The year of chasing demand
Cloudbeds has powered hostels for more than a decade. We were outsiders when we took over the stewardship of myallocator, outsiders who showed up to WYSTC wearing bathrobes in hopes to make an impression. Still, hostelers near and far welcomed us with open arms. Our relationship evolved with a front-row seat to your needs, and as we’ve grown, so have the needs of hostels. We are honored to serve this segment of the lodging industry. Over the last few years, we’ve seen hostelers navigate the pandemic and push toward full recovery amid rising costs and inflation in 2023.
This year, we expect advanced technologies to usher in a shift in how hostel owners and operators do business as they chase demand. Unplanned overbookings, front desks staffed 24/7, and marketing or finance degrees to optimize revenue are a thing of the past. Siloed and disparate legacy systems are too. We’ll be a partner in saying goodbye to the old rules of hospitality by providing best-of-class technology, education, and support to rewrite new ones.
As part of that education and support, we’ve compiled data from across the globe to deliver critical insights on hostels to support strategic decision-making. In this new and comprehensive State of Hostels report, you’ll find key data on traveler booking behavior and which trends are shaping the travel landscape as we know it. We hope this information empowers you to chase demand and elevate your business.
Let’s rewrite the rules for great hospitality, together.
Adam + Rich
Founders, Cloudbeds
2024: The year of chasing demand
In the inaugural State of Hostels Report, the Cloudbeds team draws from a trove of data, research, and daily interactions with hostels around the world to share insights and trends in travel for 2024.
If the past few tumultuous years have taught us anything, it’s that change is the only constant. No sooner had hostels begun to recover from the pandemic than they were hit with a labor crisis and rampant inflation. While these challenges began to ease in 2023, they continue to serve as impediments to growth and profitability today.
Nevertheless, the outlook for the travel industry in 2024 looks encouraging. Economic forecasts have shifted from fears of a global recession to expectations of a soft landing and moderate growth. Recovery in international and group travel is gaining momentum. Despite higher prices, consumers have demonstrated a determination to travel and a desire for the distinctive experiences only hostels can provide.
How will the year ultimately roll out? While the data provides us with strong signals, many unknowns remain. For hostelers, 2024 will be the year of chasing demand. This means monitoring market trends and travel patterns closely to determine who is traveling and how best to capture the business and finding new approaches to overcoming challenges, old and new.
In the first section, we share booking data from thousands of hostels around the world to help you benchmark performance against industry peers. And in the second section, we explore six trends shaping the travel landscape, along with strategies for adapting to the trends and ensuring long-term growth.
At Cloudbeds, it’s our goal to provide the technology and the know-how hostels need to compete for more reservations and happier guests. After all, amazing hospitality isn’t just the domain of the big brands. We’re here to help with that.
Traveler booking behavior and insights
In the lodging industry, data reporting often focuses on hotels, making it difficult for owners and operators of hostels to compare performance and identify travel patterns relevant to their sector.
In this section, we share data exclusively from hostels, representing everything from small hostels to groups. Drawing from a primary data set of 3,000 properties, we track key performance metrics over the five-year period from 2019 through 2023. Properties are dispersed across 95+ countries and divided into four regions: North America, Latin America (including Mexico), Europe, and Asia Pacific.
The following metrics provide macro-level views of how travel behavior has evolved for hostels and where the sector appears to be heading. At the property level, they reveal valuable clues about what it will take to grow market share and boost profitability in 2024.
Occupancy: Skyhigh rates
2022 was the year that global occupancy for hostels fully recovered (and then some) from the pandemic, reaching an index of 104 relative to 2019 levels. In 2023, we saw this number increase to 110, with dorm occupancy maintaining record levels throughout the year until November, when it converged with 2022. Private occupancy, while still high from January to June, leveled out in the second half of the year.
This occupancy spike can be partially attributed to strong demand for travel paired with economic uncertainty and inflation – driving travelers to more cost-effective accommodations, like hostels. When we compare this data to our main Lodging Report, we see that hostels are outperforming other types of accommodations. Looking ahead to 2024, it will be interesting to see if occupancy rates continue to rise as more groups and international travelers from Asia return to market or if occupancy will maintain the trend experienced in the latter half of the year and decline back to “normal” levels.
Average daily rate (ADR): An inflation hedge
Average daily rate has been a key driver of hostel performance since the pandemic. In 2023, independent hostels achieved an ADR index of 127 relative to 2019, meaning that rates were 27% higher on average. For some hostels, strong rate growth combined with high occupancy enabled record room revenues.
However, the picture isn’t quite as rosy when room rates are adjusted for inflation. Globally, inflation peaked at 8.7% in 2022 and then declined slightly to 6.9% in 2023. As a result, growth in operating expenses outpaced growth in revenue for many hostels in 2023. In the U.S., for example, labor costs were an additional 7.5% per occupied room compared to 2022.
This year, global inflation is forecasted to decline further but remain relatively high, at 5.8%, although it should come closer to normalization in developed countries. This poses a big question for hostelers: How much higher can pricing be pushed to offset rising costs? In the U.S., CBRE projects hotel ADR to increase by only 2.3%.
It’s interesting to note that when looking at regional ADR, private rooms grew across all regions, while LATAM saw a 17% decrease in dorm ADR. This drop can most likely be explained by the fact that the currencies in many South American countries like Argentina and Venezuela decreased in value against stronger currencies like USD and EUR, making private rooms more affordable, therefore reducing demand for dorms.
Regional ADR (Privates), year-over-year
Regional ADR (Dorms), year-over-year
Revenue per available room & bed (RevPAR & RevPAB): Room for growth
Revenue per available room (RevPAR) is an important performance metric because it indicates how well hostels balance the need to fill rooms with the desire for a high average rate. Globally, in 2023, hostels achieved a RevPAR index of 117 relative to 2019.
Another important metric is revenue per available bed (RevPAB) as an indicator of performance in relation to dorms. Globally in 2023, hostels achieved a RevPAB index of 125 relative to 2019, outperforming RevPar. This indicates the value of shared spaces and increasing popularity among travelers.
While 2020 and 2021 are outliers due to the pandemic, the pattern of steady RevPAR growth since then bodes well for hostels in 2024. Provided occupancy remains consistent, and hostels can maintain or increase average rate through selective discounting and shrewd yielding of room inventory, there is room for additional growth in RevPAR.
Global RevPAR, indexed to 2019
Global RevPAB, indexed to 2019
Booking source: OTAs are stronger than ever
Online travel agencies (OTAs) have always played a crucial role in the distribution strategy of hostels. Looking back over the years, OTAs have dominated as the primary booking source for hostels, dipping slightly to just under 60% in 2020. This dip was most likely a response to the pandemic when travelers were hesitant to book via OTAs for fears of having to cancel or reschedule.
Since then, however, we’ve seen OTAs return stronger than ever, a trend identified in Cloudbeds’ 2024 Big Book of OTAs. In 2023, OTAs generated 70% of global bookings, a higher proportion than in any of the previous three years and much higher than the 30% of bookings generated on direct channels. Nowhere was the trend more prominent than in Europe, where OTAs accounted for 73% of total bookings. At 64%, Asia Pacific followed Europe. By comparison, in Latin America, the OTA share was 56% – the lowest share of OTA booking volume across all regions.
The domination of OTAs solidifies the importance of a diverse distribution strategy for maximizing online visibility and bookings. As reported in the Big Book of OTAs, hostels see optimal results through a strategic mix of OTA connections across global, regional, and niche channels.
Not only will a diverse channel mix lead to more OTA bookings, but it will also help generate direct bookings via the billboard effect, with visitors leaving OTAs to visit a hostel’s website. To convert this traffic into direct bookings, properties must have a search-optimized and mobile-friendly website, along with clear images and descriptions and an integrated booking engine. Investments in metasearch advertising and business listings optimization will also help travelers find hostels when searching for them online after being exposed on OTAs.
Global percentage of total bookings by booking source, OTA vs. Non-OTA
Percentage of total bookings by booking source and region
Additional Data
Download the full report to see data for the following travel booking behavior and insights:
Booking window
The booking window is the average number of days travelers book trips in advance of the arrival date. Generally, the longer the booking window the better for the property. When lodging businesses have advanced notice of how busy they will be, they can more effectively manage pricing and operational planning.
Length of stay
Length of stay (LOS) is the average number of nights guests stay at a property. Generally, properties strive to attract guests for longer stays in order to boost occupancy and lower operating costs. However, long-stay guests often expect lower rates, which can drive down ADR.
Check-in / Check-out trends
Here we look at arrival and departure patterns. On what days do travelers check in and check out most often? By understanding these patterns, hostels can manage pricing and inventory controls to distribute bookings more evenly throughout the week and flatten out peaks and valleys in occupancy.
