Ferdi van ‘t Wout, a manager for a global electronics manufacturer in the Netherlands, frequently stays in hostels when traveling for work, an option he discovered last year by accident.
“I unexpectedly needed to be in Copenhagen to meet with some colleagues,” he said. “Due to the short notice and some big event happening, it was simply impossible to find a hotel in the city center that was anywhere close to being considered affordable.” So he made a reservation for a private room with a bath at the hostel Generator Copenhagen.
The service, design and public areas for quietly working and relaxing impressed him, so he has returned several times and stayed at a sister property in Hamburg, Germany. Hostels are “good for young businesspeople like me who are ready to plug in anywhere but don’t want to spend all evening alone in the bedroom,” Mr. van ‘t Wout, 30, said.
Hostels, long associated with lone backpackers and groups of students, have recently attracted older adults, families and, now, even business travelers, especially those in their 20s and 30s on tight budgets who are staying at upscale, design-oriented hostels.
Josh Wyatt, a partner at Patron Capital, the private equity firm based in London that owns Generator Hostels, said traffic had been brisk among young business travelers at its hostel in Copenhagen and seven other European properties. At some, nearly 20 percent of the guests during the week are business travelers, especially in off-peak seasons. He attributed that to upgrades in service, accommodations, design and food and beverages, areas where hostels have not traditionally excelled.
Many Generator Hostel guests are starting in their careers and traveling for work but do not have large expense accounts. In 10 years, they might stay at stylish boutique hotels like W and the Standard, but for now they choose upscale hostels rather than budget hotels. Mr. Wyatt said they were drawn by “a great night sleep, a great shower and free Wi-Fi, all in a hip, relaxed setting. If you have to travel and are on a budget, you still want to have fun and want something cool.”
He said a bed in a dorm room at Generator Copenhagen could cost about 20 percent of the price of a room at a typical midrange business hotel nearby and at Generator Barcelona about 10 percent of that midrange hotel price. And private rooms at Generator hostels in those cities can cost as little as half the price of comparable rooms at a three-star hotel, he said.
The company is beginning to market to start-up firms and entry- and junior-level employees. It uses booking sources not typically associated with hostels that compete with budget hotels, listing its properties on global distribution systems used by online booking Web sites.
The hostel industry has grown in recent years because more people are traveling and because of the global economic downturn that pinched travelers’ budgets, according to Stay Wyse, a nonprofit trade association that tracks and researches accommodation trends among young travelers globally.
The hostels, which have been consistently profitable over the years, are also evolving as they move away from the traditional, rustic concept to high design, with enhanced facilities and services, a trend that started around 2004.
An estimated 10 percent of hostel guests are business travelers, a figure that has grown about 1 percent each year since 2009, in part because “the product has significantly increased in quality,” said Laura Daly, association manager for Stay Wyse. “With the investment in facilities, we predict this will grow at a steeper rate year on year.”
Bjorn Hanson, divisional dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University, said he was not aware of data that tracked business travel stays at hostels, but he said it might be more common outside the United States. He attributed that to several factors: traditional lodging brands offer more budget choices of consistent quality in the United States. And in Europe, where low-cost brands are not as prevalent, hostels “may fill that void,” he said. He also cited “wider acceptance to nontraditional lodging formats.”
Giovanna Gentile, senior public relations executive for HostelBookers.com, a Web site based in London for budget accommodations internationally, said many hostels now offered amenities traditionally associated with hotels: private rooms with bathrooms, swimming pools, conference rooms and gyms.
She said hostels offered many amenities that hotels typically did not provide: entertainment rooms with big-screen television sets, surround-sound cinemas, game rooms, pool tables and self-catering kitchens that “encourage travelers to cook their own food and avoid spending a fortune in restaurants.” Hostels also organize social activities, like movie nights, city tours and other outings.
Driven largely by competition, hostel owners “had to find a way to stand out,” Ms. Gentile said.
The fusion hotel in Prague, for example, is both a hotel and a hostel offering standard private rooms and traditional shared dorm rooms, as well as nontraditional meeting spaces, like the rotating bar and lounge and the playroom, which features colorful, oversize folding sofas attached to the wall. Guests can network or play video games during informal meetings. The idea for the hybrid property was born after the economic crisis. “We have a product to sell to anyone, at anytime,” said Nah-Dja Tien, fusion’s general manager. “We can give business travelers an alternative pricewise, and also an alternative experience” for doing business.
Giuseppe Gentileschi, chief executive of Incoming Talents, a modeling agency and fashion production house with headquarters in Prague, often stays and books employees, clients and models at fusion and other hostels. The trend is for clean, well-managed hostels that offer atmosphere, comfort and upscale design but are not pretentious without spending “huge” amounts of money, he said. “At the beginning, I didn’t even realize that fusion was a hostel.”
David Orr, founder of Hostelz.com, a hostel booking and review site, said: “The key to staying in a hostel as a business traveler is to pick the right hostel. I think in some hostels, business travelers feel out of place,” as he said he discovered on a business trip to Spain when he stayed at a hostel “where guests are known to party all night long.” But over all, the competitive market has driven up standards, he said. “They can’t get away with being grungy,” he said. “In some cities, hostels are nicer than hotels.”