No standing room or bathrooms: Inside Spain’s pod hotels

They look more like spaceships than hotels. White walls, neon lights, strange architectural shapes on the walls but above all the capsule-shaped rooms measuring two meters wide by one meter long. These are the so-called capsule or pod hotels, a business model that originated in Japan and which has been imported to Europe with companies now trying to break into the Spanish market. But it will not be easy. To begin with, there are the cultural differences between Japan, an island with 126 million inhabitants where space is at a premium, and Spain, a country where there is a strong social culture. Such contrasts pose a significant challenge to entrepreneurs. Further complicating their introduction to Spain are regulatory issues, given that some regions lack a legal framework for these types of establishments.

The experts consulted by EL PAÍS insist that strictly speaking, this type of accommodation cannot be called “hotels” – under Spanish law they can only be described as hostels, as they do not have individual bedrooms or bathrooms. On the other hand, they lack many other features characteristic of a hostel, as there are no views, standing room or closets, though guests do have access to a locker and shared bathroom.

In the summer of 2019, the first pod hostel, Optimi Rooms, opened in the center of the Basque city of Bilbao, a few minutes from the bus station, with an initial investment of €400,000. Two years on, a night in Optimi Rooms, costs €27 for a single pod and €38 for a double. The driving force behind the project, Iñaki Zabala, insists that the pods are larger than those found in Japan. Not only have they been adapted to the Spanish market and the physical dimensions of a typical Western physique, but the aim is to try to win over those who might think they are too small for comfort. “We have patented this large capsule model in Spain and have brought them from China exclusively for our hotels,” says Zabala, who plans to open a pod hostel on Madrid’s Gran Vía with his partner this October.

After the pandemic, people are strangely more interested in sleeping in mini-rooms

Ildefonso Moyano, professor at EADA Business School

The Madrid pods will share Optimi Rooms’ futuristic aesthetic. The capsules come with a flat-screen TV, air conditioning, Wi-Fi and a coffee maker, while the walls of the pod itself are made from a combination of glass and ABS panel boards that seal the guest off from the outside world. “We are not a hostel, nor are we a room, but we are more comfortable than some hotels,” says Zabala.

Optimi Rooms has a total of 48 capsules with a capacity for 60 people. In Madrid, there will be 82 capsules. “This is a qualitative leap and the experience in Bilbao has been fundamental to this,” explains Zabala.

The space problem in Japan prompted the hotel market to come up with this innovative solution. Tokyo alone is home to more than nine million people, aside from those who commute to the city every day to work. This factor, together with high hotel prices, saw the pod hotel emerge, as a more affordable alternative, with many popping up close to train and Metro stations.

The first pod hotel was designed by architect Kisho Kurokawa in the opulent Ginza district in Tokyo. His intention was to accommodate workers who spent the week in the city. It was the beginning of a trend that has produced more than 300 such establishments in Japan, accommodating travelers from all over the world.

Entrepreneurs marketing these capsules tried to introduce them to Spain some years back, but, according to EADA Business School professor, Ildefonso Moyano, “The market was not yet ready for this type of rest station.” Consequently, a pod hostel in Barcelona closed just months after opening. The business, Moyano explains, is something that is specifically suited to Japanese society and culture with its dedicated work ethic, something that is not so intrinsic in the West.

However, in the past year as the coronavirus pandemic subsides, pod hostels have gained momentum in Spain. Two are on the verge of opening in Madrid and another has opened in Spain’s Canary Islands, off the coast of northwestern Africa. Other pod hostels have opened up in countries such as Mexico and Colombia, and their owners say they are already profitable.

Fernando Constante, 50, has been working in the hotel industry for 18 years. Last May, he decided to open his own pod hostel in Puerto de la Cruz on the Canary Island of Tenerife. “Our goal is to open new markets in a sector where it seems everything has already been invented,” says Constante, who has modified the rooms to provide a view and is charging €32 for a single and €41 for a double. “We spent three years getting ready and here we are with our Europeanized capsules.”

Pods in Colombia and Mexico

On the other side of the Atlantic, in Mexico City, José Martín has opened three pod hostels in recent years – two at the airport and one in the financial heart of the capital.

“The operation aims for simplicity, as travelers usually arrive tired and often with very little time to sleep,” he says. “The idea is to provide the basics for a clean and safe rest.” After evaluating short-stay lodging concepts in various parts of the world, he opted for the Japanese model. In Colombia, Caps Future Rooms opened its first low-cost pod venture in Bogotá in September.

“After the pandemic, people are strangely more interested in sleeping in mini-rooms,” says Moyano. “It makes a lot of sense. It is much easier to disinfect the cubicles, the air is filtered and, with a sliding glass door, the person is completely sealed off from the outside, something that would not be possible in a hostel where there’s a chance that if your roommate coughs, you’ll be hit by particles of saliva.”

Then there is the novelty factor. As Eduardo Irastorza, professor at OBS Business School, points out, “People are now looking for experiences. They want to experience things so they can talk about them and share them on social networks. People want to sleep in pods for the original experience, not out of necessity, which is why they have been made bigger and more comfortable.”

Coré Martín, head of investment at Christie & Co, a specialist advisor for buying and selling businesses, is also optimistic about the future of the pod hostel in Spain. “From an economic point of view, these hostels are a very efficient way to economize on space and, if they are sold as something fun, they have all the criteria to succeed,” he says, adding that it will remain a niche market with a client profile to match those seeking hostel accommodation, a sector which is also moving toward a hybrid model for the sake of increased privacy. “Many [hostels] still haven’t opened after the health crisis because people are not ready to sleep with strangers in the same room,” he explains.

In Spain, each region has a different set of regulations for this type of business. But in the Madrid region, as there is still no market, no regulations have been drawn up as yet, making their future unclear. “A law should be passed to prevent them from becoming a trend,” says José Manuel Calvo, from Madrid’s City Hall. “It is very risky to give media coverage to this type of initiative as it paves the way for the pod hotel to become established as one more model of accommodation. There is no place for a business like this in Western law and in our own regulations because it is not an appropriate form of accommodation. This only responds to yet one more demand in a low-cost market that is expanding into every sphere.”

On the other hand, the Madrid Hotel Business Association welcomes all types of hotels as long as they are regulated and comply with the law.