MIAMI BEACH, Fla. — Charity Simon is sharing a bedroom and a bathroom with two other young women she has never met during her stay at the Tropics Hotel & Hostel in Miami Beach. But that's fine with her since she is saving a ton of money every night.

Simon, who is from Germany, used to stay in four-star hotels until she found out about hostels, which offer low-price lodging and the chance to make new friends.

"It started with I wanted to travel around the world as much as possible," said Simon, who declined to give her age. "I asked what is it all about? They said a hostel is where you save, first of all, a lot of money, where you meet a lot of people ... from all over."

With its art deco buildings, bikini-clad women and late-night party scene, experts say South Beach is becoming a hot tourist destination for young travelers looking to spend less money on where they are going to sleep and more on sightseeing.

Anywhere between three to 14 travelers are cramped in one room at a hostel, sleeping on bunk beds. A room with 12 beds can run for $18 a night per person; $30-$40 for smaller rooms.

At Jazz on South Beach Hostel, some rooms are divided by gender (four- or six-bed rooms for women) while other rooms are mixed. Depending on occupancy, and if there are any empty rooms, people who are traveling together can request to room together just as they would in a hotel.

"But the point of the hostel is to meet other people," notes general manager Bobby Gera. "Or they can just pay for the rest of the beds in the room," essentially turning the dorm room into a private room.

Some hostels on South Beach offer private bathrooms with each room and have individual wall units or central air conditioning for those hot Miami nights.

There are also private rooms for two to three people. Those are popular, hostel operators say, in the slow season when travelers want to save some money but still take in the experience. Those rooms can run $100-$125 per night, still cheaper than most hotels.

Visitors are provided with bed sheets, a towel and a locker (bring your own lock) to store their belongings while out exploring. Some hostels have a kitchen for visitors to prepare their own food, while most offer computers with Internet access and a lounge area in which to watch television.

The idea has always been more popular in Europe and Asia, where the beds are seen as a cheap rest stop. But hostels on South Beach focus on creating a sense of community by organizing trips to the Florida Keys or Fort Lauderdale, enjoying the Miami club scene without waiting in line, or by hosting Sunday beach parties on the sand.

And at $30 a night per person — sometimes even as low as $16 — the American hostel market is starting to come into play.

Travis Lajoy, general manager of South Beach Hostel, said six years ago there were only three or four in the area that advertised as a hostel in Miami. Today, there are more than a dozen. "That's insane. You know it's 300 percent more competition than there was when we first started," he said.

The hosteling industry in the U.S. generated $17.8 million for the 2007 fiscal year, which ended March 31, according to Hostelling International USA, a nonprofit hostel organization which oversees the largest network of hostels in the U.S.

But some hostels are not members of the organization, like many in Miami Beach, and there is no association that keeps track of any industry data.

Hotel experts note that the industry is going through a transformation, especially in South Florida, where discount hotels are now offering hostel room prices.

"Discount hotels are saying, 'I don't want to convert fully to a hostel because of the connotation that comes with that, but I want to provide hostel rooms,' " said Andrew Wharton, managing director for the accounting firm KPMG LLP, and is responsible for the real estate and hospitality practice in the Southeast.

Plus, older property owners in Miami Beach are realizing they may not have the cash flow to pump more money into renovating their buildings. So owners are looking at converting to a hostel as a way to "put more heads in beds and pack the square footage," he said.

Hostels may not be for everyone. Jessica Lopez, 21, of the Bronx, N.Y., stayed at Tropics Hotel & Hostel with her brother and a friend but said she would feel "very uncomfortable sharing a space with complete strangers," especially when she had to get dressed.

But for the experienced backpacker who has seen it all, hostels are a great way to travel on a budget. Xain Coslow, 22, from Oregon, has stayed in more than 40 hostels in the past two years in places such as Thailand, Costa Rica and San Francisco. He is now at the Jazz Hostel on South Beach.

"People hear hostel and they think horror movie or they think of a cramped little space. But in reality, though, it's like meeting a bunch of friends pretty much," he said.