With prices as low as $31 in some of Europe's most expensive cities - and luxury options such as digital camera chargers for hire - hostels are shedding their image of bedbug-ridden dorm rooms and mildewed showers.
Annie Worth, a 21-year-old from Orinda, Calif., said she and her friends were used to staying in nice hotels with their parents on vacation but had chosen to stay in no-frill hostels during an 11-country backpacking trip through Europe.
"Especially with the euro being so strong and the U.S. dollar being so weak, I think a lot of younger people who had initially avoided them are staying there because they are hearing so many great things about them and money is tight," she said.
Hostel owners are also reporting that they are attracting a different type of customer. Alongside young people on shoestring budgets, they are also seeing more students from wealthier backgrounds and more travelers over the age of 30.
Lynn Schouten, manager of the Shelter Jordan in Amsterdam, said she is getting more well-heeled students and older guests who are used to the finer things in life - and are not so keen on 18-bed shared rooms.
"It's not only youth filling up the hostel anymore like in the '70s," she said.
In response to this new demand, her hostel was renovated last year to add smaller suites that "are more expensive but also provide more privacy and luxury," she said.
Hostels are not always ridiculously cheap. Most single beds in dormitory rooms cost between $31 and $47 a night and can climb as high as $78 for a dorm-room stay in tourist hotspot Amsterdam.
Heather Barrett, 21, also of Orinda, Calif., said she was surprised by how much hostels in Britain, Spain and Italy cost.
"I thought they would be much cheaper," she said. "They can be surprisingly expensive for the quality, so I suppose the image of the cheap backpackers' hostel is rapidly disappearing."
Alice Tamaian, assistant manager at Youth Hostel Jacques Brel in Brussels, said the Americans who are still coming to Europe don't seem very worried about money and come laden with tech toys such as fancy laptops, iPods and digital cameras.
Vincent Dewilde, manager of 2GO4 Quality Hostel in downtown Brussels, agrees, saying he gets the impression that many young Americans are traveling on their parents' credit cards.
"They talk about the price, but it doesn't prevent them from coming here and traveling," he said.
They are getting more perks than in the past, he said, such as free wireless Internet access and televisions in their rooms.
As the line between budget hotel and luxury hostel blurs, the hostel holds one trump card.
"We chose hostels because I think we wanted a more authentic backpacking experience," said Kristy Krsulich, 21, of San Bruno, Calif., who traveled across Europe with Worth. "For the time we were in Italy, we stayed in budget hotels, and by the end of it we were excited to get back to staying in larger rooms with more people."
The charm of the hostel experience draws many people to shun cheap hotels with private bathrooms. Instead, they stay in dormitories sleeping up to 20 strangers, with shared bathrooms where shower sandals are a must. While there's always the risk of the occasional bedbug, a quick look at reader reviews on sites like TripAdvisor shows that infestations are not all that common, and can be found at hotels just as often as they can at hostels.
It's not for everyone. Travelers usually have access to lockers to ensure their belongings are safe and may even be able to cut costs by doing chores to earn their keep.
But on the upside, hostels give people a chance to mingle and share their tall travel tales.
Dewilde said he often sees single travelers meeting in the lounge of the Brussels hostel, swapping sightseeing tips and going out for drinks together.
Gesturing across the crowded common room at the groups of students conversing and poring over maps of the city, Dewilde grinned.
"It's a whole different style of travel," he said.
By KIMBERLY CHOW