Major brands now control 72% of U.S. hotels. OTAs capture over 74% of hostel bookings. And the pressures—from post-pandemic recovery to labor shortages to operational costs—continue to mount. The hostel industry underwent significant transformations in 2025, driven by changing traveler behavior, economic shifts, and technological advancements. Cloudbeds, the premier hospitality management software platform, has released the second edition of its annual State of Hostels report.

This report highlights the most critical trends shaping the hostel market and what operators need to know to stay competitive.

The State of Hostels report offers a snapshot of travel patterns that operators can expect this year, along with strategies to optimize performance in a challenging and unpredictable market. The findings are grounded in data from 2,300 hostels across 62 countries worldwide, covering nearly 11 million bookings between 2022 and 2024.

Stephan Leuenberger, Head of Market Development, Hostels, at Cloudbeds, said:

“In today’s evolving travel market, hostels are seizing opportunities to work smarter and deliver exceptional value to guests. Despite leaner teams and budget-conscious travelers, the industry is meeting challenges head-on with creativity, agility, and efficiency. We’re committed to empowering this vital lodging segment with the data, insights, and tools they need to capture market share and thrive in 2025.”

Key findings from the 2025 report include:

• Dorms saw year-over-year occupancy growth in 2024, while private rooms dropped. This could indicate travelers’ increased confidence in sharing spaces.
• Global average daily rates (ADR) for dorms declined by 1.7%, while private room ADR declined by 4%—reflecting softening demand and increased price sensitivity.
• Online travel agencies (OTAs) captured 74% of hostel bookings globally—a 1% increase compared to 2023.
• Longer stays were more popular with dorm bookings, with 14+ night stays making up 11% of all dorm reservations, compared to just 4% of private room bookings.
• Weekends remained the main hub of activity, with 35% of reservations starting on Friday or Saturday and 20% checking out on Sunday.
• OTA bookings had the highest cancellation rate at 19%, followed by wholesale bookings at 14%.

1. Changing Traveler Booking Behavior

• Occupancy Rates & Pace: While hostel occupancy remains strong, patterns have shifted. Demand is increasingly seasonal, with peak periods seeing higher-than-average occupancy rates.
• Booking Windows: Last-minute bookings continue to rise, with a noticeable increase in reservations made within a week of travel.
• Length of Stay: The average stay has extended slightly as travelers seek longer, experience-driven trips.
• Cancellation Rates: Hostels report higher cancellation rates, with more travelers taking advantage of flexible policies.

2. The Impact of AI on Hostels

Artificial intelligence is revolutionizing hostel operations, from customer service chatbots to AI-driven pricing and marketing strategies. Smart recommendations and automated workflows enhance efficiency while improving the guest experience.

3. The Hospitality Talent Crunch

Labor shortages continue to challenge hostel operators. Many are investing in automation and AI to compensate for staffing gaps, while also rethinking employee incentives to attract and retain workers.

4. Revenue & Pricing Strategies

• The Revenue Renaissance: Hostels are optimizing pricing strategies with dynamic pricing models to maximize revenue.
• Booking Sources: Direct bookings are gaining traction as hostels improve their websites and loyalty programs, reducing reliance on third-party platforms.

5. Value-Driven Travel Takes Center Stage

Modern travelers are prioritizing affordability and authentic experiences. Budget-conscious travelers seek accommodations that offer value without compromising on community and comfort.

6. Rising Operational Costs & Financial Pressure

Hostels face increasing operational expenses, from utility bills to wages. Many are adjusting by optimizing space utilization, diversifying revenue streams, and implementing sustainable practices to cut costs.

Final Thoughts

2025 will be a year of optimization for hostels. Operators must leverage technology, rethink pricing models, and enhance guest experiences to maintain profitability and competitiveness in an evolving market.

Understanding these trends will be crucial for hostel owners to adapt and thrive in the years ahead.