MOSCOW - Until recently, visitors to Moscow had little choice but to pay for hugely expensive hotels. But now there is another option: growing numbers of clean modern hostels that opened over the last five years, charging around $20 per night.

Hostels now offer more than 3,000 beds in Moscow and their number grew by almost a third since May, the city's tourism committee said.

"It's very well located ... and it was cheap as well," said Mexican student Carolina Felton, 22, who was visiting Moscow as a tourist and sharing a dormitory room with seven others, as well as a bathroom and kitchen.

"A hotel is way beyond my price range," said British student Mike Loader, who was visiting Moscow for sightseeing and to research Soviet history, calling Moscow a "premium" and "expensive" city.

Both were staying at a hostel close to the Arbat pedestrian street, in one of the most attractive areas of the city center. It sleeps around 30 people in dormitories with up to 12 beds, starting at just 550 roubles ($19) per night. The owner, Daniil Mishin, is just 18 and comes from Ukraine, where he and his parents own several more hostels.

He said they got the idea when traveling in Europe and decided to recreate the hostel concept locally. He and his family have opened a total of seven hostels in Moscow and their home town of Sevastopol, Crimea.

Business is going well, he said, with his most recent hostel in Moscow opening in early August. Occupancy rates are currently at around 80 percent, he said, with bookings for months ahead.

And he is not the only entrepreneur to spot an opportunity in the budget travel sector. At the moment, city has 59 modern hostels, 14 of which opened since May, according to the city tourism committee. The first such hostel opened in 2006.

The city's largest hostel, with 153 beds, is due to open by the end of the year in one of the liveliest central streets, the pedestrianized Stoleshnikov Pereulok.

"Everything has changed: the market has gone mad," concluded Mishin. Whereas a year ago the guests were almost all young foreigners on a shoestring budget, that has now changed, he said.

The guests are "people of different ages, different professions, completely different social circles", Mishin said. And recently the first Russians started checking in.

"It is about a year since Russians started going to hostels," he said.

"Before, no one knew what they were, but a year or so ago Russians started to find out, They realized that you could live comfortably in the center, and pay 500 roubles per night for nice conditions."