Europe's hostels now offer cool upmarket accommodations at bargain prices. There are still the communal areas that made hostels the social place to be in the early '90s, but now they are matched by posh facilities. The clientele includes fewer backpackers, more flashpackers: holidaymakers with a taste for the nice things but who are cost-cutting in keeping with the climate

But while sleeping in crowded hostels and strapping all your possessions to your back is heaven for some, there's another breed of backpacker who's looking for luxury. Like their penny-pinching cousins, these travellers go from one exotic destination to the next with no itinerary or tour operator to guide them, toting laptops and other hi-tech gear.

"Flashpackers," as they have been dubbed because they backpack with flash or style, are generally older than the average student backpacker and thus have the funds to satisfy their champagne tastes.

You can hike the Inca Trail to Machu Picchu, backpacking for four days with guides to carry the gear.

Or like us, you can take the "flashpacker" route — a train from Cuzco and a zig-zag bus ride to stay at the hotel at the ruins.