UK hostel market is about to witness great growth, projecting from USD 326.2 million in 2025 to USD 978.5 million in 2035. This growth signifies a CAGR of 11.6% from 2025 to 2035. The growth is driven by a growing need for affordable travel among millennials and youth travelers.
As more individuals look for budget-friendly but quality accommodations, hostels are emerging as a first preference for travelers visiting the UK. The market is also being helped by an increasing emphasis on environmentally friendly and socially active travel experiences.
As more travelers focus on sustainability and community-based stays, hostels that provide green initiatives, local cultural experiences, and social activities are becoming increasingly popular. This change is part of a larger trend in consumer tastes, as younger generations expect more than a bed-more authentic, green, and community-focused experiences.
Market Overview
| Attribute | Value |
|---|---|
| Estimated UK Industry Size (2025E) | USD 326.2 million |
| Projected UK Value (2035F) | USD 978.5 million |
| Value-based CAGR (2025 to 2035) | 11.6% |
The need for budget-friendly travel, coupled with a move towards community-oriented and sustainable accommodations, is likely to fuel market expansion. Hostels are changing by adding private rooms to the more conventional dormitory-style accommodations, appealing to a wider demographic and providing greater diversity.
Explore FMI!
Book a free demo
The following chart offers a comparative assessment of the changes in CAGR for the base year, 2024, and the current year, 2025, tracking the shifts in market dynamics.
CAGR Values for UK Hostel Market (2024 to 2025)
The UK hostel sector is anticipated to expand at a CAGR of 10% in H1 2024, and a modest rise to 10.2% in H2 2024. Expansion is expected to increase further to 11.4% in H1 2025, and up to 11.6% in H2 2025, as more travelers, especially Gen Z and millennials, opt for low-cost and socially engaged holiday experiences.
| Category | Details |
|---|---|
| Market Value | The UK hostel industry is estimated to generate USD 294.4 million in 2024, contributing 40% of Europe's total hostel market. |
| Domestic Market Share | Domestic travelers account for 60% of the market, with key destinations including London, Edinburgh, and Manchester. |
| International Market Share | International visitors make up 40%, with significant interest from European travelers visiting cities like Bristol and Glasgow. |
| Key Destinations | Renowned hostel destinations include London’s Clink78 Hostel, Edinburgh’s Kick Ass Hostels, and Manchester’s YHA Manchester. |
| Economic Impact | The hostel sector generates significant revenue, contributing to local economies through budget-friendly accommodation and activities. |
| Key Trends | The demand for sustainable hostels have been increasing which includes The Greenhouse Hostel in London and community-driven initiatives at places like The Haystack Hostel in Edinburgh. |
| Top Travel Seasons | Summer is the peak season for UK hostels, particularly in cities like London and Edinburgh, attracting both international and domestic travelers. |
The UK hostel sector remains robust, with larger cities such as London and Edinburgh remaining popular with both domestic and foreign backpackers. European visitors, particularly Germans and French, have increasingly demonstrated a preference for cheap stays in vibrant cities such as Manchester and Bristol. Hostels with environmental schemes and hostels that aim to build community experiences are also on the rise. For instance, London's Clink78 Hostel provides a lively atmosphere with parties and events, whereas The Greenhouse Hostel is for eco-tourists with solar panels and recycling schemes.
| Date | Development & Details |
|---|---|
| Feb 2025 | Hostels Embrace Local Farm-to-Table Dining: Some hostels in Brighton and London, such as The White Ferry House, have introduced farm-to-table restaurant facilities. Such hostels are connecting with local farms and serving locally grown organic food, targeting tourists who seek a healthy and sustainable eating option. |
| Jan 2025 | Green Hostel Certification Program: YHA (Youth Hostels Association) has rolled out a Green Hostel Certification for green-minded travelers. City hostels in places like Manchester and Oxford now undergo tough checks on their sustainability, which entails minimizing waste, energy efficiency, and the use of renewable products. |
| Dec 2024 | Historic Hostel Renovation in Edinburgh: A historic Georgian townhouse in Edinburgh has been transformed into a boutique hostel, where heritage architecture is combined with modern design. The restoration is a nod to the city's heritage, attracting those who wish to live history while having access to modern amenities. |
| Nov 2024 | Hybrid Hostel and Co-Living Spaces Opened: In London and Bristol, to name a few, fresh hybrid hostels functioning as co-living accommodations have been opened. These hostels are specializing in long-term travelers and remote workers with community atmosphere, shared office space, and flexible stay options for digital nomads. |
| Oct 2024 | Multi-Cultural Hostel Experience Launched: One Manchester hostel has instituted a "Cultural Exchange Program" in which foreign visitors may join weekly activities like cooking workshops, language practice, and cultural performances to build cross-cultural empathy among travelers. |
Budget Hostels Dominate the Market
By 2025, budget hostels will take over the UK hostel market and account for an estimated 75% of the entire market share. Budget hostels are the first preference among price-conscious tourists, especially backpackers, students, and young professionals who want to travel affordably while visiting new places. Dormitory-style shared rooms continue to be the norm in this segment, enabling travelers to save substantially on expenses while facilitating socialization and bonding among travelers.
A great example of a UK budget hostel is the Clink78 Hostel located in London and which has been gaining popularity because of its unique characteristics and atmosphere. Located within the lively King's Cross district, Clink78 offers both shared dorm rooms and private bedrooms to suit different kinds of tourists. The hostel is special in providing a variety of complimentary events, ranging from nightly pub crawls to movie showings and group dinners, which encourage visitors to mingle and engage with each other. Emphasizing greatly the aspect of community, Clink78 also has a large common area, a fully-equipped communal kitchen, and an informal bar, creating an environment that welcomes visitors to socialize and interact with each other.
The affordability of budget hostels such as Clink78 is one of their key attractions, with them generally charging lower prices than conventional hotels while still providing basic amenities like free Wi-Fi, safe storage of luggage, and 24/7 reception service. These hostels often position themselves in prime, central locations, giving travelers easy access to local attractions, public transport, and nightlife. At Clink78, for example, visitors can conveniently tour attractions like the British Museum, Camden Market, and Regent's Canal without incurring significant transportation costs.
As the need for affordable but social accommodation keeps increasing, budget hostels such as Clink78 have a vital role to play in defining the traveling experience for young generations. With the combination of low prices, social environment, and accessibility, they are the perfect fit for modern travelers today.
Private Rooms Gain Popularity
Private rooms will account for 30% of the UK hostel bookings by 2025, representing a huge shift towards privacy in the hostel sector. The trend is fueled by an increasing need from solo travelers, couples, and business travelers seeking a more private, quiet experience without sacrificing affordability. These travelers are looking for a balance between the affordability of hostels and the privacy of private rooms, especially in urban centers like London and Edinburgh.
Generator London, a prime example, has capitalized on this expanding demand for private rooms. Praised for its sleek, trendy design, Generator features trendy private rooms with en-suite bathrooms, high-speed Wi-Fi, and upscale furnishings. The rooms are intended to create a peaceful retreat from the dynamic social spaces of the hostel, which feature an energetic bar, shared lounges, and periodic social events. This combination of privacy and social interaction is also very attractive to business travelers who require a secure, comfortable area to work or sleep but also desire the energy and sense of community of a hostel.
Increased demand for private rooms is not solely about comfort but also flexibility. Generator London guests, for example, can avail themselves of the hostel's lively environment while benefiting from the seclusion of their private room. Couples similarly view these private rooms as a great option, combining the intimacy of a hotel room with the plus of low rates.
Additionally, upscale hostels such as Generator are accommodating the changing expectations of contemporary tourists by combining the high-end quality of amenities such as designer finishes with the economic aspects of communal-hostel living. The shared rooms provided by Generator, featuring sophisticated finishes and luxury amenities, form a crossover experience that balances comfort and sociability.
The UK hostel market remains fragmented, with both large chains and independent hostels vying for market share. Key players include Safestay, Generator Hostels, and YHA, along with regional hostels that offer unique, niche experiences.
2025 Market Share of UK Hostel Industry Players
Leading players with notable market share include Safestay (15%), Generator Hostels (11%), and YHA (21%), with independent hostels making up the remaining share.
The UK hostel market is expected to grow at a CAGR of 11.6% from 2025 to 2035.
The market is projected to reach USD 978.5 million by 2035.
The key drivers include the demand for affordable accommodations, the growing trend of social and eco-friendly travel, and the increasing popularity of private rooms in hostels.
Key players include Safestay, Generator Hostels, and YHA, along with independent hostels offering unique, community-driven experiences.
The market is segmented into Budget Hostels and Luxury Hostels.
The market includes Private Rooms, Dormitory Beds, and Family Rooms.
The industry is segmented into Online Booking and In-Person Booking.
The market includes Domestic and International travelers.
The market is analyzed by gender (Men, Women).
The industry is segmented into Age Groups: Below 15 Years, 15-25 Years, 26-35 Years, 36-45 Years, and Over 45 Years.
Rural Tourism Industry - Competitive Analysis and Market Share Outlook
GDS Technology Industry Competitive Analysis and Market Share Outlook
Heritage Tourism Market Analysis by Experience Type, by End User, by Tourist Type, by Booking Channel, and by Region - Forecast for 2025 to 2035
Competitive Analysis and Market Share Outlook
Luxury Yacht Industry Competitive Analysis and Market Share Outlook
Ethno-Tourism and Community-Based Ecotourism Industry - Competitive Analysis and Market Share Outlook
UK Hostel Market
Thank you!
You will receive an email from our Business Development Manager. Please be sure to check your SPAM/JUNK folder too.
