hi new orleans

What Hostelling International’s newest property says about the changing hostel market

Everyone in the hostel industry should be familiar with Hostelling International. The worldwide organization has been around for more than 100 years and operates in eighty countries. As an old-school non-profit organization, HI is not known for being edgy and splashy. However, don’t write off HI as being a hostel industry dinosaur. Here in the United States HIUSA is building a new hostel in New Orleans. Although they probably won’t invite DJ Khaled to the opening party,  their newest property will definitely be different from other HI properties. The upgrades at the latest HI echo changes within the hostel market as a whole. Here’s what HI is up to in the Mardi Gras city and why we should all notice what it says about our industry.

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Introducing HIUSA New Orleans

4-bed dorm HIUSA New Orlenas

The HI in New Orleans will offer all the new amenities that hostel travellers are coming to expect: Sturdy, built-in beds, charging outlets, reading lights, and privacy curtains in the dorms, private rooms with ensuite bathrooms, but the big first for HIUSA is that their New Orleans hostel will include a full service bar. The addition of the bar certainly doesn't mean the property will be a party hostel. We can still expect it to be popular with school groups and elderly hostelers like other HI properties tend to be, but maybe with a bar on-site and a location that faces the Mardi Gras parades, there will be some more partying Australians blended into the mix? This is a big shift for HIUSA. Before New Orleans, their most recent hostel in Richmond, Virginia is a dry hostel. So what do these changes, both the added room amenities and the new bar, say about the overall change in the industry?

The changing hostel market

There once was a time when the accommodation market was clearly delineated. We had hotels, motels, bed and breakfasts, and hostels. There wasn’t much overlap. Each one had a distinct product, a distinct experience, and a distinct customer. Today, things are changing. Hostels are going upscale. They’re offering more private rooms and adding more amenities. At the same time, hotels are going downmarket. Big companies like Hilton and Accor are starting to see the money to be made in the hostel market and they’ve got new brands like Accor’s Jo & Joe, a hostel experience with shared accommodation, and Hilton’s Motto, a watered-down version, all private rooms, but smaller and with bunk beds. The product is changing as the customer is changing. 

“The demand for the hostel product continues to change: in the early years, classic backpackers filled most of our establishments meanwhile today, A&O welcomes a lot of families, couples and more and more business guests stay with us."

phillip winter

Phillip Winter

Chief Marketing Officer, A&O Hostels

The importance of HI improving

american youth hostels

Check out the HI in New Orleans and you’ll see that they are shifting, just as the industry shifts. This is a big deal. HIUSA's stakeholders are a non-profit board of directors, not a demanding group of private equity investors who want the value to get pumped up as high and as fast as possible. Generator likes having bars because they're good for profits.

You’re charging 4-star rates and you’re offering a 2-star service, which is what makes it so profitable. This is what it’s all about. The more you’re perceived and you’re offering these amazing public spaces, and destination bars, and destination restaurant has huge halo effect on your bed rates, and your room rates, and it gets even better.”

Alistair Thomann

Alistair Thomann

CEO, Generator Hostels

One could easily imagine that without an emphasis on maximizing profits, an alternate scenario could have emerged where HIUSA never considered opening bars in hostels. As a charitable organization, the idea of opening a bar could easily ruffle some feathers. Travel industry news website Skift asked about the hostel industry,  “Is a sector that was built on charitable goodwill in danger of losing its soul?” Adding the bar and other amenities that push up rates could easily be interpreted as HI "losing its soul" when you look at its humble origins. In reality, HIUSA is keeping its soul. The changes on display at HI New Orleans are just the organization responding to the changing demands of hostel travelers..

 While it feels like as a nonprofit we move like a dinosaur, the reality is that we have made a lot of great changes over the past 5 years and are adapting to the changing hostel landscape, and I hope in the future, truly leading when it comes to promoting positive social impact.

mike foyder

Mike Foyder

GM, HI New Orleans

HIUSA is definitely a leader in hostels creating a social impact. Their Explore the World scholarship program is a need-based, $2,000 scholarship for educational or service related travel abroad. It's offered every year in 13 HIUSA locations, including New Orleans.

The hostel industry at large should embrace Hostelling International's work to keep in touch with what modern hostel travelers want. Because of the organization's age, size, and geographic reach, they have an enormous influence on travelers' perceptions of hostels. Unlike Generator, they’ll never run away from the word “hostel.” Unlike Hilton, they’ll never feel uncomfortable with what hostelling stands for. Hostelling International will always be a central part of the hostel industry. As today’s hostel industry shifts and more properties offer more upscale amenities and food and beverage options onsite, it's exciting that HIUSA, an old, established non-profit with a history of running dry hostels, is responding quickly. Cheers, and I'll see you at Mardi Gras!

Questions to consider

Your hostel doesn't need to have a bar to keep up with the evolution of the hostel industry. Here are some questions for you to consider:

  1. The lines between different segments of the accommodation market are blurring. Does your hostel reflect those changes?
  2. The hostel market's target customer is broadening. We’re not just for backpackers anymore. Are your customers changing too? Why or why not?
  3. Industry-wide, guests have higher expectations and the standard of quality is increasing. How can you continue to improve your hostel?

About the Author Byron Bunda

Byron has worked with hostels big and small, city and rural. His first job was as a receptionist in San Francisco and his favorite was leading the events for a 500-bed hostel in Sydney. Besides all things hostel related, he enjoys motorcycle riding, especially because it's the perfect way to get from hostel to hostel!

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