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A Guide to Hostel Booking Sites

Dennis Pitcock
Written by Dennis Pitcock

Booking-Travel

The hostel booking site, more commonly known as an OTA (online travel agent) has seen some growth and consolidation over the past few years, and even more is expected. Here is a breakdown of the key players in the industry and what they are up to, including how it can affect your hostel.

Dublin based Web Reservations International is the major player in the market, holding the top brands such as Hostelworld, Hostelbookers, and Hostels.com under the same roof. They have been around the longest and have, by far, the largest hostel-driven customer base.

There are other booking sites, quite small in comparison to WRI, such as Gomio, Hostelsclub, and Hosteltimes, but they are location specific and don’t put the bodies in the beds as we would like. Also, there are network based sites like Hostelling International, Nomads, and Famous Hostels but joining them comes with a price and other requirements. Even app only booking site like WeeHostels has some challenges breaking into the market after an initial success. Finally there are new solutions popping up left and right with HostelRocket and Open Travel Exchange getting some attention now.

The major catylist in the industry is Amseterdam based Booking.com’s fast growth into the sector. They have the power of Priceline behind them, and have been strategically taking out web ads get the traffic. This is definitely one of the major reasons WRI acquired Hostelbookers in 2012, so #1 and #2 sites can stop competing against one another and focus their web marketing in a collaborated effort to maintain their hold of the market.

Competing with Booking.com’s approximate 3 Billion in web marketing spending allowance will be quite a challenge, even considering WRI’s hold on the market. And if you think that is a tough battle, Expedia recently announced it is selling hostel beds too. Though, the beds that are sold are only few hostels in few locations in the US, it will expand. Expedia has made some major changes buy offering an agent (commission) based model, which is exactly what hostel operators want. Expedia has spent over 2 Billion in web marketing, so with these giants getting into the game, WRI will have to be crafty.

And by crafty, that they are. After their acquisition of hostelbookers, WRI raised commissions from 10 to 12%. That is a big hike, but still short of the 15% that Booking and Expedia commonly charge. You could expect it to be risen again, but with that, hostel operators should expect more than just the bookings.

The major OTAs have been successfully tweaked in the hotel industry for years. They can give some insightful reports and capabilities for operators to manage their revenues. Take the non-refundable rate for example, where operators can charge the card when the booking is made and use that revenue immediately. This opens the door for great advance purchase promotions. On top of this the larger OTAs have stronger brand presence, and customer service team, and really know how to leverage the customer.

So if this is all a game, who won? Google and the other web marketing companies of course! If WRI plays its cards right it could easy be gobbled up by Expedia, Priceline, or maybe even TripAdvisor (I’d say by 2016). The customers win because the OTAs offer some consistency in the experience and they can easily find what they are looking for. Hostelwise, the larger hostels win using the OTAs to boost their occupancy, but smaller and tight budgeted hostel operators need to be weary.

The consolidation of the online travel industry isn’t the best of news for us. Hostels operate at smaller margins than our hospitality cousins. So the difference of 2-3% can really have an impact. Hostel operators must push for direct bookings, use the networks and alternative channels such as Airbnb to survive. Remember reliance too much on any single OTA is unhealthy, and a well balance distribution will bring your occupancy up. Bookings online will continue to grow, but there will always be other ways to you’re your beds.

About the author

Dennis Pitcock

Dennis Pitcock

Dennis jumped into the hostel industry after a summer backpacking Europe in 2008. He went from being a guest to a manager within weeks, and currently does consulting for large and small hostels alike in 3 continents. Prior, he worked in eCommerce, so he has passion for the tech side of the industry and is now deeply entrenched in the hostel and activities industry.

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