Why Once Budget-Friendly European Hostels Are Now So Pricey

Hostels used to be a way for budget travelers, broke college students, and solo travelers to see the world without breaking the bank but over the past several years, prices have been skyrocketing. The once-affordable option allowed travelers to sleep in dorm-room style accommodations, or in bunks alongside other travelers for a fraction of the cost of Airbnb rentals or hotel rooms. Europe is home to some of the world's best hostels, but now the line between hostels and boutique hotels is blurring, and even the most bare-bone hostel bunks are becoming too expensive for some travelers.

If you're used to traveling around for weeks on end and staying in cheap hostel accommodations, the price rises can come as quite a shock. Those of us who work as digital nomads are constantly browsing booking websites like Hostelworld in search of the low rates we enjoyed five years ago when booking cool European hostels for our backpacking adventures. Lately, finding a good price is like searching for a needle in a haystack and we're left wondering what in the world happened to the hostel industry in Europe, and whether our hopes of rate decreases are all in vain. Unfortunately, the combination of demand increase and corporatization of hostels may mean the high prices are here to stay.

The popularity of solo-travel, overtourism, inflation, and the pandemic

Some of the rate increases we're seeing come down to good old-fashioned economics. Supply and demand always impact prices, even when it comes to the travel industry. If you're a frequent traveler, you're likely familiar with how the cost of airfare and hotels skyrocket during peak travel times like the summer and holidays. As demand increases, eventually surpassing supply, expect price hikes.

Solo travel has become increasingly popular over the last several years, and hostels have long been an ideal accommodation choice for anyone looking to make friends while traveling solo abroad. Pinterest searches for "solo traveling" have increased by 145% already in 2024. According to a global travel survey of 27,000 travelers by Booking.com, 59% hoped to travel alone this year. Many of Europe's top travel destinations already suffer from overtourism, and the increased demand for accommodations drives price increases. European travel is predicted to increase even more in 2024.

Combine that demand increase with global inflation, along with the fact that many hostels are still recovering from the lost income from the pandemic, and you've got the perfect recipe for insane hostel rate hikes. Hostels suffered a lot during the pandemic due to the shared accommodation style, and many had to close their doors for good. The International Monetary Fund has predicted that global inflation will begin to drop slowly and steadily over the next year, but it will happen slowly and it may be awhile before we see any price decreases.

Privately owned hostels have to increase rates to compete with large hostel chains

Nomadic Matt, a budget travel expert and bestselling author of "How to Travel the World on $50 a Day" has certainly noticed the price increases. In 2023, he posted on X (formerly Twitter) in regards to the insane price hikes.

"Hostel prices are nuts," he wrote. "I'm seeing dorms in Rome for $80 per night (and privates for $300) London? $60 a night. Prices get higher into the summer too. I don't see how this is sustainable. You're pricing out your core audience. People just won't go. Backpackers can't absorb this." He went on to explain that financial recovery from the recent COVID-19 pandemic and inflation do play a role, but the major problem is the corporatization of the hostel industry.

"Hostels used to be a mom and pop operation. You owned one or two. But since the mid-2000s, there's been the huge growth of corporate hostel chains. Selina, Generator, Nomads, St. Christophers, Meingher... the list goes on" he wrote on X. The small-scale hostels that haven't sold out to larger brands have to increase prices to keep up with the big chains, or risk going out of business. It might still be possible to find budget-friendly unique hostels in Europe if you travel off-the-beaten-path, but according to travel and tourism experts, the days of booking cheap hostel bunks in popular tourist cities are likely long gone.