Backpacker hostels could struggle to survive, says GlobalData

Backpacker hostels currently have their backs against the wall due to the impacts of COVID-19 on international and domestic travel. Due to these unexpected changes, hostels will struggle to survive. They need to proactively diversify their revenue streams, as well as play to their strengths and surroundings – for example, if a hostel is near a beach, the renting of beach equipment and surf boards could be made available. Simply relying on demand to reappear is a risky game to play, says GlobalData, a leading data and analytics company.

Ralph Hollister, Travel & Tourism Analyst at GlobalData, comments: “Shared dormitories create questions around sanitation and hygiene, which have now become increasingly important for travelers of all ages. According to GlobalData’s global consumer survey, 43% of 18 to 24 year olds are ‘extremely concerned’ about the COVID-19 outbreak and this figure increases to 48% for 25 to 34 year olds. As these two age brackets are key demographics for hostels, it will be crucial for these businesses to instill confidence as domestic travel restarts – applying for safety accreditation schemes may be on the agenda.”

Due to the traditional business model of backpacker hostels, they have a heavy reliance on 18 to 30 year olds and this lack of diversification in average customer base will increase the length of recovery post-COVID-19.

Hollister continues: “The location of many hostels will provide another disadvantage, many are based in city centers, especially in Europe. It has been well documented that drive-to travel destinations in more rural areas will rebound before markets that depend more on-air travel such as urban/city areas.”

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