How hostel businesses are really doing right now around the world

Hostel owners and operators are in a very mixed environment at the moment. On one hand, demand for budget travel, solo travel and social, community-style accommodation is strong. On the other, higher operating costs, softer prices in some markets and dependence on online travel platforms are putting pressure on margins.

This article pulls together current data from industry reports, operators and investors to describe how hostel businesses are performing globally, with a particular focus on Europe. It is for general information only and does not provide business, financial or legal advice.

Global hostel market – growing, but with pressure points

Several independent market research firms indicate that the global hostel market has grown strongly since the pandemic:

• Grand View Research estimates the global hostel market at around USD 7.21 billion in 2023, expected to reach USD 7.57 billion in 2024, and to grow at a 6.5% compound annual growth rate (CAGR) from 2024 to 2030, reaching about USD 11.04 billion by 2030.
  Source: https://www.grandviewresearch.com/industry-analysis/hostel-market-report

• Another forecast notes the global hostels market around USD 5.26 billion in 2024, with projected growth at more than 10% CAGR into the early 2030s.
  Source: https://www.expertmarketresearch.com/reports/hostel-market

• A global report on youth hostels suggests that the youth hostel segment alone is growing from about USD 4.26 billion in 2024 to USD 4.59 billion in 2025, at a 7.7% CAGR, driven by budget travel, solo travel and online booking platforms.
  Source: https://www.thebusinessresearchcompany.com/report/youth-hostel-global-market-report

Across these sources, the pattern is consistent: the hostel market is expanding, particularly in segments catering to younger and budget-conscious travellers.

Europe and city-break destinations

Europe remains one of the strongest regions for hostels:

• Grand View Research estimates the Europe hostel market at around USD 2.7 billion in 2024, with expected growth at about 5.8% CAGR from 2025 to 2030. Dormitory rooms are reported as the largest and fastest-growing segment.
  Source: https://www.grandviewresearch.com/horizon/outlook/hostel-market/europe

• Another analysis projects the Europe hostel market to reach USD 4.36 billion by 2033, growing at roughly 5.5% CAGR from 2023 to 2033.
  Source: https://www.sphericalinsights.com/reports/europe-hostel-market

Separate hotel and hospitality trackers show that city-break destinations in Europe, such as London, Edinburgh and other major capitals, have largely recovered or exceeded pre-pandemic revenue per available room (RevPAR). That recovery in city tourism generally supports hostel demand, especially where budget travellers look for cheaper alternatives to hotels.
Examples:

• UK hotel RevPAR and ADR trends – https://publications.allsop.co.uk/market-update/nov-24/hotel-market-update
• London hotel recovery – https://www.hvs.com/article/9993-London-Market-Pulse-2024-Investor-Confidence-Renewed

What the big hostel platforms are reporting

Hostel-focused online platforms and operators give a more granular picture of how the sector is performing.

Hostelworld Group, a major booking platform for hostels:

• Reported 6.9 million net bookings in 2024, up 6% year-on-year.
• Net revenue of around €92 million, slightly down (about 1%) versus the previous year.
• Average booking value decreased by around 8%, mainly because travellers shifted towards lower-cost destinations.
• Adjusted EBITDA increased by 19% to €21.8 million, and the company returned to a net cash position.

Sources:

• 2024 Preliminary Results Announcement – https://www.hostelworldgroup.com/investors/reports-and-presentations/2024
• Market summary – https://www.marketscreener.com/quote/stock/HOSTELWORLD-GROUP-PLC-24735963/news/Hostelworld-2024-Preliminary-Results-Announcement-49382525

Taken together, this suggests that booking volumes are growing, but guests are often choosing cheaper beds and cheaper destinations, which can soften revenue per booking even as occupancy strengthens.

Pricing and occupancy: strong demand but softer ADR in places

Cloudbeds, a property-management and booking technology provider that tracks hostel performance globally, reported that:

• Global average daily rate (ADR) for dorms declined by about 1.7% in 2024.
• ADR for private rooms in hostels declined by about 4% in 2024.

Source: Cloudbeds 2024 hostel data – https://www.cloudbeds.com/hostel-report/data/

That means many hostels are filling beds, but in some markets they are accepting lower prices, particularly for private rooms, possibly to stay competitive with budget hotels, aparthotels and short-term rentals.

Investor sentiment: major deals and expansion plans

Recent deals and announcements suggest that investors still see long-term potential in the hostel segment, especially in high-demand cities:

• In 2025, Brookfield Asset Management was reported to be close to an €780 million deal for the European arm of the Generator Group hostel chain. Generator operates multiple properties in cities such as London, Barcelona and Berlin, with adjusted earnings in Europe reportedly rising from about €20 million in 2017 to €65 million in 2025.
  Source: Financial Times – https://www.ft.com/content/5f612547-b8c3-478c-a9f2-a6bb5057c7d1

• Safestay, a listed hostel operator, has publicly stated plans to double its number of hostels from around 20 to 40 over several years, focusing on management contracts and franchising rather than heavy property ownership, and has reported revenue growth in 2024.
  Source: Safestay coverage – https://www.thetimes.co.uk/article/safestay-plans-to-double-the-number-of-hostels-in-its-portfolio-xt503zkfb

• Dublin is seeing a hostel development boom, with planning approval for thousands of new hostel beds. Major investors and brands are involved, including established names like Generator and St Christopher’s Inns as well as newer or expanding brands.
  Source: https://www.thetimes.co.uk/article/booking-in-a-hostel-boom-developers-target-dublin-expansion-j0pdrgsts

These moves indicate that larger investors expect continued demand for budget and social accommodation, particularly in gateway cities and student-heavy markets. This is not a recommendation or endorsement, but it does highlight confidence in the sector’s long-term demand.

Key challenges hostel businesses are facing

Despite positive growth indicators, hostel operators still face tangible challenges. The WYSE Travel Confederation’s Accommodation Panel, which focuses on youth travel and hostels, highlights several current issues:

• Economic pressures: Higher staffing, energy and food costs are squeezing profit margins.
• Changing travel patterns: Shorter booking windows, more last-minute trips and seasonal volatility make forecasting difficult.
• Distribution strategies: Heavy reliance on online travel agencies (OTAs) and big booking platforms can mean higher distribution costs and dependence on third-party algorithms.
• Competition: Budget hotels, aparthotels, student housing and short-term rentals compete for the same price-sensitive guests.

Source: WYSE Travel Confederation – “Key challenges and market dynamics in the hostel sector in 2025” – https://www.wysetc.org/2025/03/key-challenges-and-market-dynamics-in-the-hostel-sector-in-2025/

These dynamics mean that even with rising demand, not every hostel will automatically see higher profits. Location, cost control, distribution mix and the appeal of the social experience all matter.

How cost of living and traveller behaviour are shaping demand

A higher cost-of-living environment, particularly in Europe, has encouraged many travellers to:

• Look for lower-cost accommodation (hostels instead of full-service hotels)
• Favour destinations where their money goes further
• Combine work and travel, using hostels with co-working or longer-stay options

Industry commentary suggests that hostels can benefit from this trend by being the “budget floor” in many cities, but they also need to absorb increased utility costs, wage increases, and in some cases higher local taxes or licence fees. These pressures vary by country and city.

Broader hotel sector analysis, including cost pressures and normalising growth following the initial post-pandemic rebound, can be seen here:

• Deloitte – European hotel industry and investment survey 2024 – https://www.deloitte.com/nl/en/Industries/transportation/research/european-hotel-industry-and-investment-survey-2024.html

Overall picture: growth with thinner margins in some places

Putting the available data together:

• The global hostel market is growing, particularly in the youth and budget travel segment.
• Europe is a key region, with billions in annual hostel revenue and projected steady growth over the next decade.
• Major platforms like Hostelworld are seeing more bookings but lower average booking values, showing that travellers are trading down in price while still travelling.
• Investors are active in buying and expanding hostel chains, especially in high-demand urban markets, suggesting continued confidence in the model.
• At the same time, operators face higher costs, softer ADR in some segments, competition from other budget options, and a need to manage distribution and staffing carefully.

For hostel businesses, this means the sector as a whole appears to be expanding, but the environment is competitive and cost-sensitive. Performance varies widely by location, business model and cost structure.

This article is based on publicly available data and is provided for general informational and educational purposes only. It does not assess any specific business, does not recommend any strategy or investment, and should not be taken as financial, legal or tax advice. Individuals and businesses considering decisions in this sector typically seek professional, regulated advice tailored to their circumstances.