraw from the Nasdaq Stock Exchange. With an estimated 1.2-billion-dollar valuation, it would have joined in 2021.
Among Selina Costa Rica's operational achievements, I would like to draw attention to their deliberate and well-reasoned choice of locations, properties they rented out for their benefit, and their steadfast adherence to their market niche.
Among the errors were what appeared to be a policy of non-payment both locally and globally, as confirmed at the time by the media outlet “Hotel Investment Today”, and the disregard for other tried-and-true best practices by prosperous hotel chains, like the training and development of human resources, at the very least to ensure a minimal level of standardization and an organizational structure to guard against the staggering turnover.
Beyond the fact that Selina Costa Rica is a phenomenon in its own right and should be researched by the hotel industry and our nascent academic community, I think it's also worth looking into for individuals who are considering investing in Costa Rican hotels. the analysis of the events that have transpired since then. The “Thai company Collective Hospitality”, which has elegant sub-brands like "Slumber Party Hostel & Bar," and is headed by a Canadian hotelier with experience in an international chain, has purchased 100 Selina facilities. The businesses in this selection are those that are owned—not the ones that are rented—in Selina, Costa Rica.
It's not the first time a new hotel chain, unfamiliar with the specific Costa Rican destination, steps in to save a facility whose owners are experiencing financial difficulties.
The conduct of these new chains and operators is shocking to those of us who have spent years providing proper answers to the feasibility questions of hotel projects across this nation, both for owners and for some of the biggest international hotel chains that are so particular about viability. And it goes beyond this most recent instance of businesses filling an unmet demand niche.
We are aware that not every Costa Rican paradise or type of lodging offers the same return on investment or level of occupancy. Still, there are certain places and hotel categories where success has been all but assured. Keep an eye out for the footsteps of these "young" people—"Selina, Hacienda Altagracia”, “Dreams Las Mareas”, “Best Western Kamuk”, “Driftwood Hospitality Management”, and “Botanika”—if the subject interests you.
And keep in mind that, in order to build a successful hotel rather than a trap, the first and best investment in your hotel project should not be grandiose architectural plans or purchase options, but rather a feasibility study that lays out in black and white the true cost and precise demand, with reservations named and specified for each room, every night.