As travel opportunities have become available to a wider range of people including people from all income levels, the market for budget hotels has seen a boom.

Low-cost airlines have led the way in democratizing travel and with it, the budget hotel has become an increasingly popular option for accommodation.

Not everyone cares about the frills of luxury hotels and the corresponding price tags. All that most budget-conscious travelers need is a clean room and a comfortable bed to rest their heads on at night.

So who prefers budget hotels? The answer may surprise you!

It turns out that the budget hotel target market is not just limited to people who are on a tight budget. In fact, many other types of travelers are also drawn to budget hotels.

Let’s find out who they are and what motivates their choice of hotel.

Understanding the Budget Hotel Target Market

One of the best ways to understand the budget hotel target market is to understand why someone may choose a budget hotel over another type of hotel.

For instance, it’s easier to understand why someone would go to a budget hotel rather than a luxury hotel. Because they do not want to spend a lot of money. But how about other inexpensive options? Why not stay at a bed-and-breakfast? Or why not go to a boutique hotel – not all of them are expensive.

When we dig deeper into the answers to these questions, we get the following divide the budget hotel target market into the following segments:

  1. People who are traveling on a budget
  2. Students
  3. Backpackers
  4. People who are looking for a no-frills hotel
  5. People who are looking for value for money
  6. People looking for a “pit stop” hotel
  7. People visiting an area with no other hotels in the neighborhood

Let’s now take a closer look at each of these customer segments.

#1. People who are traveling on a budget

People who are traveling on a budget are one of the target markets for budget hotels. These hotels charge lower rates than their more luxurious counterparts, in order to be more affordable to those without large incomes.

Budget hotels often offer amenities such as free WiFi and TV, as well as reduced parking fees or discounts at restaurants nearby. A lack of expense is not always indicative of low quality; these smaller properties can still offer all the services that one might find at larger establishments, but with less extravagance.

A lot of people know this and will gladly go for a budget hotel when they don’t have enough money to spare for hotel bills.

#2. Students

Students are also a key budget hotel target market. When students go on vacation, they need somewhere to stay that is cheap and easily accessible.

Budget hotels provide this by being close to schools, airports, and train stations. Many budget hotels offer low prices with no minimum stay and no cancellation fee, making them an attractive option for students who are always looking for ways to save money.

The lack of features like maid service, laundry service, breakfast, and or free parking make budget hotels perfect for students looking to cut costs.

#3. Backpackers

Backpackers are typically minimalist and would rather go for budget-friendly hotels than high-end hotels. Budget hotels offer most of the amenities that backpackers require at a much lower price point than those offered by other accommodation options.

They provide a home away from home, with simple but comfortable rooms and a great location usually near tourist spots. Budget hotels cater to people who want to get as much out of their money as possible. And backpackers definitely fit this description.  

Budget hotel chains are popular among backpackers because they make it easy for them to find accommodations without breaking the bank in comparison to some other lodging establishments like luxury hotels.

#4. People who are looking for a no-frills hotel

People looking for no-frills hotels are people who are only interested in the essentials a hotel has to provide. A budget hotel is often their choice to cut prices. When they book, they do not expect anything more than a bed and bathroom and do not care if there is no coffee maker or TV.

What matters most to them is getting a good deal on the room, making it possible for them to stay at nicer hotels than they could have previously afforded. The low rates allow them to save money on food, transportation, and other expenses that would be necessary when traveling out of town. That’s why a majority in this category are usually tourists.

#5. People who are looking for value for money

Another huge target market for budget hotels is people who don’t believe that spending on luxury is good value for money. When they go out to dinner, they look for a cheap option that will get them full without having to spend too much time or money at a restaurant.

They also know that when they stay at a hotel, they need one that isn’t upscale but will provide enough room and amenities so that it’s worth staying there. This category of potential guests isn’t only budget conscious when it comes to hotels, they don’t just see a point in spending on things they don’t see value in.

#6. People looking for a “pit stop” hotel

This segment of the budget hotel target market is looking for a pit-stop hotel where they can park their head for the night and then move on the next day.

These could be people who are driving across the country and just need a place to stay for the night. Or, they might be people who are taking a budget flight that arrives late at night and need a place to stay before their connecting flight the next day.

Pit stop hotels are usually budget hotels that are close to the airport or train station. This makes them convenient for people who just need a place to stay for one night and don’t want to spend a lot of money on accommodation.

#7. People visiting an area with no other hotels in the neighborhood

The budget hotel target market also includes people who have no other choice but to stay in a budget hotel because there are no other hotels in the vicinity. This is often the case in small towns or rural areas where there are limited accommodation options.

In these cases, budget hotels provide a much-needed service to travelers who would otherwise have nowhere to stay.


The budget hotel target market includes, first of all, people who are traveling on a budget. This can include students and backpackers.

It also includes people who are looking for a no-frills hotel or those looking for value for money. Many travelers looking for a “pit stop” hotel will often look for a budget hotel. These are usually situated close to transportation hubs like train stations and airports.

Finally, when people visiting an area cannot find any hotels other than a budget hotel, they are going to book themselves in it.

So, there you have it: an analysis of different segments of the budget hotel target market. Thanks for reading!