YHA is living in the past as the debts pile up

When Richard Schirrman opened the first youth hostel in Altenia, Germany, in 1909, his aim was to enrich the lives of young people living in large industrial cities. The concept of providing simple, affordable accommodation - underpinned by a love of the countryside - spread rapidly across Britain.

Today there are 227 hostels in England and Wales, which together account for about two million bednights a year. However, the Youth Hostels Association (YHA) is finding life harder at the start of the 21st century than it did at the beginning of the 20th. It has debts of £34m and, with interest accruing at more than £1m a year, it's considering selling up to a third of its properties as part of its next five-year strategy.

Part of the YHA's difficulty lies in adapting to the huge changes in the hostel market in recent years. In the YHA of my youth the surroundings were always spartan, rules plentiful and the focus on outdoor pleasures. Membership was required, the property would be locked for most of the day and guests had to perform a chore, such as sweeping, cleaning or communal washing up.

Today's more affluent and sophisticated young generation demand more. They expect the internet, a bar, all-day access and, most important, an atmosphere of fun. As for doing chores… forget it. There's now a huge range of places catering for today's modern youth market.

In London, for example, a new breed of backpacker venues is represented by The Generator in WC1 and Wake Up! London in W2. Both sell themselves as funky and hip, and cater to a clearly defined young and lively audience. Open all hours, facilities include internet, laundry, travel desk, TV lounge and bar. Wake Up! London even advertises female dormitories - so-called Doll Up! rooms - that are equipped with "hairdryer, en suite bathrooms, vanity area and a picture or two of desirable men to get you in the mood before your night out". Perhaps not what Schirrman had in mind.

While the world has moved on, the YHA remains in the past. Part of its mission statement is "to help all to a greater knowledge, love and care of the countryside and thus to promote their health, rest and education". This doesn't exactly sound sexy to the modern audience.

But the YHA has been making great efforts to change its image. Paul Fearn, YHA communications officer, notes: "There has been increasing demand for smaller, private rooms with en suite facilities. This shift in expectations has proved expensive. Our borrowings have been used to fund such improvements and build new properties."

Fearn is also keen to point out that that the opening and closing of properties is not unusual. "It's about having the right hostels in the right places," he says. "This has changed over time. Our city locations are now some of the most profitable in our network."

Herein lies another weakness in today's market. The brand lacks cohesion. It has no clearly defined niche, but instead tries to cover too many bases, from families to youths, walkers to backpackers, countryside to cities. From the old school are properties such as Welsh Bicknor in Herefordshire. It has no licence to sell alcohol, basic facilities, bunk beds in single-sex dormitories, shared bathrooms and is closed during the day. Representing the new school is a purpose-built youth hostel in Liverpool. All rooms are en suite and include tea and coffee making facilities and TVs, it's licensed, has a free car park and allows 24-hour access.

The YHA certainly has some fantastic buildings and locations, agrees Sam Dalley, editor of the Independent Hostel Guide. However, another weakness is its large overheads. "At independent hostels, the owner/occupier does everything, including marketing and sourcing supplies. In contrast, YHA hostels have to fund the staffing of the head office in Matlock in Derbyshire."

The cost of YHA accommodation is certainly an issue. John Jefferies, head of politics at Warwick School for Boys, takes regular school trips around the country. "The YHA is no longer the only cheap accommodation option. The differential with better-equipped alternatives has steadily been eroded," he says.

A focus on value for money is behind the success of London's recently launched EasyHotel in Kensington. The property was originally going to have shared facilities. However, notes James Rothnie, EasyGroup's director of corporate affairs: "We ended up changing our business model and switching to private facilities. This gives us access to a much wider audience. The focus is on the essentials." The result is accommodation at a price that's attractive to both independent business people and backpackers.

The old dog, it seems, needs to learn some new tricks.