New Generation Hostels Offer Budget-friendly Luxury Travel

Last Year, 227 NextSeed investors funded The Native, a boutique hostel in Austin that officially opened its doors six months ago. Read on for a look at the new lodging trend that’s shaking up the hospitality world.  

Sharing is caring, but sharing is also practical. Every day in 2017, people around the world share car rides, work spaces, even their homes. So it should come as no surprise that the hostel industry has both received a makeover, and an increase in popularity. Room sharing is now a lot more glamorous than it was in your college days. 

Boutique, high-class hostels have been popping up around the world for the past several years, with designs ranging from extravagantly urban chic to Art Deco masterpieces. The setup of multiple bunks in one room is traditionally most popular in Europe, but after initially being slow to hop on the trend, the number is slowly growing in the USA. There were some 360 hostels in the States as of last year, and increasingly those of the hip boutique variety.  

The hostel industry is united by its economically-priced accommodation, but the main differentiator between the standard and increasingly common upscale kinds is the attention to detail on the inside. Rooms are being thoughtfully decorated with an eye for both the urban aesthetic as well as the practical. They’re a far cry from the backpack-strewn sparse boxes stacked with bunk beds that your mind probably conjures when you hear the word “hostel.”  

The Native has quickly become a neighborhood hub for those who live and work in East Austin, furthering its appeal for travelers looking to experience local culture. Image courtesy of The Native, photo by Charles Reagan.

In 2017, a low price point is no longer an excuse for a lack of good design or user experience in any industry. Hospitality is no exception, as evidenced by the explosive rise of fast-casual dining. For instance, beds at one of the most prominent upscale hostel chains in the USA, Freehand — which has locations in Miami, Chicago, Los Angeles, and New York — start at $35 a night. But the affordably-priced rooms are designed by New York interior design firm, Roman & Williams — winner of the Cooper Hewitt National Design Award, and known for its work with Stumptown Coffee, NYC’s Lafayette, and Ace Hotel. 

The rooms also vary in configuration, another hallmark of the boutique hostel trend. There are private suites with king or quad beds, in addition to the typical bunk bed extravaganzas sleeping 8 in a room. En-suite bathrooms, air conditioning, and complimentary bedding and towels are all standard. 

Boutique hostels, or “poshtels” may increasingly feature private rooms in addition to the typical dorms, but sociability is still a big part, and selling point, of the experience. Hostels feature far more shared spaces than regular hotels, like communal dining tables, media centers, and often host group outings or happy hours at on-site bars. Many boast their own third wave coffee shops, and restaurants that even the snobbiest foodies would be proud to eat in.  

Common spaces at the Freehand Miami include a charming and well appointed pool deck. Image courtesy of  Freehand Miami, photo by Adrian Gaut.

If this is all sounding a bit like it’s geared toward younger people, there’s a reason. According to a report by Hostelworld, millennials make up 70% of the global hostel-goer market. As younger Americans start to travel more and live with roommates longer, shared sleeping accommodation suddenly doesn’t seem foreign, as much as a natural way to save pennies on the road. Poshtels are understandably then most often found in the trendiest neighborhoods in town, making location another appealing feature to travelers looking for the best bang for their limited buck. 

Numerous studies have shown that the experiential aspect to purchases is one of the most important things to the young, trendy, traveling demographic. Not only does it allow people to feel like they’re getting more for their money, the happiness associated with a memorable experience lasts a lot longer than that bought with a material thing.  

Staying in a hostel that provides so much in the way of activities, stunning design, and opportunities to meet other like-minded people is a way to add to the experience and memories created in a trip, rather than just offering a blank, cookie cutter room to sleep in. People are also more likely to share a memorable experience with several hundred of their closest social media friends, meaning some easy word-of-mouth marketing for a company. 

It might be easy to dismiss the appeal of hip hostels as passing fads, unable to see the mass appeal of bunking with snoring strangers. But the model has clearly proved sustainably popular in Europe, and the diversifying hostel market in the U.S. is only growing as the cultural norms evolve. 

Luxury travel on a budget sounds like a pretty easy sell.

At The Native, bunk beds have their own privacy curtains, lighting, electrical outlets and ultra-soft sheets. Image courtesy of The Native, photo by Charles Reagan.

This blog article is provided for general informational purposes only, and not a promotion of NextSeed US LLC, any offering on NextSeed or any specific business. Prospective investors should NOT rely on information provided herein as investment advice in any way. Past performance of one business is not a guarantee of future results of another business, and should not be relied upon or interpreted to be a prediction of performance of investments offered through NextSeed US LLC. In making any investment decision, investors should rely on their own examination of each issuer and the terms of each offering, including the merits and risks involved.