Beyond the Backpacker: How Hostels Are Remaking the Low-Cost Accommodation Marketplace

For many across the travel industry, the term "hostel" brings to mind cheap, dorm-style accommodations catering to budget-conscious backpackers. While low-cost lodging remains central to hostels, this often overlooked segment in travel accommodation has been undergoing some big changes, all to cater to the travel-ambitious, mobile-minded millennial.

Phocuswright's The Global Hostel Marketplace, 2014-2018, a first-of-its-kind study of the global hostel industry, features market sizing, forecasts, distribution channel analysis and in-depth analysis of hostel travelers and properties. The report identifies five key trends that are driving transformation across the global hostel marketplace:

1. The power of privacy: Bunkbeds and dorm-style rooms are almost synonymous with the segment, but hostel travelers are increasingly seeking privacy, and hostels are complying. Nearly nine in 10 properties offer private rooms as well as traditional dorms or shared rooms. In fact, private rooms represent 57% of global hostel room inventory.
   
   
2. A step up in service: A majority of hostels now offer a range of amenities, such as free Wi-Fi, on-site food and beverage, linens and daily cleaning, social events, libraries and media centers. They offer these services with good reason – most hostel travelers purchase additional services on property, and ancillaries contribute to 18% of global hostel revenue.
   
   
3. Social by design: After price and location, it is the opportunity to connect with others that attracts travelers to choose hostels. More hostels are specifically designing their common areas and introducing curated social events, parties and activities to foster guest socialization.
   
   
4. Digital dominates: With approximately three in four hostel travelers globally under 35, it should be no surprise that they – like most millennials – do almost everything via digital and increasingly via mobile. Two thirds of global gross bookings for hostels are online (see Figure 1 below). For millennials, online booking incidence is even higher: More than nine in 10 booked their last hostel stay online, and one in four via a smartphone.
   
   
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5. The rise of chains: Branded chains are taken for granted in the hotel industry, but have only recently begun to have a broad impact on the hostel market. Chains account for just 8% of hostel properties but 38% of global revenue. With more emphasis on private rooms, digital, design, and service-level consistency associated with a branded product, it is chains such as Generator, MEININGER, Wombat's, A&O, St Christopher's, Nomads and Freehand who are driving forces behind the preceding trends.

Phocuswright's The Global Hostel Marketplace, 2014-2018, based on surveys of more than 3,000 hostel travelers and 1,000 hostel properties worldwide, provides unprecedented research and analysis into the global hostel market. This study provides insight into segment characteristics, trends and opportunities for growth.

Research highlights include:

• The structure, size and outlook of the global hostel market
• In-depth analysis of distribution and booking behavior, including mobile, OTAs and direct
• An assessment of key trends in product, service, design and distribution among hostel operators
• An in-depth and global look at the characteristics, behavior and motivations of the hostel traveler
• An analysis of the non-hostel traveler and opportunities to convert

Learn more and purchase your copy HERE.