Boutique style on a backpacker budget

Once hostels were all about low cost – and low comfort. Now the best of them combine cheap with chic, says Lucy Gillmore

What's the attraction?

If economic-downturn fatigue has got the better of you and your bank balance won't justify an indulgent holiday, perhaps it's time to rethink your options. Hostels (try not to choke on your cappuccino) have grown up and had a designer makeover. And it's no longer all about "youth": Feargal Mooney, chief executive of the booking website Hostelworld.com, says: "Hostels have broadened their appeal beyond 20-something backpackers. With much higher-quality accommodation now on offer, including private and en suite family rooms, we're seeing an increasing number of older travellers using hostels."

When the Youth Hostelling movement began a century ago, hostels were spartan affairs. In the past few decades, though, independent hostels offering a more relaxed ambience have provided stiff competition for organisations such as the Youth Hostels Association (YHA) of England and Wales, which have responded by improving hostels, from remote properties such as Black Sail in Cumbria to large city-centre places on London's Oxford Street. Many hostels have gone for a slick, minimalist look and there's now one to suit all tastes, from flashpackers to families. There are "boutique" hostels, independent hostels and hostelling chains, funky city pads and hip (not hippie) rural hideaways. Hostelling is hot.

And the winner is...

Portugal. Last month, Lisbon swept the board for the third year running in the annual Hoscars, the hostelling version of the Oscars, founded by Hostelworld.com. The top three hostels were all in the Portuguese capital: Travellers House in the top spot, with Lisbon Lounge Hostel and Living Lounge Hostel – part of the same organisation – taking silver and bronze. Located in Baixa, the capital's atmospheric and central old quarter, Travellers House is a 250-year-old building that has been turned into a stylish hang-out with bean bags, patterned wallpaper, candy-coloured lampshades and free Wi-Fi. Beds start at €17 (£15) in a four-bed dorm (00 351 210 115 922; www.travellershouse.com).

Taking the biscuit

So new it hasn't made up the beds yet, Kex Hostel, an old biscuit factory in Reykjavik, is due to open next month. You probably wouldn't expect the owners, Icelandic footballers Hermann Hreidarsson (Portsmouth FC) and Eidur Gudjohnsen (on loan at Fulham FC), to be sampling the dorm beds and communal kitchens, but they're aiming for the premier league of hostels with Kex. The contemporary design incorporates many of the factory's original features. There is also salvaged-but-chic furniture, a café (home-made bread and, of course, biscuits) and bar, a heated outdoor patio, free Wi-Fi, a hair salon and a gym. There is a handful of private rooms for families and two hotel-style doubles with private bathrooms. Add a relatively weak krona, flights from £89 one-way with Iceland Express (0118 321 8384; www.icelandexpress.com) and beds from ISK3,200 (£17) in a four- to six-person dorm and the once-wallet-mugging city is looking oddly affordable (00 354 561 60 60; www.kexhostel.is).

Back to nature

The first lodge in Ireland to receive the "EU Ecolabel for Tourist Accommodations" is a Hobbit-like dwelling burrowed into a hill in Sligo. The Gyreum has been built from a mix of sustainable and reclaimed timber with sheep's wool used as roof insulation. Its name roughly translates – from the Greek root "gyr" and Latin "eum" – as "round building". During the summer and winter solstices, rays of sunlight flood the central hall of this cavernous construction. Other green credentials include "grey" and toilet water being processed through a reed-bed system, power and heating generated from wind turbines, and a geothermal heat pump. Dorms circle the central round hall, which is perfect for yoga and meditation, and there's a sauna heated by wood gathered from the forest as well as an icy plunge pool. If that all sounds a little virtuous, there are also big, hearty breakfasts: porridge, organic duck eggs, home-made jams and fruit, fair-trade tea and coffee. Prices start at €17 (£15) for a bed in a dorm sleeping six; breakfast is €7 (£6) (00 353 71 916 5994; www.gyreum.com).

Hostels with history

Fancy bedding down in an old lighthouse keeper's cottage? Rattray Head hostel overlooks rolling dunes and a remote 11-mile beach in Aberdeenshire. Or how about a former women's land army hostel built in 1940 on the edge of the Northumberland National Park? On each bedroom door there is a profile of one of the land army girls housed there during the Second World War. In London, Clink78 Hostel is a 200-year-old courthouse that now sports cool interiors and pod beds. You can chill out in the Courtroom Lounge, kick back during happy hour in the bar and sleep it off in a former prison cell. All from £10 per night, including continental breakfast.

The latest edition of the Independent Hostels network handbook has just been published and features 334 hostels across the UK, including 50 new additions for 2011. You can buy it online for £7.45 at www.independent hostelguide.co.uk, where you can also search for hostels for free. Or call 01629 580427 to order a copy.

Forget boutique hotels...

Why not check into a boutique hostel instead? Offering hotel-standard style, the Fort Boutique Hostel opened last summer in York. With en suite wet rooms, flatscreen televisions, Wi-Fi and free hot chocolate, this is new-school hostelling. It's centrally located and a different young artist has designed each room.

"Country living meets city buzz", for example, has a log cabin theme and its designer – fine-art graduate Steven Haygarth – was inspired by his aversion to hostel rooms. There are four double/twin rooms and a larger, mixed bunkroom sleeping six. Prices start at £20 per person during the week, £25 at the weekend. Double rooms from £52 (01904 620 222; www.thefortyork.co.uk).

From York to New York... the New York Loft Hostel offers Manhattan-style living on a realistic budget. Set in Brooklyn's hipster-central neighbourhood of Williamsburg, the 1913 building is all high ceilings, exposed brickwork and vinyl wall graphics. There's also a terrace with a hot tub, a swanky kitchen, bar and free fondue on Thursdays (barbecues in the summer). Mixed dorm beds start at $52 (£32) per night with breakfast; doubles start at $80 (£50) (001 718 366 1351; www.nylofthostel.com).

Base-camp beauty

For pampering, head to the funky Base Backpacker hostels that pepper Australia and New Zealand. In Melbourne, Base is an eye-catching architectural landmark of red glass and concrete in the cool, seaside suburb of St Kilda (vintage boutiques and Italian café culture galore).

As well as the Red Eye bar, there's a gym and a girl-only Sanctuary floor, complete with fluffy towels, hairdryers, Aveda products, morning tea in bed at the weekend and a glass of champagne in the evening. Dorm beds start at A$27 (£17), or from A$34 (£21) for a bed in the Sanctuary (00 61 3 8598 6200; www.stayatbase.com).

What Google will tell you...

"In 1909 a teacher named Richard Schirrmann had the idea of providing low-cost overnight accommodation for young hikers, especially school parties, while he was sheltering from a thunderstorm one night during a school trip with his class. In 1912, the first permanent Youth Hostel was established in Altena, in Germany's Sauerland region." From DJH, the German Youth Hostel Association ( www.djh.de).

What Google won't tell you... until now

"Youth hostels are for the use of members who travel on foot, by bicycle or canoe. They are not for members travelling by motor car, motor cycle or any power-assisted vehicle." From the YHA handbook, 1964.

Who said that?

"Anyone can stay with the YHA. We are open to all. Our accommodation and social spaces, our tradition of sharing, offers everyone the chance to mix with and meet people from other communities and from around the world. Through YHA, people are able to explore new places, to understand different cultures: an experience which encourages and enhances the growth of all." YHA mission statement.

"Tran D'Oc has long been popular with backpackers looking for low-cost lodging in downtown Bumpattahbumpah. The staff are lovely and can help with just about any request, providing it doesn't involve clean sheets or a non-smoking room." From 'Phaic Tan: Sunstroke on a Shoestring' (Jetlag travel guide).