After 30 years in hotels, Luke Moran is channelling his experience into a new hybrid hotel concept as CEO of Leisure Accommodation Collective (LA Co.). Moran sat down with Ruth Hogan to discuss the untapped opportunity in elevating the humble hostel.
Tell us a bit about the origins of LA Co.
Drifter was established as a brand and a concept by Hugh Stephenson, Joshua Hunt and Ryan Sanders – two of which remain in the business today; Hugh is our Chief Investment Officer and Josh is our Chief Marketing Officer.
They had acquired three sites and in 2022, further expanded the business through the acquisition of The Village Hostels, creating Leisure Accommodation Collective (LA Co) as it stands today. We acquired a seed portfolio back then of five additional assets, which grew to eight very quickly.
With the acquisition of The Village hostels, we saw a strong opportunity to invest capital to reposition and relaunch them, which is underway at the moment.
Drifter recently made its brand debut with the first property opening in Christchurch. Tell us about this hybrid hotel concept and what you are trying to achieve with it.
Whilst there’s has been a reasonably strong hostel youth market within Australia and New Zealand, it sits well behind Europe in this concept. We see an opportunity to provide a much more improved product offering that is unique to what we’re doing in Australia, that caters for both the shared accommodation market and a traditional hotel guest, but with a strong emphasis on community and engagement on site.
We think this is an untapped market in Australia – the tailwinds in this sector are very strong – and we’re leading the charge.
It’s a really exciting opportunity, to be honest, to be part of something that’s taking traditional hostel backpackers in a new direction, elevating the product, elevating the experience, and drawing on some of the hotel experience that I’ve had over the last 30 years to see how we could help mold that into this space.
What can travellers expect from a Drifter property?
The Drifter product is more refined in terms of its nature of being a true hybrid hotel-hostel.
It operates as a hotel environment, but with shared accommodation – about 30% private to 70% shared – and design-led communal spaces that are far more pronounced.
The target market is anywhere from young to young at heart. We’ve got a target audience that includes the Gen Z traveller looking for great experience, up to millennials, corporate travellers, group business.
We’ve got co-working spaces, great communal kitchens, there’s cinemas, libraries, wellness zones, where you can do anything from yoga and meditation in the mornings to more strenuous exercise and HIIT programs to sound healing.
The concept behind it, the delivery and execution is world class. I’ve opened a lot of nice with some big chains in my time, and I’ve never been more excited than the opening of Drifter Christchurch.
What makes The Village brand different from a typical hostel experience?
The Village brand is aimed at that more traditional hostel market – the Gen Z/millennial backpacker that is wanting to meet people on their travels – but we’re investing heavily in quality beds, quality bathrooms, quality communal space and exceptional staff. The communal spaces are all being redesigned through the renovation process of each asset, with a strong emphasis on creating a vibrant, energetic environment.
We are undertaking a complete refurbishment of all eight The Village hostels in the portfolio, which we hope to complete withing the next 12 months.
We renovated and relaunched The Village North Melbourne – a 350-bed asset – in late December 2023. It was full through January, February, March and has been very well accepted.
We are upgrading some existing The Village properties in Surry Hills, Glebe and Bondi – a 160-bed property that is 200m from Bondi Beach; an A-grade location which opened in August.
We’re implementing a loft product there that we think will be suitable for people that are looking for a private room but with a little bit of space. Each time we renovate a product we look at how we can bring something new to market.
We’ll continue to develop that brand and explore acquisition opportunities.
Where are you looking in terms of potential locations for these brands? And are you interested in new-build projects as well as conversions?
We’ve secured three products in New Zealand – in Christchurch Wellington and Auckland –and we are working hard to find a suitable location in Queenstown.
We absolutely see great opportunity for Drifter in Australia. We’ve got a product in Melbourne – the largest hostel in Australia and New Zealand with nearly 800 beds – and we are looking at multiple sites from Brisbane to the Gold Coast and Sydney.
We have secured Byron Bay, which will be one of the first Drifters that we launch into the market. The design phase is underway at the moment, and we hope to kick off the full renovation during summer trading before relaunching as a Drifter mid next year.
In this iteration, we’re not looking at greenfield development, we’re looking at how we acquire and repurpose existing assets, so we look for unique locations, buildings that have some character.
Tell us about the team behind LA Co., both at leadership level and on the ground.
We have established a strong executive team that sits across the portfolio that we own and operate. LA Co is the vehicle that manages our assets, and we’ve got a great mix of people from traditional hotel backgrounds to traditional cluster backgrounds from Europe. Our Chief Operating Officer, Justin Mack, spent 20 years building Generator Hostels in Europe – we have been very lucky to secure him, he’s doing an amazing job. We’ve got great leaders in finance; our Chief Investment Officer, Hugh Stephenson, who is one of the founders of Drifter, used to be an investment banker. On the ground, we have an eclectic mix of ages and demographics that reflect the guests that stay in those venues.