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The Biggest Challenge in Starting a Hostel

Written by Oliver Simon

Starting a business is inevitably going to involve varied challenges. Starting a hostel business poses an additional, different issue to that of other startups. Simply, the general population lacks a basic understanding of what a hostel is.

I have come up against this issue more times than I can count. It’s an issue that really won’t go away.

So you are making a homeless shelter

 The first time it surfaced was when I explained my project to friends and family. “So you are making a homeless shelter” was one response I commonly received. Or some other people made a banal reference to the horror film made in 2005.

When I got a builder to give a quote me for some renovations to the hostel. He suggested spending €100k on luxury design fittings and minor improvements and then charging (a bit) more than the competition. He just didn’t understand the hostel market. Where utility is gained from the connections formed rather than only the space itself.

At least, I was lucky that Budapest is a city of many hostels.  Hopefully, the local authorities here would understand the concept of a hostel, I thought to myself. But in this case their understanding brings disadvantages. They try to rinse hostels of every cent from their profit margins, with numerous taxes and regulatory burdens.

Overall, the concept of a hostel must be crystallized as discreet from that of a hotel, simple dorm-room, guesthouse or any other form of accommodation. A better understanding of hostels would be beneficial to all of those who have an interest in this market.

Additionally, a greater understanding of the wider social benefits that a hostel brings to an area, should lead to less regulatory and tax pressure from local authorities.


About the author

Oliver Simon

Oliver is currently in the process of founding his first hostel. FunkNBunk Budapest will open in April 2015. Apart from this, Oliver has a great deal of experience in working and staying in hostels across the world.

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