"I think it's wrong to call it budget accommodation."
During an onstage interview at Phocuswright Europe 2026 in Barcelona, Hostelworld CEO Gary Morrison argued that the industry often misunderstands hostel travelers and the opportunity they represent.
Rather than viewing them through the lens of price, he said Hostelworld is building its business around the social needs that bring people to hostels in the first place. Morrison believes that strategy will become even more valuable as artificial intelligence (AI) changes travel discovery.
"The things that you really remember are the people that you met and the crazy things that you did," Morrison said. "Nobody remembers what the color of the wallpaper was ... whether the bed was comfy."
That insight led Hostelworld to launch its social network in 2022 and rethink what business it is actually in.
"Being an online travel agent focused on hostels was about as competitive as me saying, 'I'm going to be an OTA specialized in two-star hotels,'" he said. "Why would a consumer care?"
Instead, Morrison said the company's goal is to help travelers find people to hang out with and "cool things to do" together.
That philosophy also shapes how Hostelworld approaches ancillary revenue. Rather than prioritizing products such as travel insurance, he said the company is focused on helping travelers discover local events and experiences that match how they actually travel.
"They don't want to go up the London Eye," he said. "They want to find the same stuff that locals do."
As travelers shift from keyword searches to explaining their needs to AI, companies with proprietary data and differentiated experiences will be best positioned to stand out, Morrison said. For Hostelworld, that means combining millions of social interactions with booking and event data to answer questions that go beyond finding a place to stay.
The interview also covered the company's expansion beyond hostel inventory, the travel and spending behavior of young travelers, customer retention and how AI agents could help organize real-world meetups.
See below for the full interview with Phocuswright’s Madeline List.
Budget, social and the new era of marketplaces