Hostels as an alternative accommodation option has great potential, says Hostelworld Group CEO

At a time, when the Indian landscape is witnessing a swift unlocking of ignored alternative accommodation assets primarily centred around rooms and homestays, the pipeline may further broaden in a medium run framework with the addition of another class of asset. Hostels as an alternative accommodation asset class has proved its utility in Europe and is gradually spreading its wings to other parts of the world. And in the forefront of this exercise is a Dublin based global online marketplace operating since 1999 which has built quite a position for itself in this ultra-niche segment with an inventory of around 35,000 units spread across 170 countries.

Feargal Mooney

“Hostels as an alternative accommodation option has evolved quite significantly in European markets and is particularly accessed by the back packer travellers. It is spreading in other parts of the world as well. For instance, in Australia it is increasingly becoming prominent. In Asia too, we are noticing rising awareness about this product class,” Feargal Mooney, CEO, Hostelworld Group told TourismFirst in an exclusive conversation on the sidelines of the recently held PhocusWright Conference. In a market like India, the segment is yet to show its first promising signs (a dedicated marketplace called Zostel has come up which is developing a hostel inventory across several cities and is a partner of Hostelworld Group) but according to Mooney the scene will change in the coming years. “There is a misconception about hostels in India. People associate it with students’ residence provisioned by colleges and universities which is not the case. The product has evolved very significantly in the last twenty years in Europe. Earlier, they were operated by non-profit organisations but now most of them are high quality commercial properties. Some of them can compete with regular quality hotels – they offer nice rooms, cafes, restaurants, bars, private rooms and even swimming pools,” Mooney emphasised. 

According to Mooney, the product class mainly draws from its ability to offer a social setting to young, experience seeking travellers who would like to interact with guests from other nationalities – something which is usually not possible within the confines of a regular branded hotel. “Our definition of hostel is simple. First and foremost, it must offer a social experience to its guests irrespective of their nationalities. While it may have dormitory section, private rooms and other added features, it must have a large common area where visitors can interact,” he pointed out. And while the social experience become the major calling card of a typical hostel unit, another critical differentiator is the pricing. “In a popular European destination, if a 3-star property costs you $150 and a room in a budget hotel is offered for $100, a dormitory will cost you just $25 in a hostel. Even its premium offering, a well-furnished private room will not cost more than $50-$60,” Mooney presented the pricing comparison in these words. 

Hostelworld Group which is promoting this segment aggressively across the globe searching for new fertile turfs has also empowered its platform with the review and rating functionalities. However, there is a critical difference in its strategy vis-à-vis user generated content. “We have a very comprehensive ranking and rating system. The unique feature about our review system is that we take it only from those who have actually booked through us and stayed in the unit. Anybody can’t post his remarks. So that way the feedback generated is more authentic than any other typical review site which does not filter to this extent,” Mooney pointed out. 

Meanwhile, for Hostelworld Group, Asia is the new turf where they are exploring opportunities for a larger presence. “Asia has become a very important market for us. It is contributing nearly 15 percent of our overall business. Most of our Asian business is outbound linked – young Asian travellers staying with our hostel units in Europe and other continents. South Korea is our largest Asian outbound market ranking seventh in our list of international visitors to our units. The number from India too is growing fast though it is currently not in our top ten list,” he said. From Hostelworld standpoint, the increasing exposure of young Asian travellers to its offerings globally is the first decisive link in making this product class popular in the domestic markets too. “Once they get exposed to this kind of unit and begin to like its offerings, they would look for options in the nearby destinations too. That makes us enthusiastic that this segment has a good future in a market like India. We are convinced our number will grow here significantly in a medium run,” he summed up. 

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