Last updated: 06:00 PM ET, Thu May 05 2016

Examining the State of the Hostel Industry

Hotel & Resort | Patrick Clarke | May 05, 2016

Examining the State of the Hostel Industry

PHOTO: Freehand Miami. (Photo courtesy of Hostelworld).

Often overlooked by the average traveler, hostels provide guests with an opportunity to save money and make new friends all while experiencing a brand new destination.

So it should come as little surprise that these alternative accommodations are on the rise as more younger travelers seek more travel experiences. According to the Hostel Trend Report released by hostel booking platform Hostelworld, the industry's future is bright.

The report, commissioned by travel research company Phocuswright, sheds light on the current state of the hostel industry and examines where its headed.

Millennials Fueling Growth

PHOTO: Ostello Bello Grande. (Photo courtesy of Hostelworld).

The hostel industry is currently valued at more than $5 billion and projected to grow seven to eight percent year-over-year. That's in large part because of hostels' popularity among young people.

According to Hostelworld's Hostel Trend Report, 70 percent of hostel travelers are millennials (aged 18-35).

In addition to being young, the industry's clientele is dedicated, with nearly nine out of 10 surveyed millennial hostel travellers saying they plan to travel as much of the world as they can (86 percent) and consider travel a critical part of their lifestyle (87 percent).

READ MORE: Hostel Etiquette: How Not to Be a Rubbish Roommate

"The millennial travel demographic is perfect for hostels as they’re spending more of their time seeing as much of the world as possible," Hostelworld CEO Feargal Mooney said in a statement. 

An Emphasis on Privacy, Modern Amenities

PHOTO: U Hostels Madrid. (Photo courtesy of Hostelworld).

When one thinks of a hostel they typically imagine a dormitory-style living space where little privacy exists. However today's standard hostel is arguably as private as a hotel, with nine out of 10 boasting private rooms, according to the report.

But fortunately for those travelers who yearn for social interaction, the option of shared rooms hasn't gone away. That's important considering that nearly one-third (31 percent) of surveyed guests ranked opportunities to meet others as one of the top reasons to choose a hostel.

READ MORE: 3 Unique Hotels to Consider for Your Mexican Beach Vacation

On top of added privacy, modern amenities are becoming increasingly accessible at hostels around the globe. Free Wi-Fi, on-site dining, bicycle rentals, media centers and other amenities and services are fast emerging as the industry aims to compete and attract guests with growing expectations.

"It’s astounding how much the hostel industry has transformed in the last five years alone," added Mooney. "Today, we’re seeing luxury hostel accommodations that are offering the perfect balance of privacy, amenities and social activities."

Asia Leading the Way

PHOTO: Wallyard Hostel Berlin. (Photo courtesy of Hostelworld).

According to the Hostel Trend Report, the highest revenue growth areas are markets that garner the most interest from millennials. South and Southeast Asia (13 percent) currently lead the way, followed by the Middle East (11 percent) and Eastern Europe (11 percent).

Northern Asia, which includes China, is close behind at 10 percent.

But moving forward there appear to be tremendous growth opportunities for the U.S. and Europe, the report finds. After all, the U.S. and Canada account for a meager three percent of hostel properties and 10 percent of global hostel revenue. By comparison, the U.S. represents nearly one-third (28 percent) of global hotel revenue. 


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