Hotels and investors that are considering branching out into the hostel market should carefully do their research before making any commitments, said Paul Halpenny, a Group Director at the Hostelworld Group in Dublin. 

"Many people in the hotel industry have got it all wrong," said Halpenny at the ITB Conference in Berlin.

"They open a hotel and call it a hostel by throwing in a pool table, but that won't fool the discerning hostel customer."

Those customers are going to want amenities typical of hostels, like shared beds and common social spaces, which contribute to the shared community experience of staying in a hostel. 

Halpenny said interest in the hostel market is growing as businesses and investors become more aware of the fact that hostels often provide a better return on their investment than comparable alternatives, like three-star hotels.

"The opportunity is huge," said Halpenny. "But operators need to be cautious if they are going to open a hotel and market it as something else."

This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.