Nimby = 'not in my b ack yard'
Buying decisions for houses are complex. For most of the market the following will be important:
Location (where house actually is - can I travel to work from it? Is it close enough to my parents?)
Size & type of house (millions of different factors here)
Other features of house (garden, garage etc)
Surroundings (made up of a combination of factors: how close you are to facilities like schools, transport, shops. How well kept the surroundings look. How peaceful they are. Whether there are any obvious sources of nuisance ie hostels, pubs etc)
Each individual in the market will put this list in a different order, and each individual will have a different idea about what makes an attractive house, good location etc.
So if different people have different ideas about what makes a house attractive, it follows that you are going to find some who will not give a stuff about a quiet hostel and will happily continue to pay top dollar for a good home in a family neighbourhood.
Now I'm not denying there are some activities that will so obviously cause a problem to the neighbourhood that it does devalue a house - for example a house right next to a major motorway is likely to be valued at a big discount.
But this is a quiet residential hostel for families, FGS! I'm fairly sure that in a hot market like this it is not going to outweigh the other advantages of good location and good house. In fact, I would challenge you to find evidence of any neighbourhood where such a hostel has actually reduced the prices achieved on a house sale.