With its sky-high rents, Hong Kong can be an unwelcoming city for the budget traveller.

Filling the reasonably priced-accommodation void is new kid on the block the Mahjong Hostel, located in one of the few old-fashioned neighbourhoods left in Hong Kong. All tong lau, cha chaan teng and little old grannies, To Kwa Wan offers a taste of the unique in this fast homogenising town of ours.

With clean, bright, airy and modern rooms, and a manager who can point travellers to cheap and cheerful eateries in the neighbourhood - some of the most affordable and best Thai food in the city can be found here - the hostel can host up to 44 people and has taken on a look that would make G.O.D. founder Douglas Young proud. The walls are adorned with mahjong tiles (of course), graffiti by local artists such as Bao Ho and murals that tell the area's history - Kowloon Walled City, which was, until the early 1990s, one of the most densely populated (and lawless) places in the world, stood nearby.

But there's more to the hostel than its looks. The carefully designed space meets many of the modern budget traveller's practical needs. Each of the bunks, or "sleep pods", comes with a built-in safe and electrical outlet, and a pull-down curtain that affords a little privacy. The mattresses and coverings are all hotel-grade, claims manager Iris So, and have already given comfort to wannabe models from reality TV show Austria's Next Top Model, rugby players and the Nepalese Oxfam Trailwalker team.

Furthermore, the Mahjong has teamed up with local microbrewery Moonzen for a signature line of craft brews, which can be supped in the common room, and on Thursdays staff teach residents how to make sense of the tiles that give the place its name.

While the MTR doesn't connect to To Kwa Wan yet, the Mahjong is but a short bus ride from the city's major sites, and just a 10- to 15-minute walk from the Kowloon City Ferry Pier, which connects to North Point. Also close by is the Cattle Depot Artist Village.

"There's a Chinese saying: the sparrow can be small but it has everything it needs," says So. Need we say more?

Mixed single pods (10 per room) start at HK$200 a night. Female-only pods (eight per room) start at HK$270. Deluxe queen pods start at HK$450 (six per room) a night. Visit themahjonghk.com for further details.