This is my submission for your contest. It's in a sleek and modern style. Visually, it is supposed to suggest a red carpet going all the way to an entrance, or a red carpet folded over.
Most people do not see the entrance right away, but I think that's fine - consider the famous "FedEx" arrow which is hidden in the white space between the 'E' and 'x', for which the logo is known for.
It's this kind of visual reminder that makes this logo memorable, I think. I see you commented on some other submissions about wanting a 'funky' look, but I advise against it. Most logos trying to look 'funky' fail, and those who actually work, would not work for a hostel. Moreover, if you want your customers to feel luxurious, you should have a quality, sleek logo. But, that is only my opinion.
Thanks for your entry and the explanation. I agree with you that funkiness will fail when inappropriate, but for our business it would be just rigth. we have a young target group and a funky concept (rolling out a red carpet in the lobby for backpackers, every guest gets free champagne, ...) thus need a funky logo.
I appreciate your suggestions, but we are definitely looking for a less serious and simple solution combined with some sort of Pictorial/Character which represents our business even without the "red carpet hostels" lettering next too it.