A Durham, North Carolina-based startup called Hostel Rocket wants to make it easier for travelers who prefer the low-cost accommodations provided by hostels to find available rooms, view photos, descriptions, reviews and schedule bookings from either the web or their mobile phones. Though the startup only launched to the public this July, the site has already seen over a million visitors, and 86,000 customers have created accounts. Now the company is in the process of closing a seed round, led by Great Oaks VC.
Others are also participating in that $650,000 round, but not all term sheets are signed, says co-founder and CEO Michelle McBryde, declining to disclose those names.
McBryde knows the industry well, having previously owned two hostels herself, the last one in Yosemite. And her five-person team includes avid travelers who, combined, have stayed in over 200 hostels worldwide, giving them first-hand experience with the accommodations their service is now focused on selling.
Today, there are several websites catering to hostel-goers, explains McBryde, but the market is very fragmented.
“There are multiple hostel booking sites, and each of them has different inventory and different ways of displaying information,” she says. And sometimes, the pricing will vary from site to site, too. “It’s extremely frustrating from the user experience standpoint.”
Meanwhile, a $100 million acquisition between two of the top players in the industry took place last year between HostelWorld and HostelBookers, leading to a monopoly in the market. Before, hostel operators were paying 7%-10% for commissions, but now they’re paying 12%-17%. “They basically gave the hostel operators no other option,” McBryde says.
In other words, now is a good time for a new contender to come in and shake things up.
With Hostel Rocket, the company is aggregating hostel inventory from a number of sources, and offering it up on their own site for travelers to peruse. The goal is to provide the “simplest hostel booking engine,” says the CEO, noting that there are no hidden fees or booking fees involved with booking transactions. Instead, travelers pay a 10% deposit at the time of booking and the startup will take a percentage of that to run its business. Plus, customers can cancel at any time, and still get their deposit back, which makes it ideal for travelers with ever-changing plans.
Of the 86,000 account holders, McBryde declined to say how many had already booked via Hostel Rocket, citing the fact that they’re still in the process of fundraising, and not disclosing these kinds of numbers.
Online and, as of recently, on mobile, the service provides listings for over 35,000 hostels in 180+ countries worldwide. For comparison’s sake, market leader HostelWorld only offers 19,000 today.
What’s more, Hostel Rocket’s aim is to become more of a one-stop-shop for hostel travelers in the future, by soon offering a variety of resources, including tips on local events, crowdsourced ideas about things to do in the area, videos, and more. And on mobile, they’re planning to roll out a push notification feature in a few months’ time that will alert travelers to possible discounts at nearby hostels and other deals.