By Douglas Quinby
The broader travel industry may bucket hostels into "alternative accommodations," yet this often-overlooked sector is showing higher online penetration than the hotel or vacation rental categories. Younger travelers (18-34) comprise the largest share of hostel guests, and these digital natives have fueled rapid adoption of online and mobile hostel booking.
The US$5.5 billion global hostel market in 2017 will grow to nearly $6.4 billion in 2020. Over the same time period, the online hostel market will grow 7-11% annually, rising from $3.5 billion to $4.6 billion. More than 70% of revenue will be booked online, making hostels one of travel's most highly penetrated online travel segments.
Online travel agencies (OTAs) are the most popular online purchase channel. Amid a highly fragmented market of independently operated properties serving mostly younger, more price-sensitive travelers, OTAs have become the leading booking channel. OTA share of total hostel bookings will rise from 44% in 2014 to 54% by 2020, when OTA bookings will represent just over three quarters of online hostel revenue.
Phocuswright's Global Hostel Marketplace 2016-2020 Second Edition provides comprehensive marketing sizing, forecasting and analysis for this under-studied sector.