Global Hostel Market (by Booking Channel, & Region): Insights and Forecast with Potential Impact of COVID-19 (2022-2027)

Global Hostel Market (by Booking Channel, & Region): Insights and Forecast with Potential Impact of COVID-19 (2022-2027)
Market Insight:

A hostel is a sort of low-cost, short-term shared convivial housing in which visitors can rent a bed, often a bunk bed in a dormitory, as well as shared use of a lounge and, on rare occasions, a kitchen. Hostels provide benefits such as cheaper costs and the ability to meet people from all over the world, find travel partners, and share travel ideas. Some hostels, such as Zostel in India or Hostelling International, cater to a specific demographic of visitors.

Hostel expansion has outpaced hotel growth, owing mostly to the increasing millennial population. Other tailwinds were the rising popularity of third-party booking sites, a boom in the number of foreign travelers, and an increase in the proportion of young and solitary travelers. The global hostel market is predicted to record a value of US$6.04 billion in 2023, growing at a CAGR of 10.15%, during the forecast period.

Segment Covered: By Booking Channel: In terms of booking channel, the report provides the bifurcation of the global hostel market into four different segments: Online Travel Agencies (OTAs), Hostel Websites, Offline Direct and Offline Intermediaries. The Online Travel Agencies (OTAs) segment held the maximum share of the hostel market. Rising millennial population acted as crucial growth driver for the OTA hostel market owing to their tech savvy nature. This segment of the population is a major user of mobiles applications for booking accommodation, utilizing information found on social media platforms, and are influenced by other travelers’ experiences. Therefore, OTA has become a very important channel of booking hostels, especially for millennial. Geographic Coverage:

According to this report, the global hostel market can be divided into six major regions: Asia, North America, Western Europe, Australia and New Zealand, Latin America, and Rest of the World. The countries covered in Asia region are China, Japan, India, and Rest of Asia, while North America includes the US, Mexico, and Canada. Moreover, Ge Germany, UK, France, and Rest of Western Europe are included in the Western Europe region.

The Western Europe hostel market enjoyed the highest market share, primarily owing to the presence of tourist locations across several European cities. While London continues to be a prominent engine of UK tourism, accounting for a large proportion of total visits, regional United Kingdom markets have grown in popularity with both tourists and investors. Along with that, United Kingdom hostel market is also expected to grow significantly among other countries due to the emergence of hybrid hostels as a significant trend in the hostel industry.

Top Impacting Factors:

Growth Drivers Greater Spending by Millennial Growing Interest for TravelEscalating Popularity of Solo TravelIncreasing Role of Online Travel Agencies (OTAs) ChallengesOvercrowding in Hostels Misconceptions About Hostels TrendsSurging Interest in Sustainable TravelGrowing Number of Mobile Bookings Rising Demand for Luxury HostelsIntroduction of Hybrid HostelsDriver: Escalating Popularity of Solo TravelThe increasing popularity of solo traveling is creating a favorable environment for the growth of the travel industry as well as the hostel market. Solo travelers are experience seekers and majority of them travel to collect memories and experience the local culture, as well as to make social connections. These solo travelers are typically outgoing, curious, and adventurous people who like to meet and connect with new people or like-minded travelers during their tour. Solo travelers mostly prefer hostels with buzzing communal spaces as they are budget-friendly and provide the opportunity to meet other travelers. Owing to the rising preference of solo travelers to book hostels during their trip, the demand for hostels is expected to increase in the coming years. Challenge: Misconceptions About HostelsA major barrier to the success of hostel market has been the certain misconceptions associated with the hostel. One of the major misconceptions about the hostels is that the hostels are only for young people. Therefore, majority of the older travelers are reluctant to book hostel for their stay. Another misconception is that the hostels are dirty, resulting in the low demand from many guests. There are various other misconceptions, including hostels are only for partying & for solo travelers, have no privacy, and are not considered safe. Infact, people also think that unlike many hotels, hostels do not provide any amenities. Hence, the growing misconceptions about the hostels is regarded as a key factor that restrain the growth of the hostel market.Trend: Rising Demand for Luxury HostelsOne of the major trends that would impact the growth of the hostel market is the rising demand for luxury hostels. The hostel market has undergone a major transformation and now designer hostels with private rooms, vibrant bars, yoga classes and luxurious interior designs are becoming more common. Luxury hostel accommodations offer the perfect balance of privacy, amenities, and social activities. These luxury hostels are characterized by swimming pools, cocktails, art shows, live music, rooftop bars, yoga classes and luxury suites. Luxury hostels also provide excellent service and maintain clean premises. Therefore, the rising demand for luxury hostels is creating a robust development in the overall hostel market.

The COVID-19 Analysis:

During the pandemic, hostel industry witnessed a decline due to the restrictions in travelling all around the world. Many hostel chains were losing money and were forced to close due to the lockdown the integration of technology in hostel apps and online booking channels would open new doors, pave the way for enhancement, and widen the horizons of the hostel business in the next years.

Analysis of Key Players:

The hostel market is fragmented, with the presence of large number of players. Key players of the hostel market are: Hostelworld Group, Hostelling International (HI), Generator Hostels,Safestay plc. A&O Hotels and Hostels, London Backpackers, Wombat’s Hostel, Green Tortoise HostelNewquay International Backpackers, Maestro HostelHostelworld estimated that close to 9% of hostels had already exited the market since the COVID-19 outbreak. It is expected that further closures could come particularly from the independent segment. Hostel sector is facing a challenging outlook but this would provide the opportunity for Safestay to capitalize on cheap assets and make further strides in consolidating the market.