We traveled through Xinjiang in September 2018. Urumqi was booked out completely when we arrived and no hotel or hostels would allow us to stay. Even if the police officer bargained on our behalf. Usually you can ask at the reception of any "tourist designated" hotel and they will call all the others. The same happened to us in Bayingol.
I can confirm Ziyou international hostel. Perfect location. We had a 3 people tatami room with ensuite bathroom. It was good. The staff is super nice and speak English very well. But 99% of all guests are Chinese... which means it can be veeeery loud in the dorms. The common room is rather sad and you are allowed to smoke there so the lobby smells like cigarets. Wifi only in the lobby area unless you have a chinese sim card.
From Urumqi south train station take BRT bus number 1 to Hongshan. Then it's a short walk. It's on maps.me. we booked through booking.com
It's pricey, I know, and in not a great location, but when I ended up in Ürümqi unexpectedly (meant to be going to Turpan, my train was cancelled/delayed/who knows and had to fly) the cops at the train station suggested I go to the Hilton.