Glenella, the historic guest house in Blackheath, is opening a new lower-cost accommodation wing aimed at outdoor sport enthusiasts.
Owners Rowan and Margaret Bouttell are hoping the bunkhouse will attract canyoners, rock climbers, mountain bikers, trail runners and other enthusiasts who are more interested in their daily activities than where they sleep.
The guests will share a bathroom but will also enjoy a home-away-from-home feel with a comfortable lounge room and direct access to the garden.
"We're targeting the more mature market," said Mrs Bouttell. "It isn't a backpackers - that's why we've called it a bunkhouse."
The Bouttells have based the venture on the UK model where there are low-cost bunkhouses dotted across some of the country's most scenic walking or rambling areas.
Mrs Bouttell said the atmosphere in the UK was "inclusive and communal and we want that spirit to be part of our bunkhouse".
Mr Bouttell said Glenella would continue to offer the traditional B and B service in the main part of the guest house but he hoped the alternative accommodation would provide a lower cost option.
"We want to appeal to people who are passionate about the outdoors," he said. "Blackheath is the centre of rock climbing, it has the potential for mountain biking. We even want to see bird watchers here."
The downstairs space has been renovated with the help of friends and a string of young overseas visitors engaged through HelpX, an online volunteer work exchange website.
The visitors stay for up to six weeks, getting board and accommodation in exchange for helping in the guesthouse. Their most recent helpers were from Spain and Japan.
"They can learn English, find out about Australia culture, see the Blue Mountains and they help us immensely," Mrs Bouttell said.
The couple bought Glenella a year ago. The Thai restaurant on site will be closing shortly and the kitchen and dining room then will be available for "kitchen events", Mrs Bouttell said.
"We might do workshops, make jams and preserves and possibly even work with locals who do cooking to sell at the markets."
The Sports Bunkhouse is expected to be open for business by November.