Council Post: How The Hostel Industry Can Come Back Stronger Than Before

Edmund Lowman is CEO of Slumber Hostel Group, a youth travel accommodation and tour experience provider in Southeast Asia.

April 1 was arguably the worst day of my life — that was the day I decided to temporarily shut the doors to my hostels in Thailand and Indonesia. Just like the Fresh Prince of Bel Air, my whole life got flipped turned upside down, but unlike Will Smith, the villains weren’t some nefarious basketball players. It was a microscopic virus that had begun wreaking havoc across the entire travel industry.

Depending on how long the crisis lasts, the international tourism economy could see a 60% to 80% decline this year, according to an OECD analysis. Ouch — taking an elbow to the head from a basketball villain would have been more pleasant! However, in May, about a third of U.S. spenders said they planned some type of travel, according to a Deloitte survey, and the numbers have been climbing up ever since. My taxi to Bel Air has arrived, and now I think the hostel industry is poised to bounce back stronger than ever. 

For one, the hostel sector is the last frontier of the hotel industry, where travel-hungry consumers go for adventure and authentic experiences. Even before the pandemic, travel trends were shifting toward the type of experience that hostels provide, and consumer demand had boomed in recent years. In addition, early industry indicators are showing signs that hostel travelers are ready to hit the road as soon as they’re able.

Here’s how I think the industry can rebound quickly: 

1. Appeal to the 18-35 age group.

Backpackers, by their nature, are bold adventurers who intend to be the first to explore unknown locations. They’re also going to be the first to navigate this new world. When Hostelworld, the leading hostel-booking site, recently asked customers how soon they’d travel after restrictions are lifted, about half said they’d take off in the first 60 days. The appetite is there — and bookings are already increasing in countries that have reopened.

So far, the most popular trips being booked are multi-city backpacking trips, Hostelworld reported, with 56% of people planning extended trips where they can see more of the world. The trend reaches 63% in the 18-24 age group, who are resilient and eager to travel. Plus, hostels are considered part of the “economy segment,” which is the best-performing hospitality sector besides extended stay. Hostels that appeal to younger age groups and offer affordable accommodations will come out ahead.

2. Be nimble and flexible.

Hostels offer a variety of room options for all budgets, ranging from private rooms to a dozen beds in a shared space. This won’t change in the new travel climate, and in fact, will allow hostels to shift as the demand does, which could give their business far more flexibility. If travelers want private rooms, hostels can adapt their inventory easily by increasing the number of private rooms.

Even early in the pandemic, hostels were quick to introduce new safety measures for travelers, including protective curtains, screens on beds and limited spaces in dorms. As restrictions shift, hostels should continue to be nimble and adjust their accommodations by opening up or closing down space, restarting or halting entertainment options, and prioritizing the needs of travelers. The most flexible locations will pull in more business.

3. Highlight the unique business model.

Because hostels can deal with change quickly, their business models can shift as well. When booking data showed that solo female travel was increasing nearly 90% during the past four years, hostels responded by offering more attractive options for female guests. When solo travel sharply increased in recent years, hostels pivoted to offer more room options: private, 2-bed, 4-bed and higher.

When hostels play to their strengths, travelers notice — and investors do, too. Private equity and venture capital firms have provided capital injections since 2018, including companies like Selina raising $250 million, Generator Hostels selling for $480 million, and we at Slumber Hostel Group raising $50 million. These investments have kept hostel groups going during this time, and future focus on this unique business model could result in additional major growth.

4. Create social opportunities in an increasingly antisocial world.

Travelers at our hostel have often said they are eager to try out hostels to meet people and have actual one-on-one interactions with new friends on the road. In fact, 1 in 5 people planning trips in the next few years say the social aspect of a hostel is the most important factor that they consider when choosing where to stay, according to the Evolution of the Hostel Traveller Report.

In recent years, hostels have offered a wide variety of activities such as yoga, walking tours, bars, restaurants and retreats. As travelers hit the road again, hostels can offer new options to fit the “new normal.” To stay competitive, I recommend hostels continue to find new, creative ways to host socially distanced events so backpackers can stay safe but still enjoy the fun, adventurous atmosphere they crave.

5. Foster authentic experiences.

Even before the pandemic, people were searching for off-the-beaten path travel experiences where they could explore. Backpackers, in particular, are eager to embed themselves in the local culture at their destinations. They look for new ways to meet locals by participating in cooking classes, learning crafts, or volunteering for community projects.

Local culture has become such a powerful part of the travel experience that it now overshadows other factors when choosing a play to stay. People would rather guarantee that they can meet others and do the activities that they want than worry about the exact location of a hostel near a tourist site. When travel resumes, hostels can offer those authentic experiences by helping travelers to connect with the interests that match them.

Although it’s tough to see what will happen next during the pandemic, the path is already paved for certain sectors of the hospitality industry to boom back into business. If hostel owners make the right moves now to appeal to eager travelers, business could boom back like never before.


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