Hostels are amazing places. They never die, as youths still prefer this low-priced accommodation, which they consider a place to meet like-minded travellers.
The simple but modern room decor at Lub D Siam Square hostel in Bangkok.
Young tourists believe hostels exude a charm they cannot find from a five-star hotel, which is why hostels can still attract new investors.
Adrian Chooi, a young Malaysian traveller staying at Lub D Siam Square, said he loves to travel alone and prefers to stay in hostels.
He chose this hostel not only because of its reasonable price and good location but also the chance of finding new friends.
"I travel three or four times a year. I have a lot of friends from many countries. We meet at hostels. It's not just a place to sleep," he said.
Clarissa Eysell, a young female German also at Lub D Siam Square, said it was her first time at a hostel. She travelled alone and her travel agent recommended this hostel due to its safety.
"I'm happy with this place. It's safe and clean," she said after a chat with new friends.
The popularity of low-cost airlines and online travel agents (OTA) are two important factors driving the hostel business in Bangkok. Budget airlines bring more young travellers, while OTAs provide marketing and booking channels for hostels.
During the past few years, old commercial buildings have undergone a facelift to appeal to backpackers. Hostel locations are not limited to downtown either, stretching to the outer limits of mass transit.
Hostels have developed to lure flashpackers — high-tech, socially connected young travellers.
The United Nations World Tourism Organization reported youth travel generated US$182 billion in international tourism receipts in 2012 and represented over 20% of more than 1 billion international arrivals.
The average cost of a trip by a young person amounted to $910. The number of international trips by youths could increase from 200 million a year at present to 300 million trips by 2020, the UN forecast.
Chittipan Srikasikorn, business development director of Lub D, said lifestyle matters to its guests and design was important in building a social atmosphere, more important for them than service.
"Hostels are popular again," Mr Chittipan said. "My subordinates left Lub D to rent a house or commercial building to open a hostel.
"It requires a small investment, so many young investors under 30 are entering the business. However, it's not easy to survive over the long term if they lack knowledge about operating hotels."
Lub D was established in 2008 and operates two branches at Siam Square and Silom. Most of its customers come from Europe.
It plans to open a big hostel, Lub D Patong Phuket, with 200-300 rooms and an investment of 400 million baht in mid-2016.
Average occupancy for the two Lub D hostels is estimated at 70% year-round.