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In Australian backpacker hostels, quality is still an extra amenity

March 6th, 2018 | | Accommodation

In his recent opinion piece “Why backpacker hostels had to change to suit millennials” Ben Groundwater argues that bad hostels had to change. He suggests that in the internet age bad hostels will be exposed instantly and new customers will flee. This is an overly simplistic view of the hostel industry in Australia in 2018. The range is still wide enough in larger cities and other busy places that there remain plenty of the ratty and dirty hostels with half-arsed kitchens and one powerpoint for a dorm room full of people. But let’s explore why these places continue to survive, despite the fact that they are anything but Instagram-worthy.

Workers prepared to sacrifice comfort

Were it not for the working holiday maker programme, there might not be demand to support Sydney’s rattier hostels. After all, Australia is considered a premium holiday destination, and there are likely fewer holiday makers willing to spend thousands on airfares only to skimp on accommodation. Many of the guests at Sydney’s cheapest hostels are working or looking for work, and need to save every dollar they can, even if it means subjecting themselves to run-down lodging its something they are prepared to take on. Of course taking in long term tenants also has its own trials.

Sydney’s wide range

Australia’s backpacking capital – Sydney, runs the the full gamut of hostes types from top rated hostels with an average rating of 9.4/10 on Hostelworld, to less salubrious ones with an average rating of 4.5/10. This tremendous range is because of the high level of demand in Sydney. With so many backpackers in town there is demand for a bed in an eight bed dorm to be $45 per night while, also demand for a bed in another eight bed dorm down the road for only $20. (Edit. Life gets tougher for the latter in Autumn and Winter when supply outstrips demand.)

Port Macquarie’s narrower market

However, in smaller towns Groundwater’s idea that hostels can’t get away with bad conditions rings true. Take Port Macquarie, NSW for example. “Port” is a popular spot to stop for a night or two on the way to the backpacker mecca of Byron Bay. In the small town of Port Macquarie there are three hostels competing for these stopover guests. With high bed supply and a much smaller demand pool, these hostels must offer a top quality product, or risk that guests will flock to the other two operators in town. As a result, the quality in Port Macquarie is top notch, with average Hostelworld ratings ranging only 0.3 between 8.8/10 to 9.1/10.  In towns with more beds than backpackers, you can expect competition to push up the quality.

What this means for your hostel

For the remaining lower price point operators, look at the money that is left on the table when rock-bottom quality forces you to offer rock-bottom prices. Yes, it costs money to increase quality, but as leading hostels illustrate, with increased rates more than offsetting higher costs a smart, quality hostel will be far more profitable than a low-cost, low-quality one. To Australia’s leading backpacker hostel operators, keep up the good work! As Ben Groundwater’s article explains, the higher quality makes more demographics besides the young European crowd feel welcome, with older guests and people from all over the world making themselves at home in hostels. This embodies the true spirit of hostelling, which was always about interacting with different kinds of people. If higher quality helps get us there, then all the better!