6 trends shaping hostels
Artificial intelligence is changing the way people discover destinations and plan trips; now, it’s set to transform hostel operations. AI isn’t replacing employees – it’s acting as an intelligent assistant, automating routine tasks and empowering employees with data and insights to effectively engage guests – from answering queries to suggesting relevant upsells and offers.
Three key AI technologies stand out for their potential:
- Agentic AI. This emerging form of AI can make decisions, perform actions, and adapt autonomously. It can assist hostel staff by managing repetitive tasks such as updating rates, responding to common guest queries, and coordinating housekeeping and maintenance requests.
- Multimodal AI. By processing text, images, video, and audio simultaneously, multimodal AI enables hostels to centralize knowledge resources such as training manuals, floor plans, and room images. Staff can instantly retrieve information or generate professional materials – such as reservation responses and marketing assets – with a simple query.
- Causal AI. Unlike traditional AI, which identifies correlations, causal AI uncovers cause-and-effect relationships. This allows hostels to make more precise decisions about pricing, marketing, and operations, leading to improved forecasting and commercial strategies.
How hostels can adapt
“A successful hostel relies on five pillars,” says Cloudbeds’ CEO, Adam Harris. “The first three are timeless: attracting and keeping loyal travelers, running efficient operations, and delivering seamless experiences. The fourth pillar – data – has become critical as hostels now manage an average of 19 different software systems. But it’s the fifth pillar – intelligence – that’s transforming everything by making that data actionable. Hostels can now predict demand with unprecedented accuracy, personalize every traveler interaction, and optimize revenue in real-time while maintaining their community-focused atmosphere.”
Here are a few examples of AI-driven capabilities:
Automated reporting
Instead of manually compiling data, staff can ask an AI tool to generate reports in seconds, presenting insights in graphs or summaries as needed.
Enhanced reservation handling
AI can analyze guest inquiries, check availability, recommend upsells, and send automated follow-ups leveraging data within the PMS, freeing staff to focus on more complex requests.
More accurate forecasting
AI can analyze booking pace, historical trends, competitor rates, and market conditions to predict demand and recommend pricing strategies.
Optimized marketing campaigns
AI can define target segments, craft personalized campaigns, and even generate email or ad copy to improve conversion rates.
- The global multimodal Al market size is expected to reach $8.4 billion by 2030. (Source: KBV Research)
- 50% of travelers expect to use generative AI for leisure travel in the next 12 months. (Source: Phocuswright)
- 44% of employees spend 3-4 days per month on reporting, and 26% spend 6-8 days. (Source: HEDNA)
Learn more Hospitality marketing is undergoing a seismic shift. Travelers no longer want to dig through endless search results – they expect instant recommendations tailored to their needs. Instead of searching Google for ‘coolest hostels in Bangkok,’ they turn to influencers on TikTok and Instagram and AI travel planners like ChatGPT, Gemini, and TripGenie to be told where to stay.
The creator economy, projected to reach $480 billion by 2027, has fueled demand for authentic content from trusted voices. According to Skift, influencers are becoming the next power brokers in travel, as travelers gravitate toward trusted voices and organic recommendations on social platforms over traditional methods.
At the same time, Generative AI is redefining search behavior. Travelers are leveraging AI platforms for personalized recommendations, and are receiving hyper-personalized answers in real-time. By 2028, Gartner predicts that brands’ organic search traffic will decrease by 50% or more as consumers embrace generative AI-powered search.
For travelers, these agents go beyond suggesting hotels and hostels – they actively book them, optimizing for price, loyalty perks, and cancellation policies. For hostels, visibility in AI-driven search results is now as critical as ranking on Google – if not more.
How hostels can adapt
To remain discoverable and competitive in the era of AI-powered search and influencer-driven marketing, hostels should:
Collaborate with influencers
Travelers trust real experiences over traditional ads, making influencer partnerships essential. Hostels should identify content creators whose audience aligns with their target guests and offer exclusive stays, experiences, or behind-the-scenes access to generate authentic, high-value content.
Get creative in advertising
AI-driven advertising is transforming how hostels target and convert potential guests – so use it to your advantage! Platforms like Meta, TikTok, and Google Ads use AI to optimize ad placement and personalize content based on user behavior. Hostels can also leverage hospitality-specific tools to dynamically adjust messaging, targeting specific guest personas with tailored promotions, giving travelers exactly what they need at the right time.
Optimize for AI search
With gen-AI assistants like ChatGPT and Gemini influencing travel decisions, hostels must ensure their information is accessible to AI-driven search. This includes:
- Investing in PR and brand marketing, earning features on top travel blogs or trusted media sites.
- Claiming and optimizing third-party profiles like Google Business Profile, TripAdvisor, OTAs, and metasearch platforms.
- Responding to mentions on online forums such as Reddit and review sites.
- Reinforcing your brand’s authority and credibility by including on your website guest reviews, ratings, awards and more.
Invest in conversational AI
Consumers expect instant, personalized interactions, and AI chatbots enable hostels to do this on their own websites. Implement AI-powered chatbots to answer guest inquiries about room availability, loyalty perks, and upgrade options. You can also provide personalized booking recommendations, mirroring how AI travel planners operate.
- 80% of travelers consult social media before making travel decisions. (Source: Skift)
- The global LLM market is set to grow by 37% from 2024 to 2030. (Source: Grand View Research)
- 57% of Gen Z and Millenials prefer receiving personalized travel recommendations from AI-based systems. (Source: Skift)
Labor shortages continue to strain the industry, driving up costs and increasing turnover. While hostels have different work environments than traditional hotels, they still involve long hours, physical demands, and difficult guest interactions, all of which contribute to burnout.
Since the pandemic, hospitality workers have left the industry in record numbers, seeking higher wages, more flexibility, and better career growth opportunities. In 2024, these pressures reached a breaking point, with widespread labor unrest and strikes demanding improved compensation and working conditions. Hostels may not have experienced the same level of disruption, but they still face competition for talent.
According to the AHLA, the hospitality industry in the U.S. has an annual turnover rate of 73% – more than double the national average. This issue isn’t limited to frontline workers; hotel manager turnover was 25–35% higher in 2023 than in 2019. Managers, often required to cover shifts when staff levels are low, face long hours and added stress, further increasing burnout.
In 2025, tighter immigration policies in regions like Europe and North America may further restrict the available workforce. This is especially concerning for hostels, which often hire travelers to work.
How hostels can adapt
High turnover is costly for hostels, not only in financial terms but also in its impact on staff morale and guest satisfaction. However, hostels often have an advantage: a more flexible and adaptable work environment that can appeal to employees seeking a less corporate atmosphere. A people-first approach will help attract and retain top talent.
Invest in training and career development
Employees who see clear growth opportunities are more likely to stay. Hostels can foster engagement through training programs, upskilling, and mentorship opportunities.
Enhance job satisfaction
Recognizing and rewarding employee contributions fosters loyalty. Regular feedback, competitive compensation, and meaningful benefits are essential components of a strong retention strategy.
Make technology more user-friendly
A well-designed PMS improves operational efficiency and reduces frustration, contributing to employee satisfaction. When technology streamlines workflows rather than complicating them, employees feel more empowered, valued, and ready for advancement.
- U.S. hotels were projected to fall about 225,000 jobs short of 2019 employment levels in 2024. (Source: AHLA)
- 38% of employees have left their previous roles due to poor user experience with technology. (Source: Cloudbeds)
- 42% of employees say their manager or organization could have done something to prevent them from leaving. (Source: Gallup)
Revenue management as we know it has changed forever. With rising costs and softer demand, hostels can no longer rely solely on bed revenue to drive profitability. Every space, service, and guest interaction must be optimized.
This shift is part of a broader transformation: commercial revenue management. Rather than operating in silos, revenue, sales, and marketing teams are aligning under a unified strategy to capture demand and drive maximum profitability. AI-powered revenue management is at the heart of this shift, moving beyond static pricing models to intelligent systems that analyze, predict, and act in real time.
Michael McCartan, VP of Sales EMEA at IDeaS Revenue Solutions, revealed at the 2025 Global Revenue Forum that AI-driven revenue management could increase revenue by up to 30%. By integrating AI-powered revenue management systems, CRM tools, and marketing automation, hostels can personalize promotions, optimize pricing across all revenue streams, and maximize guest lifetime value.
This evolution also requires a new breed of revenue manager—one who combines strong commercial acumen with technological literacy. Beyond pricing rooms, they must analyze total revenue, leverage AI-driven insights, and collaborate across departments to drive profitability. Those who embrace this next era of revenue management will not only adapt to changing market dynamics but position themselves for long-term, sustainable success.
How hostels can adapt
Hostels have much more to offer than just a place to sleep. Here are a few strategies to capitalize on these opportunities.
Align departments toward shared profitability
Revenue management must be a collaborative effort. Breaking down silos and aligning revenue-generating departments – beds, rentals, F&B, tours – allows hostels to optimize overall profitability rather than viewing each department in isolation.
Expand performance metrics
While ADR and RevPAB are essential, they only reflect a portion of performance. Expanding to metrics like TRevPAB (total revenue per available bed) and GOPPAB (gross operating profit per available bed) provides a clearer picture of total profitability.
Maximize group business
When bidding for group bookings, consider the total revenue impact – not just room revenue. Evaluate contributions from F&B, tours, and the potential displacement of higher-paying business to make informed pricing and allocation decisions.
Target high-value segments and packages
Prioritize high-spending traveler segments, such as digital nomads, to maximize revenue per guest. Bundling offerings can encourage incremental spending.
Leverage technology
In addition to AI-powered revenue management technology, upsell software and guest communication platforms can increase per-guest spending and drive engagement. Business intelligence tools that integrate data across departments provide deeper insights, enabling more effective pricing and revenue strategies.
- Guest spending in the U.S. was expected to reach $758.6 billion in 2024, up nearly 5% from 2023 and almost 24% above 2019. (Source: AHLA)
- 42.4% of hoteliers say they practice total revenue optimization. (Source: HSMAI)
- Technology will play a powerful role in maximizing hotel profit margins in 2025. (Source: STR)
In 2024, travelers largely shrugged off inflation, continuing to take trips and even upgrading their experiences. This year, inflation fatigue has set in, weakening pricing power. According to STR and Tourism Economics, price sensitivity is now a defining factor in travel decision-making. This shift presents a unique opportunity for hostels.
The WTM Global Travel Report 2024 describes today’s traveler as “an increasingly price-conscious and brand-agnostic consumer, willing to trade up or down, balancing financial considerations with a greater appreciation of comfort and experiences.”
Low- and middle-income households are cutting discretionary spending, with some forgoing vacations entirely. Hostels, with their typically lower price points, are well-positioned to attract these budget-conscious travelers. Many travelers will be looking for ways to stretch their budgets – opting for shorter stays, closer destinations, and more affordable accommodations, while aggressively seeking deals.
How hostels can adapt
- Over 80% of tourism experts expect price sensitivity to play a greater role in travel retail in 2025. (Source: Tourism Economics)
- Rising prices are projected to cause a 25% decline in brand loyalty in 2025. (Source: Forrester)
- The global hostel market size is anticipated to reach $11.04 billion USD by 2030. (Source: Research and Markets)
Travelers aren’t alone in feeling the pressure of rising costs. While inflation cooled during 2024, operational expenses remain high, squeezing profit margins. In 2025, the trajectory of inflation remains uncertain.
Labor costs – the largest operating expense – continue to climb. In 2024, the cost to staff a guestroom in the U.S. increased by $9 year-over-year, with further increases expected in 2025.
Energy prices, particularly in Europe, remain volatile due to geopolitical conflicts in Ukraine and the Middle East. Insurance costs are another growing concern, with U.S. hotel insurance costs rising 19.5% in 2023, particularly in climate-affected regions. Meanwhile, a potential trade war between the U.S. and key global markets could further impact travel demand.
How hostels can adapt
- F&B labor costs grew by nearly 15% in 2024, outpacing all other departments. (Source: STR)
- Transport and accommodation costs are the top challenges in international tourism in 2025, according to tourism experts. (Source: UN Tourism)
- 80% of European hoteliers consider energy costs a significant risk to business performance. (Source: Booking.com & Statista)
