OTAs and Millenial Travellers are Pushing Hostels to Innovate

Millennials don’t attack travel in the same way previous generations did. They travel younger, for longer periods and with much less cash-in-hand. 49% of millennials book their accommodation on their smartphone and 93% use their smartphone while travelling to discover places they visit. With the “less cash-in-hand” anecdote it is clear why more young travellers are turning to hostels as their preferred choice of lodging. In fact, the hostel and budget hotel sector accounts for almost 15% of total European accommodation (even with the rapid rise of Airbnb).

So what does this mean for the hostels of Europe?

Overall, it means there is a huge opportunity for hostels. The sector has responded to the changing profile of its guest. We millennials are more demanding than ever. We want hotel comforts, hostel prices all with a bubbling social atmosphere. Now, 9 out of 10 hostels have private rooms as they search to offer the perfect balance of amenities and social activities. Hostels have sharpened their focus based on what their guests are looking for; Low cost, convenient location, overall value for money & the opportunity to meet other travellers.

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OTAs are having a field day at the expense of Hostels

It is a controversial sub-heading because Online Travel Agencies (OTAs) are also the hand that feeds hostels. Let me explain what I’m on about here. Prior to the world of online booking, travellers booked directly through the hostel not only for their room, but also for the majority of sightseeing tours and activities. This allowed hostels to reap valuable commission. In 2016, travellers spent US$40 Billion in Europe alone on tours and activities and over US$10 Billion on Car Rental. The sheer market size has meant that there has been enough to go around. However, every year hostels are seeing less and less travellers go through them to book tours, activities and car rentals. The reduction in non-bed revenue means that hostels are focusing on increasing alternate revenue streams by promoting in-house food & beverage sales. Further, chain hostels are aiming to retain guests as they traverse Europe by offering loyalty programs.

Changes in hostel marketing 

Facebook and Twitter have become the new “word of mouth” for travellers so there has been a strong emphasis on hostels to maintain a strong social media presence by being responsive and posting interesting content. It is a mistake for hostels to market solely to the “cheap” backpacker. Millennial travellers are not “cheap” they just demand value for money and are happy to pay for quality if they can see the value. Ski resorts are leading the way in allotting resources to digital marketing with Vail Resorts spending 80% of its marketing budget on digital production and social media.

Next time…

Our next market-focus blog will discuss how hostels can capture the attention of guests who are staying at the hostel to become the driver of the guest’s travel experience. We will highlight how hostels that offer valuable add-ons, extra personalisation, and generous customer care will stand out from the crowd.

Tenderfoot is a platform that allows hostels to attract more guests to book through them directly. It also allows guests to discover everything that a hostel has to offer. We know that hostels can make the most of the experience-thirsty traveller and we allow them to do it in the digital space (where millennials live). If you’re interested in what we’re up to please send me an email at charles@tenderfoot.com.

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Sources:

  1. hostelwordgroup.com
  2. expedia.com
  3. news.wtm.com

 

Charles
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Charles

Co-founder at Tenderfoot
Charles
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