Purpose – To determine which factors account for customer satisfaction with a service and their loyalty to a given service provider, in the particular, context of “backpacking” in Australia, a significant element of the country's hospitality and tourism economy. Design/methodology/approach – A series of hypotheses was developed from the services marketing literature and built into a 52 item questionnaire administered to 281 backpackers staying at the three youth hostels in Australia, who thus responded whilst actually experiencing the service encounter rather than in recalling it later. The European Customer Satisfaction Index (ECSI) was used to measure the strength and direction of the determinants of customer satisfaction, and the impact that the antecedents of satisfaction had on loyalty to the generic provider. Findings – The results of confirmatory factor analysis of the questionnaire responses suggest that brand image is a predictor of satisfaction with a hostel, while perceived value indicates a degree of loyalty towards the “brand”. Research limitations/implications – The ECSI model's generic measuring criteria limit its generalisability. Further, research could usefully investigate other variables applicable to both hostels and conventional hotels to be included in a measurement model of satisfaction and loyalty for the whole hospitality industry. Practical implications – Backpacker hostels are an example of experienced-based service encounters with few clear comparative advantages. The marketing of the generic brand must therefore foster a brand image congruent with the experience actually delivered and the potential customers' expectations of it, thereby reducing decision risk. Originality/value – The unusual context and particular methodology cast fresh light on an important challenge for marketing planners in the service industries.