The hostel industry is celebrating its centennial this year, and unlike some other industry segments that have come and gone since the first hostel was opened in Burg Altena, Germany in 1909 (does anyone remember the days when people crossed the Atlantic on ocean liners and not airplanes?), not only have hostels managed to survive, they are thriving as a result of changing and adapting to their customer’s needs.  And while the global hostel accommodation market is a small niche relative to other travel industry segments, it doesn’t detract from the fact that selling hostel accommodations represent a good play for some travel affiliates.

Estimates for the annual global sales of the hostel industry are few and they vary; we’ve seen statistics pegging sales somewhere between $2 billion to $3.0 billion, and accounting for some 45-50 million overnight stays worldwide.  Whatever the true numbers may be, one thing that seems bankable is that the industry has significantly broadened beyond the traditional model of being the exclusive domain of the young backpacker, and that this demographic change is driving huge volumes of travelers into hostels, the global recession notwithstanding.

This demographic shift is obvious when looking at the membership profiles of the U.S. branch of the Hostelling International (HI), the hostel industry’s global trade association as well as one of its major reservations processors. According to HI, 40% of their 46,000 members are 20-25 years old, 20% are 26-34 years old, and 10% are seniors age 55 and older.

In an April 19th, 2009 article published in the New York Times (NYT) about the changing face of the hostel industry in Europe, one of the owners of the Circus hostel in Berlin, Germany, Tim Hierath, noted the changes he’s seen in his customers over the last decade: “Beyond the classic student backpackers,” said Hierath, “we get young urban professionals on a city break, families vacationing, business travelers and even older tourists.”

Despite last year’s recession, Hostelling International experienced a 14% increase in bookings in 2008, processing more than 1.4 million online reservations on its website.  Regrettably, Hostelling International doesn’t work with travel affiliates. However, HostelWorld.com and HostelBookers.com, two of the next largest hostel reservations services do, and in fact, both stake much of their success to their travel affiliate programs.

Based in Dublin, Ireland, HostelWorld.com offers online reservation services to consumers form inventory sourced from more than 20,000 hostels, B&Bs and guesthouses spread across some 168 countries around the world.  All reservations are made in a secure, real-time environment and are guaranteed at the time of booking.  Travelers have the option to book using 16 languages, and they also offer an Online Group Bookings feature which can accommodate groups of up to 20 people.

Additionally, HostelWorld.com features traveler reviews on many of the hostels and other accommodations providers that they sell (currently their database stores more than 2 million user reviews), as well as travel videos, free podcasts, customized city guides, booking capabilities for 1,500 local tour and activities, and ‘My World’, their internal travel social network which recently recorded their one millionth member.

In addition to its website, Hostelworld.com provides a property management system, appropriately named Backpack, free of charge to hostels.  Backpack enables hostels to better manage their inventory, as well as provides a direct link back to HostelWorld which then enables them to access the hostel’s inventory in real time.

Just as importantly, HostelWorld.com boasts that through its affiliate program, the Company enjoys relationships with over 3,000 distribution partners.  By signing-up with HostelWorld’s travel affiliate program, affiliates (and their customers) in turn benefit from getting seamless access to the hundreds of hostels that use the Backpack PMS.

Separately, HostelWorld has a travel supplier partner program, which includes content sharing agreements with major players Lonely Planet.com, TripAdvisor.com, easyJet.com, Ryanair.com, and AirAsia.com, among others.

Currently, HostelWorld’s affiliate program pays travel affiliates a base commission of $3.00 USD for each of the first 149 hostel/hotel/accommodation booked online by the travel affiliate’s customer in a given month.

Incentives kick in after the monthly threshold has been met: at the 150th booking through to 299, the per-booking commission increases to $3.51 USD per action; between 300 -899 bookings, it jumps to $3.99 USD per action, and for bookings over 900, travel affiliates can earn $4.80 USD per action.

For more information about HostelWorld’s travel affiliate program, visit their affiliate FAQ page, or sign-up through Commission Junction, their preferred affiliate network provider.

The second major online player in the hostel aggregation / portal industry, HostelBookers.com, is also a big supporter of the affiliate marketing channel. Since its launch in 2003, this London, UK based online player has grown exponentially, and today represents some 10,000 youth hostels and budget accommodation properties in more than 2,500 locations worldwide.

They also offer several unique value propositions to the traveler – they believe that their accommodation prices are so competitive, that they back up their claim with a lowest price guarantee, and, unlike most of their competitors, they do not charge a booking fee.

HostelBookers’ value-add on the travel affiliate side is quite attractive as well.  Offering a tiered commission structure with a 30 day cookie window, HostelBookers boasts that it not only offers the highest commission rates in the hostel travel affiliate industry (3%-5%), but that its technology is second to none.

According to their affiliate FAQ page, HostelBookers’ technology offers:

  • Seamless technical integration, easy, quick and free – essentially all of the tools travel affiliates need undertake a bespoke design to suit their website – all at no cost to the affiliate
  • A wide range of text links, banners, product feeds and booking engines to enhance the travel affiliate’s site, increase their conversion rates and boost their revenue
  • Reporting that’s available at any time in the travel affiliate’s back office area, enabling the travel affiliate to check on program performance, including sales & commission

If you are interested in learning more about HostelBookers’ affiliate program, check-out their travel affiliate information page, or alternatively visit AffiliateFuture or TradeDoubler, HostelBookers’ preferred affiliate networks.

TravelDividends believes that niches represent great opportunities for travel affiliates, and that in those cases where there are few affiliates ‘playing in the game’, the opportunity increases as the niche gets smaller.  We think that the hostel accommodation segment is such a niche.

Additionally, in unsettled economic times like today, where travelers around the world are looking for low price and value when shopping for accommodations, hostels represent a viable alternative that is often overlooked by the traveler (and the travel affiliate).  We think that for some travel affiliates, working with online hostel aggregators and portals like HostelBookers and HostelWorld can result in profitable and sustainable revenue stream.

Do you agree with our conclusions and recommendations?  Are there other travel niches that you have had success with? TravelDividends is interested in hearing from our readers and learning about their experiences…as always, you can contact us by email. Thanks!

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