7 Reasons to Open a Hostel instead of a Hotel
Tourism is booming and expected to grow. You've already found an amazing property, and 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 tells 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 created from just about any existing property out there, and chances are a hostel has already been made from one. When it comes to hostels, not every dorm room needs a bathroom; even private rooms will sell without them. 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Outdated hotel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 jobs. Hostels aren't known for their high salaries or unlimited vacation days, yet there is a mountain of applications for every job posting. Simply put, these workers love to travel and help others have the best experience on their journeys as well.
#5 Less Demanding Guests
Hostel guests are less demanding than those of hotels. They are willing to sacrifice some privacy and use shared bathroom and kitchen spaces. They understand unusual rules and have no problem making their own beds. Because of all this, it's easy to keep operation costs low and reviews high. Just make sure some standards are 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 price war where one new contender can be all it needs to take off. Maybe there are no hostels in the area, or perhaps the hostels aren't that great. Hostels pull most of their guests from different booking sites than hotels, so you can separate yourself from the hotels by targeting 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, such as 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 the 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 300 sq ft hotel room can hold 4 people in 2 double beds. Let's 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 $12.50 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 stay, 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 here. Do you sell activities? In Australia, the big-name hostels report that around 30% of their revenue is from travel sales. It’s a numbers game; the more guests that come through your doors, the more opportunity 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 alongside 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 Booking.com and Expedia, in addition to the hostel OTAs. These private rooms can be as diverse as the dorms, such as single, queen, king, two queens, 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.