People require accommodation for various purposes. Guest houses and hostels are cheaper lodging means for visitors, who are seeking residence in a new environment. Both can be used interchangeably but differ in their overall accommodation facilities.
Guest house, as the name implies, is a residence at the disposal of a guest(s). Generally, they were considered a living place inside a home, where guests of the homeowners usually resided for a certain period of time. However, guesthouses now cater to a broad audience, which may include students, business travelers as well as tenants. Hostels are sociable accommodation where guests are required to pay rent and will share a common bathroom, lounge and a kitchen. Hostels are generally seen as a place for long-term residents.
The differences between the two terms are subtle. Hostel can usually accommodate several guests at one time whereas guesthouses caters to a small number of people as it is built within or just outside the main house. Hostels are usually meant for students who have come from different places in order to pursue higher studies.
Guesthouses are usually operated by the homeowners, who apart from shelter may also provide other facilities related to food, clothing, cleaning etc. Hostels, on the other hand, are specifically built for accommodation purposes and will most likely provide all sorts of facilities but with a common agenda. For instance, food menu will be prepared in advance for students or backpackers, while residence will be provided with a basic entertainment facility such as a main hall etc.
Operating a hostel therefore, will require a 24/7 staff presence, and extensive security protection. However, guesthouses have very limited staff members, all of whom may be working in a part-time capacity.
While both provide cheaper accommodation means for the visitors, hostels can be relatively inexpensive as they cater to a larger audience. Tenants in guest houses may be required to pay a large upfront deposit to avail the service.