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MARKET OVERVIEW

1.1 Presentation & definition

According to INSEE, a youth hostel is an establishment governed by a non-profit association. It provides users with accommodation and limited food service and/or individual cooking as well as other services, programs and activities. They are mainly intended for young people for educational and recreational purposes.

The conceptual and functional significance of youth hostels, however, has much older roots. In the Middle Ages, numerous structures were built to provide rest for pilgrims or travellers. In the 1900s, these accommodations, originally known for their hospitable character, underwent numerous transformations that brought them closer to the image they have today. The particularity of these accommodations is the sense of sharing: in general, hostels have common dormitories and common facilities.

Hostels are usually preceded by the word "youth", which reinforces the intrinsic connotation of being designed for young people, backpackers or travellers. Notable features include a common space and an affordable price. Although, since lifestyles and travel habits have changed dramatically over time, hostels have adapted to an ever-changing demand.

Globally, the market of youth hostels was estimated to grow at a CAGR (compound annual growth rate) of 6,8% between 2020 and 2023, before being heavily impacted by the Covid-19 pandemic, due to the drastic reduction of tourism and to the different lockdowns put in place by the government.

In Europe, hostels are now flourishing as alternatives to short-term rentals (e.g. Airbnb) or typical hotels, with many features such as private rooms, social events, extra facilities (e.g. swimming pool, café lounge), extravagant amenities. 

In France, the historical actors of the market are the non-profit associations that offer low-cost accommodation throughout France. However, more and more private actors have entered this promising market to create new concepts to seduce young travelers eager to meet and travel.

1.2 A growing global market

Global market turnover

The worldwide turnover of youth hostels was valued at *.** billion dollars in **** and was estimated, in a report written in June ****, to increase at a growth rate of *% between **** and ****, thus reaching the value of *.** billion dollars in ****. [***]. However, the CAGR estimated for the period ****-**** is much ...

1.3 The French market of youth hostels

According to a report published by UNAT (***), which represents *** youth hostels, the turnover of the “youth hostels sector” was **,* million euros in **** and the average turnover per establishment was *** *** euros.

Assuming that this average turnover per establishment is the same for all hostels and multiplying by the number of hostels listed ...

1.4 Impact of the Covid-19 pandemic

Hostels are a sub-category of the hotel industry, one of the sectors that has suffered the most with the Covid-** pandemic. Indeed, the various lockdowns imposed by the government as well as the closure of borders have led to a significant decrease in tourism. In addition, hotels and hostels had to ...

ANALYSIS OF THE DEMAND

2.1 The main categories of travelers

The different types of travelers can be grouped as follows:

The reasons for travellers' trips can be:

Personal reasons:

Leisure, relaxation and holidays Visiting family and friends Health (***) Pilgrimages, sports events, school trips, etc.

Professional reasons

Youth hostels are mainly aimed at travelers who fall into the first category.

2.2 Demand driven by millennials

According to a survey conducted among more than **** people in **** concerning their travels in hostels, we can draw the typical portrait of travelers in hostels: they are mostly young men. Moreober, according to a survey conducted by the FUAJ in July ****, two thirds of those who travelled to a youth hostel ...

2.3 Non-residents are increasingly involved in hostels

In a **** report, Insee explains that the growth of the AHCT segment (***) is moderate but driven by non-residents. In fact, while the total number of overnight stays only increased by *.*% compared to ****, the number of overnight stays by non-residents increased by over **%. However, residents remain the vast majority in this segment, ...

2.4 A rather cyclical demand

By analysing the frequency of Google searches in France for the terms "hostel" and "youth hostel", we can see that demand is very cyclical: it peaks between mid-July and mid-August and lows between mid-November and mid-December.

Search frequencies for the terms "hostel" and "youth hostel" France, ****-****, Google index Source: ****

NB: ...

2.5 Demand trends

Individual travel

More and more people are travelling alone. This change is visible worldwide, as traditional single-place travel is being abandoned in favour of short-term stays in several places.

Frequency of Google searches for the term "solo travel" World, ****-****, Google index Source: ****

Over the past five years, Google search interest ...

MARKET STRUCTURE

3.1 The context of tourism and the hotel industry in general

According to the DGE, France continues to attract a large number of tourists with more than ** million arrivals in ****. The government spoke of a "record" year, and this despite the impact of the "Gilets Jaunes" movement. France even tops the world rankings for the number of arrivals per country as shown ...

3.2 Hostels that were initially associative but are increasingly of interest to the private sector

Traditionally reserved for the associative sector in France, the youth hostel market is attracting more and more private French and foreign groups, attracted by a sector considered to be very profitable and still under-exploited.

Thus, more and more of these "hostels", which renew the "youth hostel" in a premium format, are ...

3.3 A fragmented market

Despite the emergence of hostel chains, they remain rather limited in importance. For example, according to The Wandering Walker, The Mad Monkey Hostel Group, which operates in Asia and Australia, has "only" ** hostels, * of which are in South East Asia. Similarly, the Vietnam Backpackers' Hostels have only * establishments in the ...

3.4 The importance of the internet in the booking process

According to a figure published by the website Tendance Hôtellerie, in **** already, two thirds of the revenue of hostels was generated by online bookings (***). This corresponds to a young clientele, who wants to be able to book from their phones.

Another source, from a BFM article citing figures from a ...

3.5 Good territorial coverage, except in Paris

According to the Yellow Pages (***) as well as the very high property prices in Paris.

Number of youth hostels according to the Yellow Pages France, ****, in number of youth hostels Source: ****

ANALYSIS OF THE OFFER

4.1 A standardized minimalist offer

By consulting the offers available on the Internet, it appears that the different offers of hostel accommodations are very similar.  They offer a bed in a shared room or dormitory, access to sanitary facilities, as well as communal areas, such as lounges and cafeterias, so that you can eat and get ...

4.2 Youth hostels focus on their price competitiveness against the traditional hotel industry

The average rates of youth hostels and hostels are much lower than the standard hotel offers.

Average price before hotels tax January ****, France, in €/night Source: ****

We can see that even the "super-eco" hotels offer a higher average price than some hostels: for example, vertigo offers a bed for ** euros, Gastama, ...

4.3 An expensive entry-level product in France

Looking in the Hostelworld catalogue, taking the price for one person in august **** in several European capitals and in several French cities we get the following table:

Source: ****

It is interesting to note that while prices are fairly close between private groups, it seems that the FUAJ (***). [***]

The chains that are ...

4.4 Between the concepts of "coliving" and "youth hostel"

For a few years now, we have been witnessing the rise of "coliving", a way of life that is somewhere between the concept of a shared apartment and a hotel residence. In fact, this concept implies the idea of sharing one's private life but also working with someone else, like in ...

REGULATION

5.1 Current regulations

Like any establishment welcoming people, hostels and youth hostels must comply with the regulations in force for safety - regarding technical installations in particular - and with hygiene rules.

As for the youth hostels :

The reception of young people handed over by the Ministry of Youth and Sports (***) The reception of ...

POSITIONING OF THE ACTORS

6.1 Segmentation

  • St Christopher’s Inns
  • Generator Hostels
  • Jo & Joe
  • France Hostels
  • Meininger
  • SLO Living Hostel
  • Cool & Bed
  • Vertigo
  • Gastama
  • Fédération Unie des Auberges de Jeunesse

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