Hostels remain outsiders in chaotic accommodation world

“Alternative accommodation” is a title that has been banded around for a years now, primarily as a tool to separate hotels from everyone else.

The umbrella term has come to prominence in particular because of the likes of Airbnb (room or home sharing) and HomeAway (vacation rentals) seemingly accelerating their concepts into the mainstream market.

One of the accommodation types that has found itself lumped in with the alternatives is the hostel, although – like vacation rentals – it has been around for decades.

But Hostelworld CEO Fergal Mooney, speaking after an appearance at the recent WebInTravel conference in Singapore, argues that the pigeon-holing of certain types of places to stay as “alternative accommodation” will eventually become irrelevant.

In particular, he sees the maturing of many elements of the accommodation sector, in terms of technology and distribution, customer bases and marketing, as strands of a wider evolution that all players can play a part.

Consumers are moving from one accommodation type to another, for example “solos become couples”, he says, meaning that requirements for different experiences change over time.

The hostelling wing of the accommodation sector is “extremely healthy”, Mooney says, but that’s not to suggest that it has sat in the shadows and let other parts of the industry evolve any quicker or smarter.

Thousands of individual hostels are now connected to property management systems and distribution channels, plus in recent years the market has seen the rise of hostel chains such as Generator.

This drive to digitise the marketplace, Mooney claims, has not led – as yet – to the some of the issues that have plagued the world of hotels and online travel agencies when it comes to direct distribution.

Around two-thirds of bookings for hostels take place on online travel agencies such as Hostelworld (and Hostelbookers, which was acquired by Hostelworld in April 2013), primarily because Mooney believes that hostels have a lower commission model with hostel-specific OTAs that benefits their lighter levels of resources to maintain a direct-booking model.

Another element that works well with the OTA model, Mooney believes, is the late-booking concept where many travellers are still making plans on-the-go, rather than months in advance.

Around 50% of Hostelworld’s bookings are taking place within a week of the stay, with a quarter within 24 hours – still online, rather than showing up at the property (as many budget travellers used to).

This plays into the hands of those with mobile apps, he says, allowing travellers to search and book a stay during a trip.

The company expects half of its bookings to be made via a mobile device in the very near future.

At the other end of the distribution ecosystem, Hostelworld itself is an active participant in accommodation metasearch (Trivago and TripAdvisor, for example) but, given its low commission model, doesn’t see it playing in the instant booking model that is trying to get traction on many search sites.

Mooney says:

“We have to look at the economics of it – but, really, it doesn’t make much sense at the moment. For hostels it is not worthwhile doing it.”

Taken from an original article by Kevin May on TNooz

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