The International Hostel Market is Changing: How to Prepare Your Property to Attract a New Generation of Guests

By Cloudbeds, October 9, 2018

The hostel market is changing around the world and while many people still think of hostels backpackers-only accommodations, these properties are growing in popularity like never before. The millennial generation has shown a particular affinity for hostels. With a new generation of travelers looking to hostels, how can you prepare your property to accommodate this new wave of guests?

Research published by Phocuswright shows that millennials tend to spend more of their disposable income and stay on the road longer than other age groups. Consequently, this group of travelers is driving a rise in hostel accommodations due to their search for low-cost lodging in convenient locations that many hostels offer. Perhaps what drives millennials most, however, is the desire for experience-driven services and opportunities to interact with other travelers. Millennials want to see the world, meet people, and have fun doing so.

 

How the Hostel Market is Changing

The simple, dormitory-style hostels, with no frills or amenities, are becoming a thing of the past. The hostel market has undergone a transformation and now designer hostels with private rooms are becoming more common. In fact, according to Phocuswright, nine out of 10 hostels now have private rooms.

It’s not only private rooms that are drawing millennials attention. Properties like FieldHouse Jones are attracting guests with fun, amenity-rich environments that include a gymnasium lounge, coffee bar, swimming lanes, themed speakeasy, and public and private event areas that feature custom slot car racing and gourmet kitchen restaurant. Another hostel, Lub d in Phuket, offers Thai boxing class at a full-size boxing ring right inside their lobby.

As the number of services offered by hostels increases, so do customers’ expectations, and now most hostels are expected to offer services like:

  • Free Wi-Fi
  • On-site food and beverage options
  • Daily cleaning service
  • Design-focused interiors
  • Social events
  • Bicycle Rentals
  • Libraries and Media Centers

Additionally, there are apps – such as Hostellers – that integrate with your Property Management System (PMS) and allows guests to interact and socialize with each other. Through the app, guests can see who else is staying in your hostel, create group chats, or even create events, all with the purpose of driving guest engagement and improving their experience.

The hostel trend hasn’t gone unnoticed by the big hotel chains either. Some hotel groups are now rushing to gain their share of the market with “hostel-like” accommodations, like the Marriott’s Moxy properties.

 

Understanding the New Generation

Generally speaking, hostel-goers travel as an opportunity to seek out new experiences and make social connections. In fact, 72 percent of hostel bookers travel alone.

While hostel guests and millennial’s have a tendency to be budget conscious, they hold a significantly higher average annual trip spend and frequency than the overall travel population.

Millennials consider travel and exploring the world a very important part of their lifestyle and are prioritizing shared adventures and social interactions more than the average traveler.

 

How To Prepare for this New Generation of Hostel Guests

Millennials are accustomed to using the internet and social media from a young age and have integrated technology into almost every aspect of their life. It’s no surprise then that millennials aged 18 to 34 have fuelled the rapid adoption of online and mobile hostel booking.

Hostel owners and managers that have an integrated PMS can better employ technology to reach and connect with this large demographic. Here are some tips for making technology to work for you:

  • List on a variety of websites – Make sure your properties are listed on several OTAs, from the big names like Booking.com, Airbnb and HostelWorld to more niche sites like Dorms.com. For Cloudbeds customers, signing up for Dorms.com or HostelCulture takes seconds to do because of an express connection coming soon. According to Phocuswright, OTAs have become the leading booking channel for hostels, growing from 44% in 2014 to 54% by the year 2020. Increasing your property’s visibility will expand your reach and ensure that you’ll be listed exactly where this generation is looking.

For a full listing of the best OTA sites for hostels, check out the Big Book of OTAs.

  • Convenience for the customer – Guests LOVE convenience, so make sure you’re adding things like keyless entry, speedy check-in and out services via mobile apps, and upgrade opportunities that will allow guest to spend less time focusing on the process of their stay and more time exploring the community around them.
  • Use apps to stay social – You can keep in touch with guests pre and post stay by using popular apps like Whatsapp, Wechat, and Hoperator. Think beyond email. Free independent travelers (FITs) were responsible for a huge growth in Chinese outbound tourist numbers in 2017 and this demographic is communicating via social media apps. These tools give you multiple opportunities to interact with guests and help make their stay as smooth as possible. You can, in turn, use their feedback to manage guest satisfaction.

Hostels have always been the accommodation of choice for younger travelers and using technology to reach the millennial generation is essential to growing your business. Check out how the following hostels are using technology creatively to maximize their reach on millennials:

Slumber Party Hostels provide a great example of how properties can create an amazing atmosphere where guests can start living their experience as soon as they click on the website. They offer engaging video footage at the top of the screen, social validation by displaying the first name and location of recently-booked guests, as well several vivid, high-quality images enticing visitors with exciting tours and the promise of adventure. 

Lub d hostels offer a co-working space called the Garage Society in their Phuket location, enticing digital nomads who are working and traveling. The space not only offers modern amenities, like Wi-Fi, printer, refreshments, and AC but also includes networking events.

 

Looking Forward

The international hostel market is set to grow to $6.4 billion by the year 2020, according to Phocuswright, and it’s clear that adopting essential software and technology for your property is going to be crucial in attracting this new generation of hostel guests.

If you want more information, Cloudbeds is here to help. Whether it’s information about software implementation or products that will help your business grow, we’re happy to chat anytime, contact us now.

Sources:

Phocuswright The Global Hostel Marketplace 2014-2018

About Cloudbeds

Cloudbeds creates cloud-based hospitality management software that simplifies the working lives of professional property owners, operators, and employees. Tens of thousands of hotels, hostels, vacation rentals, and groups in over 135 countries trust Cloudbeds’ award-winning software. Founded in 2012, Cloudbeds has expanded to hundreds of team members in 31 countries who altogether speak 17 languages.

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