The largest online hostel-booking platform with over 36,000 properties in 170 countries

The Roots of Hostelworld

Hostelworld’s story began in 1999 when Ray Nolan, a software developer from Dublin, created a property management system (PMS) for a local hostel. The PMS aimed to help the owners streamline operations and manage reservations more efficiently.

Recognizing the potential for expansion, Nolan founded Raven Computing and began selling his PMS software to other hostels in Dublin. Then, he realized the true opportunity lay in connecting hostels with travelers online.

From HostelDublin to Hostelworld

HostelDublin.com became HostelIreland.com, catering to hostels across the Emerald Isle. In the early 2000s, the company rebranded as Hostelworld.com, setting sights on the global hostel market.

Attracting Hostels to the Platform

One of the early challenges of Hostelworld was convincing independent hostel owners to join the platform. At that time, the hostel market was fragmented, consisting mostly of small, owner-operated businesses.

Hostelworld offered the platform’s proprietary PMS, branded as “Backpack,” free of charge, to incentivize hostels. The only condition was that the hostels would use Hostelworld’s booking engine, giving the company access to the hostels’ inventory and the ability to sell those beds online.

An Innovative Revenue Model

Another hurdle Hostelworld had to overcome was developing an attractive revenue model. Traditional OTA commissions of 25%-40% were not feasible for the lower-priced hostel market.

Hostelworld’s solution? A non-refundable 10% deposit from travelers, which the company keeps as the commission. The remaining 90% is paid to the hostel upon check-in. The model eliminated manual invoicing and collections, allowing Hostelworld to fully automate the booking process and efficiently manage a high volume of low-value transactions.

Automating the Booking Process

By having travelers prepay the 10% deposit, Hostelworld streamlined the booking process and eliminated the administrative overhead that had plagued traditional OTAs. As a result, Hostelworld became more efficient and scaled rapidly without being bogged down by manual processes.

To further capitalize on the advantage, Hostelworld registered hundreds of location-specific domain names, ensuring the platform’s websites dominated search engine results for hostel-related queries. Eventually, the company captured a vast organic traffic.

Expansion and Strategic Acquisitions

In 2002, Hostelworld acquired the company’s main competitor, Hostels.com.

Initially struggling to secure traditional bank loans–with lenders skeptical of the hostel business model–Hostelworld had to get creative, raising capital through a mix of loans and equity investments from friends and family. Hostelworld’s perseverance paid off, as the acquisition of Hostels.com eliminated a rival and gave Hostelworld access to a large existing customer base and inventory of hostel and vacation rental listings.

Fending Off the Competition

Hostelworld inevitably attracted competition and was forced to refocus on the platform’s core strengths and maintain a technological edge.

Despite the challenge, Hostelworld achieved profitability by July 2002, just months after Feargal Mooney joined the team as Chief Operations Officer. Later, the company experienced rapid growth, with a triple-digit booking increase over the following years.

Embracing Innovation and Traveler Trends

Today, Hostelworld is present in 179 countries and more than 17,000 hostels and vacation rentals are listed on the platform. At the same time, Hostelworld has invested in mobile apps, social features, and personalized recommendations to serve the needs of a young, adventurous customer base.

Features like “My Trips,” which provides local weather and recommended dining options, and “Hostel Chat,” which allows travelers to connect with others staying at the same hostel, have helped Hostelworld cement lead the budget travel space.