Designed to appeal to rambling travellers of the co-sharing demographic, Steel House Copenhagen has hit the nail on the head. GUEST magazine speaks to Dorte Krak, CEO of Arp-Hansen Hotel Group, about the lessons from their premier luxury hostel.

By Christian Brorsen

Steel House Copenhagen is a successful business case and a pleasant surprise for Dorte Krak, CEO of Arp-Hansen Hotel Group. Conceived as a millennial-style luxury hostel, Steel House Copenhagen opened in 2017 in a repurposed metalworker trade union HQ, converted to offer a rough-edged world of exposed concrete walls and stripped-bare pipes and ducts.

With 253 dorm and double rooms and no less than 1,150 beds, the luxury lies not so much in the size and privacy of the guestrooms but in the homey and welcoming atmosphere of the shared amenities.

With plush communal lounges, a self-catering kitchen (called ‘show kitchen’), laundry, gaming room, screening room, a CrossFit gym and a splash-happy indoor pool, Steel House Copenhagen was designed to entice travellers away from the boons of Airbnb – travellers who follow their hearts and spend less time on planning ahead and more time on enjoying the moment in the experience-widening company of likeminded strangers. And it’s the shared social spaces at Steel House Copenhagen and wider-than-anticipated demographic that have proved key to its business success.

What does it take to make a project like Steel House Copenhagen profitable? 

“On the whole, it’s the size of the property that is decisive for what kind of hotel you can establish and make profitable. The fixed costs, including front desk staff, are difficult to reduce and that’s why the number of rooms is critical. A building where you can create 253 rooms is actually too small, but when you can sell beds individually, as you do at a hostel, then it suddenly makes financial sense.

“It is also important to emphasise that it requires a different type of staff to operate units such as Steel House Copenhagen, preferably employees with an international background. Having traditional hotel training isn’t necessarily an advantage – the guests have a different kind of preference. We have experienced a very special commitment among our employees and a community that is unique. A special culture.

“That said, a business such as Steel House Copenhagen requires a higher flow of guests, which causes greater wear and tear and requires that the traditional hard-core operations are taken very seriously. So, we cannot do without employees who have the expertise.”

Dorte Krak, PR foto

Co-shared amenities are the backbone of Steel House Copenhagen, including a self-catering kitchen, gaming room, screening room, a CrossFit gym and an indoor pool located below the bike entrance to the courtyard. Photo: Copenhagen Editors.

What kind of guests are you attracting to Steel House Copenhagen?

“When we look at the target group for Steel House Copenhagen, it’s wider than we had anticipated. It’s a bit like Norwegian [low-cost airline, ed.]. They also have an incredibly wide target group. Steel House mainly has guests in their 20s, 30s and 40s.

“There is a large group of people who travel to destinations to where there are cheap flight connections and where there should also preferably be cheap accommodation. That has been lacking here in Copenhagen. The life of the city itself is the most important asset; that’s what people travel for.

“Many travel around without having decided how long they want to stay at the individual destinations, so we often see guests extend their stay. It’s a different way to travel. To be honest, Steel House Copenhagen is also an attempt to recapture a bite of what Airbnb has taken from hotels. Today, Airbnb has about one million room nights out of the four million room nights that are sold each year in Copenhagen.”

What does the social aspect of the hostel mean to your business?

“Conceptually, it has been important for us to create common areas that invite you to stay, make your own food, drink a cup of coffee or enjoy a beer and simply hang out. We have succeeded beyond all expectations. Earnings-wise, this is also an important contribution to the hotel’s operation that one cannot ignore. In popular terms, the success of a hotel concept like Steel House Copenhagen can be measured in the bar.

“For us, Steel House has been about developing a new product that caters to the generation that likes to share, the millennials. If we look to the future, we believe that the social aspect where you get to know each other, eat together, etc., is something that all hotel guests will demand. And we’ll take note of that at our other hotels. It shouldn’t be like at a hostel, but there are elements that can be copied.

“We believe it can be introduced as a spice, but to a limited extent, depending on the hotel. Overall, there is a movement in that direction – a good example is Hotel Hornbækhus where the new owner, Lennart Lajboschitz [founder of the Flying Tiger Copenhagen stores, ed.] has introduced communal dining and with good success.”