Both are places where you sleep when you're traveling. Hostels tend to be cheaper and less fancy than hotels (though hotels don't have to be fancy). In many hostels, you will share a bedroom with people other than your friends and family, and you will share a bathroom, too. This is rarely the case in hotels, at least in North America. Hostels are very popular with college students and people just past that age. Hotels are popular with everyone, but especially with people over 25 or 30.

Hi Sally, So, we don't really have hostels here in the U.S., but from what I understand, a hostel is a place to stay that is inexpensive, where women share one large room and bathroom and men share another one. They have beds kind of like cots or bunk beds, and I believe they are common in Europe, especially for young people to use when they are on backpacking trips. A hotel is a nicer, more expensive place to stay where you have to make a reservation either ahead of time or when you arrive. You get a private room (which may even have more than one bed) and bathroom. Here in the U.S. hotels often have a free ("continental") breakfast, as well as other restaurants where you can buy food, a gym, and a swimming pool.