It's a shame but I think they've been out evolved by the Premier Inn and AirB&B markets.
If I'm travelling en famille, I don't want to stay in a hotel. Often we need 2 rooms (expensive), or we are all shoved in one tiny room with no option of going to bed at different times. I also don't want to be tied to expensive hotel or restaurant food, and would rather not have to subsist on sandwiches or meal deals eaten perched on the edge of the bed.
A hostel with a well equipped kitchen is ideal but for not much more you can have, as PPs have said, an entire AirBnB. Hostel availability is also challenging, and I'm not sure how I would feel with my kids sharing dorms with randoms, even if I am with them. I wonder if increasing regulation of AirBnBs will change things?