This report provides an overview of current trends and key players in the European hostel sector, a form of transient accommodation that has existed for over a century, but which has undergone significant changes and segmentation over the last couple of decades. Hostels can be defined as a type of budget accommodation where typically guests rent a bed in a dormitory and share facilities, although there are more emerging that offer individual accommodation. Hostels encourage social interaction between guests and most provide common areas for them to mingle and socialise. Many also stage events or offer local tours to enhance their attractiveness to the nomadic bands of young adults who constitute their core customer base. Hostels are also generally located closer to city centres than comparably priced hotels, tend to have a more casual atmosphere than hotels and often promote adventure travel.

However, since hostels are shared accommodation, there is less privacy for guests, which is one reason why they are particularly suited to teenagers and young adults. Hostels also appeal to the young because they offer value for money, as well as a range of accommodation options, going from dormitories of up to 20 beds, to the aforementioned single and double rooms with en-suite bathrooms. Another major attraction offered by hostels is the opportunity for social encounters with like-minded travellers from around the world.