The youth accommodation sector continues to navigate an increasingly challenging landscape, with economic pressures, changing travel patterns, and evolving distribution strategies affecting hostel operators worldwide. The WYSE Travel Confederation Accommodation Panel, which meets regularly to discuss industry trends, has highlighted key concerns and developments.
Here are some of the latest insights shared by the panel in their latest meeting in February 2025.
Market challenges and performance trends
Etienne Matichard, Director of Sales and Distribution at JO&JOE, provided an overview of the current business environment. While contracting and Q2 projections appear promising, the overall market remains in survival mode. Hostel bed prices have been reduced, yet high operating costs related to electricity, food, and other necessities continue to exert financial pressure. The competitive landscape is shifting as travellers increasingly opt for private hotel rooms, which, in many cases, are more affordable than hostel accommodations.
A significant challenge for the hostel sector is the lack of reliable benchmarking tools comparable to those used in the hotel industry. While organisations such as STR provide critical performance metrics for hotels, hostels lack equivalent data points such as the Market Penetration Index, Average Daily Rate (ADR) Index, and RevPAR Index. Hostel providers continue to struggle with accurate market positioning due to the absence of industry-wide key performance indicators (KPIs).
Shifts in travel patterns and regional market dynamics
Diogo Vaz Ferreira, Head of Commercial at Clink Hostels, shared observations on evolving travel patterns, particularly in the Netherlands, where there has been a decline in air travel to the area and places like Amsterdam, with travellers increasingly opting for trains and buses. This shift appears to be driven more by cost considerations than sustainability concerns.
Furthermore, many travellers are choosing long-haul destinations such as Mexico and Thailand over European cities, as the overall cost of travel remains comparable while offering a more exotic experience.
The Netherlands is also experiencing increased pressure due to an impending VAT hike on accommodation. From January 2026, VAT will rise from 9% to 21%, a significant increase that hostels cannot absorb and must instead pass on to customers. This development poses additional challenges, particularly as hostels already struggle to compete with budget hotels and lower-cost markets. Meanwhile, neighbouring countries such as Belgium, Denmark, France, and Germany are becoming more significant sources of inbound travellers.
In contrast, the Dublin market presents a unique opportunity due to the presence of language students, particularly from Brazil and Mexico. Changes to Irish visa regulations allow non-European students to work while studying, leading to an influx of students who require accommodation. However, Dublin faces an ongoing housing crisis, exacerbated by high rental costs and government-housed refugees, making hostel accommodation a viable alternative. This specific segment has provided stability for Clink Hostels in Dublin, mitigating some of the broader industry challenges.
Conclusion
The youth accommodation market faces persistent challenges, but despite these challenges, the industry remains resilient, continuously adapting to market dynamics. However, there is a need for better performance tracking, pricing intelligence, and competitive positioning tools and this remains a pressing issue.
As the sector moves forward, collaboration and innovative solutions will be essential to ensuring the long-term sustainability of the hostel industry.