Seven out of ten bookings for hostels are now made on online travel agencies, making it one of the sectors with the highest web penetration in the industry.
This is on the back of two-thirds of all hostel bookings being made on the internet.
These are some of the findings from a new study by Phocuswright into the budget accommodation sector, with an estimated $5.2 billion spent globally in 2014.
The research house says there are around 18,000 properties designated as hostels worldwide, with Europe and Asia accounting for two-thirds of the global spend.
But the general size of properties and the fragmented nature of the sector indicates there are challenges for those brands seeking to organise it from a booking perspective.
Just 8% of hostels around the world belong to a chain or group (but account for 38% of revenue), whilst 70% of properties are taking in less than $200,000 a year in revenue.
The hostel sector is estimated to be worth $7 billion globally by 2018.
One of the reasons for the high web penetration is the demographic of guests, Phocuswright says.
More than seven out of ten hostel users are millennials (age 18-34), with one in four having booked their last stay using a mobile device and 93% using their phone when travelling.
But interestingly, similar to threats facing the hotel sector from the rise of vacation rentals and property sharing, hostels could also start feeling the pinch.
Phocuswright says hostels "do not have a lock on their guests" as the most budget travellers will consider a range of options, including comparing budget and midscale hotels alongside private rentals.
"Hostels operators should pay close attention to the rise of rentals and at a minimum include local shared space rentals in their direct competitive set.
"The use of rental homes and room-sharing is much higher among the hostel traveller population than it is among the general traveller population."
In fact, Phocuswright's report found that 42% of Australian hostel users had also stayed in an Airbnb property or home rental.
Their comrades in US, Germany and the UK had likewise strong affinity for alternative accommodation at 39%, 32% and 31% respectively.
Other nuggets from the study include:
Activities performed on smartphones:
Importance of online features for research:
Information sources:
Feargal Mooney, CEO of Hostelworld, sponsor of the report, says:
"It’s astounding how much the hostel industry has transformed in the last five years alone.
"Today, we’re seeing luxury hostel accommodations that are offering the perfect balance of privacy, amenities and social activities.
"The millennial travel demographic is perfect for hostels as they’re spending more of their time seeing as much of the world as possible. Hostels allow for serendipitous, adventurous things to happen in more places, and let millennial travelers get more value for their money."