‘A better experience than an Airbnb’: how hostels are going upmarket, offering hotel-like experiences at much lower prices

Some nights, guests are treated to live music.

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“It honestly felt like a resort and was a better experience than an Airbnb,” says Melissa Middlestadt, a Canadian travel blogger who runs the website My Beautiful Passport, about her stay at Selina Boquete.

“It was quiet, which is what I look for in an Airbnb, but it had more amenities and was in a better location.”

The private room she booked at the hostel was US$50 to US$100 cheaper per night than what she would have paid for an Airbnb nearby, she says.

Some hostels have recently transformed to appeal to a broader demographic, such as travellers who would never consider a shared room or those who seek slightly upscale amenities.

The Grand Ferdinand in Vienna, Austria, promotes poshness with its heated rooftop pool. Other hostels promote kid-friendly activities. The HI Pigeon Point Lighthouse Hostel in Pescadero, California, for example, features on-site tide pools and private family rooms.

Middlestadt says she typically books Airbnbs and sometimes hotels. She used to turn to hostels as a last resort, but if hotel or holiday rental prices exceed her budget, she’s now far more open to hostels.

Her only deal-breakers are sharing rooms and loud party places, both avoidable even in a hostel setting.

In its early days, Airbnb sought to connect travellers with locals. The company got its start in 2007 after its founders turned their apartment into a makeshift bed and breakfast after hotels were sold out because of a local conference.

“Our guests arrived as strangers, but they left as our friends,” founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk wrote in a letter attached to the company’s S-1 filing for its 2020 initial public offering.

Yet friendships between hosts and guests are few and far between these days – and that’s hardly Airbnb’s biggest challenge.

Then there are rising prices for travel lodging across the board. Prices in the United States reached record highs in June 2023, according to consumer price index data from the US Bureau of Labour Statistics.

While average US travel lodging rates have dropped from their all-time highs, they’re still higher than before the Covid-19 pandemic.

Hotels, specifically, have some additional drawbacks. A reduction in services like daily housekeeping, coupled with rising resort fees, has made hotels feel like a lesser value at a higher cost.

Hostels are usually cheaper than hotels. In notoriously pricey San Francisco, for example, the average daily hotel room rate in 2022 was US$231, according to the San Francisco Travel Association, which is forecasting an even higher average of US$246 for 2023.

However, at the HI San Francisco Fisherman’s Wharf Hostel, you can find a bed in a shared room for less than US$30 or a private room for less than US$100 on some nights. That rate includes Wi-fi, breakfast and luggage storage.

Hostels can combine the best of hotels and holiday rentals. Like hotels, hostels often offer central locations and on-site staff. And hearkening back to the intent of Airbnb, hostels tend to provide a more social experience through common areas and group activities such as pub crawls, walking tours and cooking classes.

Berlin-based hostel chain A&O Hotels and Hostels announced record earnings for the first half of 2023, with year-over-year sales up 47 per cent.

Hostelling International USA (HI USA) said it has seen a 10 per cent occupancy increase from 2022 and a 360 per cent occupancy increase from 2021.

Some locations have seen even greater increases. At HI NYC, the company’s top-booked hostel, occupancy has surpassed 2019 levels.

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Airbnb has also had strong financial performance lately, including 18 per cent year-over-year revenue growth in its third quarter of 2023, suggesting that travel is back in multiple facets.

But for price-sensitive travellers, hostels are becoming an appealing alternative.

“While I still like Airbnb, cleaning fees have gotten so out of hand,” Middlestadt says. “It just doesn’t make sense to me to pay extra when I can use that money elsewhere on my trip.”

This article was provided to The Associated Press by the personal finance website NerdWallet.