Are they mutually exclusive?
Personally I've always found if you pay peanuts, you'll get monkeys. Volunteer staff can add to the atmosphere of a hostel but I'd never rely on (essentially) free labour to operate ANY business. I have worked with volunteer staff before - both of my own volition and under direction; sometimes out of necessity, sometimes out of... err... financial motivation.
I think having someone 'volunteer' for the hostel in exchange for room and board can work, provided you don't expect too much, particularly in terms of hours committed. If you're effectively paying them less per hour than they would earn in terms of bed price - so, if a bed costs €20 and the average wage is €10, they shouldn't work more than 14 hours per week - then you can't expect much. But if you need someone to host a games night/pub crawl/cook up or similar in your hostel once or twice a week in exchange for a free bed for a few weeks (or months), it can work wonders, particularly in low season when you'd be less likely to sell the bed and need more from reviews/WOM than you would in peak season when good ol' fashioned demand takes over.
A reliance on volunteers is evidence of a faulty business model - but it is an excellent low cost way to add a little more value to paying guests experience when you need to.
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