“It’s literally not available anywhere!” Michel von Düsterlho, a 26-year-old backpacker from Germany, talks about finding hostels.
Von Düsterlho, who came to Australia on a Working Holiday Visa (WHM), is following a path that young travelers have trodden for decades in search of sunnier climes, golden beaches and the opportunity to work part-time.
In 2019, the WHM program attracted more than 300,000 travelers and was Australia’s second largest tourism market by spending after China.
But when backpackers return after the pandemic, they will face significantly higher prices for travel and accommodation as the country’s tourism industry recovers from the pandemic.
Many accommodation providers have closed over the course of 2020 and 2021, particularly those catering to backpackers, leaving fewer places to stay for visitors.
“We’ve seen a reduction in capacity in the broader hostel market – in some areas more than half the accommodation has disappeared,” says Paul McGrath, chief executive of YHA Australia. Across Australia, 19 of the YHA properties have closed permanently, while Tourism Adventure Group, the owner of Nomads hostels, has closed or sold six of its 16 Australian properties during the pandemic. Now prices are up almost 50%.
A far cry from the barefoot lifestyle that draws many travelers to Australia, backpackers are reporting housing stress and reconsidering their plans. “It’s almost impossible to find accommodation anywhere without booking in advance…it scares me a lot,” says Hannah Storm from the Netherlands. She now books at least two weeks in advance to save money and find better rated accommodation. “I’ve been thinking about a road trip but I’m not sure if it’s feasible given the need to pay for accommodation along the way and current fuel prices.”
Beth Stone learned the perils of a last-minute booking the hard way. “I paid 100 euros [$180] for a night in a 100-person dorm at Surfers Paradise! It was the second place I went to after arriving and I didn’t book in advance – it was either that or a place with no reviews whatsoever.”
India Taylor, who works as a receptionist at a hostel in Byron Bay in exchange for accommodation, says her job basically consists of turning people away because the hostel is full. “The conditions in some of the other hostels I’ve stayed in are terrible,” she says. “But the owners get away with it because they know they’re going to get bookings anyway. There is no incentive to improve.”
K’Dee Melfi started a world tour in January and spent the last month in Australia. She knew it would be more expensive than the other countries she had visited, but she was still surprised. Even places with bad online reviews “are hardly available because everyone is so desperate,” she says. “Actually, it was cheaper to book a serviced apartment [in Melbourne] and share with three people than staying in 8 bed dorm.”
Other backpackers report that they have to surf the web between bookings to avoid paying prohibitive prices. Many had to find work much earlier than originally planned to cover costs.
Thanks to the significant pent-up desire to travel, the increased prices have not discouraged visitors from coming to Australia. Airlines and accommodation providers are reporting buoyant demand over the Christmas and summer period. Searches for accommodation on travel site Kayak increased by up to 127% in September and October 2022 compared to the same period in 2019, while Australian domestic air fares hit the highest levels since 2004.
YHA, like many hostels, increase their prices when demand increases, so prices may not have peaked yet. McGrath believes there will be an increase in arrivals over the next few months as airfares fall and international travel stabilizes.
There are still tens of thousands of travelers who have received WHM visas but have not yet entered Australia. McGrath suspects they are waiting for cheaper flights.
YHA is now focused on broadening its appeal to customers who are undeterred by higher prices. They are testing co-working spaces in hostels. With the rise of the digital nomad, McGrath believes the traditional image of the backpacker is now obsolete.
“I joke with my boys that backpackers are now arriving with Prada suitcases… the notion of the Working Holidaymaker is changing and we’ve changed to reflect that.”
Despite the expense, almost no one expresses regret about their trip to Australia. As summed up by Düsterlho: “It may be expensive but I’m still having a great time – it’s better than being stuck at home with Covid.”