Food & Beverage Hostel Size Operations Pre-Opening The Industry

7 Reasons to Open a Hostel instead of a Hotel

Dennis Pitcock
Written by Dennis Pitcock

Tourism is booming, and expected to grow. You already found an amazing property. The hotels in the area have high daily rates and impressive occupancy levels. Everything is looking great, and you’re just about ready to move forward with your new project, but something is telling you to wait, there could be more. If you’re thinking of opening a bed and breakfast, hotel or something similar, perhaps a hostel is right for you.

Here are seven reasons why:

#7 Facility Flexibility

Hostels can be made from just about any existing property out there, and chances are a hostel has been made out of one already. When it comes to hostels, not every dorm room needs a bathroom, even private rooms will sell without any bathrooms. This opens up a lot of room for creativity. Here are some examples of what can be turned into a hostel.

• Outdated hotel
• Converted warehouse space
• Residential home
• Closed prison
• Jumbo Airplane
• Exotic Treehouse
• A plot of ground

#6 Easily Motivated Staff

One major consistency among the great hostels out there is that the staff really love their job. Hostels aren’t known for their high salaries or unlimited vacation days, yet there is a mountain of applications at every job posting. Simply put, these workers love to travel and help others have the best experience on their travels as well.

#5 Less Demanding Guests

Hostel guests are less demanding that those of hotels. They are already willing to sacrifice some privacy, and use shared bathroom and kitchen space. They understand weird rules and have no problem making their own beds. Because of all this, it’s easy to keep operation costs are low and reviews high. Just make sure some standards must be set to deliver a high quality of service.

#4 Edge on the Competition

Hotels might seem to do well in the area, but perhaps they are on the edge of a pricewar where one new contender can be all its needs to take off. Perhaps there are no hostels in the area, or perhaps the hostels aren’t that great. Hostels do pull most of their guests from different booking sites than hotels, so you can separate yourself from the hotels by going after a completely different market.

#3 More Money per Key

No matter how big, a hotel room can hold 2-4 people max. Of course there are some exceptions, and suites, but just think about how many bunks you can fit into that space. A properly designed hostel can fit up to 16 people in a room if the size is right, minimizing the inconveniences to a point where the guest can barely tell how large the room is.

A properly designed hostel has rooms of all sizes to accommodate people of all budgets. A 300sq ft hotel room can hold 4 people in 2 double beds. Lets say this is a low ADR area, where they make $100 per night per key. They can easily fit 8 beds in that room, and can make more from that room if they charge more than $12.5 per bed. It takes some research and some math, but you can see how dorms can really boost your revenue.

#2 Higher tRev Possibility

Now that you have 8 people staying where 2-4 would normally, you have more people who would want to consume the goods and services you offer. Do you serve food and beverages? The top European bars at hostels boast that 50% of their revenue comes from F&B. So there is a huge possibility. Do you sell activities? In Australia, the big name hostels boast around 30% of their revenue is from travel sales. It’s nothing but a numbers game, and the more guests that come through your doors, the more possibility you have to sell them more than just a bed.

#1 Sell the Beds, and the Rooms

A hostel can sell private rooms along with dorm beds, but a hotel cannot sell dorm beds along with their hotel rooms. The private rooms can be basic or as extravagant as any hotel. You can list your private rooms next to hotel rooms on and Expedia, in addition to the hostel OTAs. These private rooms can be as diversified as the dorms, such a single, queen, king, two queen, en-suite or shared bathroom. These private rooms could offer the right experience at the right price and in many hostels, the private rooms sell the best out of all their inventories.

About the author

Dennis Pitcock

Dennis Pitcock

Dennis jumped into the hostel industry after a summer backpacking Europe in 2008. He went from being a guest to a manager within weeks, and currently does consulting for large and small hostels alike in 3 continents. Prior, he worked in eCommerce, so he has passion for the tech side of the industry and is now deeply entrenched in the hostel and activities industry.

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