We are the only hostel in our city. Our prices for our 3 dorm sizes are normal and relative to the destination and season. The town is a transport hub but in winter not a huge amount is happening here, but we are in a good location for a national park that is really popular so around now mostly everyone who comes is going there.
The problem is the next city (60km away) has a shitload of hostels. There is a price war happening there with hostels undercutting themselves with ridiculously low bed prices just to get a good ranking on HW searches etc...where beds used to be 10 or 11€ in winter, they are now selling at 6, 7 or 8€!
How should we approach this? Should we even be concerned? Im imagining guests searching both cities in relation to the national park and choosing the other one even though it is further away and more expensive for food etc. but the bed prices are cheaper.