I traveled a couple of years ago with my two children, and will return this summer (they'll be 10 and 14). Last time, we did research and found lots of sleeping options. For us, Hostels did not end up being the most economical -- because with four they charged us the same whether the kids were adults or not. In Italy, we stayed in a convent -- very cool experience -- right across from the Vatican! Throughout Germany we had no problem finding what they called 'family rooms' or 'familienzimmer'. Sometimes it was a standard room with beds, other times it was more like a little suite. As long as we stayed with pensions, gasthauses, or 2-3 star hotels, I could normally find rates similar or better than a hostel. To get that, though, I usually emailed an inquiry to the owner with my dates, the ages of my kids, etc., and asked what they had available. Sometimes, the hotel had an apartment that was not even on the website. In Munich, for example, we had a great little top floor room in a historic hotel -- only downside was it was on the 6th floor with no lift. Made you VERY certain of what you were bringing with you when you left for the day. While most of our stays were for 1-2 nights, at 3 nights plus it seems that apartments are the way to go.