Budget Rooms and ‘Cheap Sleep’ – the Emerging Trend of Generation Y Travelers

The trend to low-cost accommodation is being driven by diverse factors, including budget flights and technological change such as the internet and social media, Maria Teresa Agostini, consultant with Milan-based PKF Consulting, told the forum. Young people in particular – the so called ’Generation Y’ – are taking advantage of this trend.

Different kinds of low-cost accommodation have emerged in recent years. Budget hotel chains are expanding rapidly, hostels are improving and diverse private accommodation forms have sprung up, Agostini explained.

The ’free hospitality’ network Couch surfing, for example, enables travellers to stay as a guest at a host’s home on a hospitality exchange basis. So far it has 6m registered members, with an average ’guest’ age of 28 years. New forms of cheap rental of private accommodation have also emerged. The best-known, Airbnb, has had 10 million bookings to date while there are diverse other platforms in this sector as well, she said.

Meanwhile, hostels are transforming their image by improving their offer, for example with smaller dormitories, more professional management and better facilities, Agostini emphasised. As a result, they are now attracting a wider range of guests rather than just groups and young people. But their rates remain low, with an average room rate of € 59 and a bed rate of just € 17. Diverse new hostel chains have emerged in Europe and are growing fast, such as A&O, Generator, Meininger and Wombats.

This trend was underlined by David Chapman, Director General of the World Youth, Student and Educational Travel Confederation (WYSE). Hostels are moving away from their image as cheap mass accommodation and are diversifying their markets, to target young travellers such as ’flashpackers’ and business users, he explained. ”Hostels today have better facilities, social spaces and more free Wi-Fi. In fact, the difference between a hostel and a hotel is simply the ’s’ – which stands for the ’social’ aspect,” Chapman declared.

Will ’low-cost beds’ be the next big trend in the travel and tourism industry after the rise of ’low-cost flights’ over the last decade? And when will hotels rediscover ’guests’ and become ’hosts’ once again? Those were two of the hospitality ’hot topics’ discussed at this year’s World Travel Monitor forum in Pisa.

The international hospitality market is increasingly splitting into a ’top end’ and ’bottom end’, according to several speakers. Over the last four years, the total number of international overnight stays has increased by 16% to 7.5 billion nights, according to the World Travel Monitor from IPK International. However, there have been clear winners and losers in the battle for these 200 million additional overnight stays. Over the last four years, private and alternative accommodation has grown by 31% and budget accommodation by 15% while luxury is up 19% but mid-market accommodation has grown only 8%, IPK president Rolf Freitag told the Pisa forum.