The Hostel Industry Needs To Segment

“I’ll take one car, please.”

Imagine walking into a car dealership and saying that.

That may have worked in 1908 and you were trying to buy a Model T, but today it would probably lead to a confused salesman and maybe a call to security.

If they were patient, the salesman would ask a few more questions. What is your budget? What features are important to you? Where will you be driving this car? How many people do you plan on commuting with? Do you plan to go offroad with the car?

The goal with all these questions would be to bring you closer to the type of car you’re looking for. You’d walk away in less time, happier with your new car, and happier with the concept of cars generally because you got what you were looking for.

If you were to start your search online, every website would begin with you selecting from at least a dozen different body types from coups to SUVs.

Unfortunately in the hostel industry, we’re stuck in the Model T days. Type ‘hostel’ into any booking engine and they’re all lumped together. The result of this lack of categorization is a suboptimal experience for hostel guests and hostel owners. If the industry is to mature, we need to start segmenting. It’s the natural evolution of an industry, and it’s overdue for hostels.

In the hotel industry, this is widely established. A couple spending a night at the 4 Seasons knows to expect a different experience than those at the Red Roof Inn. Wikipedia lists 40 different pages under “hotel types” ranging from apartment hotels to casino hotels to eco hotels to conference hotels to boutique hotels to luxury hotels. Each of those types offers a difference experience. Each will appeal to a different demographic.

It isn’t that only one or the other should exist, it’s that different people are looking for different experiences. The easier you make it for people to match their expectations to their experiences, the better everyone feels.

In the hostel world, accommodation ranges from party hostels to alcohol free hostels, luxury hostels to budget hostels, adventure hostels, eco hostels, surf hostels, family hostels, and more. Each of those hostels provide a different experience.

As hostel owners, we need to accept and adopt this segmentation. Nobody likes being put in a box, but I don’t think anyone would argue against getting more guests better suited for our offerings. The result would be better hostel experiences for guests. Better hostel experiences for guests would mean more hostel experiences. A rising tide lifts all boats.

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People that can’t enjoy life can’t create places for people to enjoy life.

What type of space are you trying to create? Who will be inside that space? Make sure the team you’re putting together to create that project are the same type of people.

About a month ago the design team of our dreams came to visit our ‘ghost town’, Cerro Gordo. These guys don’t take on new projects. They’re too busy and in demand. Getting them to fly to California and join us on a mountain top was a feat itself.

How’d it go?

We forgot to bring dinner. And sheets for the beds. And enough water. And to tell them it was going to be below 20 degrees below and they should bring extra clothes. And basically everything any decent human would want when stranded on a mountain hours from civilization.

We ended up sleeping side by side in the living room on a jiu jitsu mat that definitely hadn’t been washed this decade. I didn’t have a pillow. If someone hadn’t woke up every so often to put another log on the fire we all would have lost a few toes to frostbite.

The experience could have been terrible. There was every reason in the world for anyone to complain. To lose the hours up there lost in thought of what should have been.

Instead, it was the opposite. We all had the time of our lives. We went running through the cold, howling at the moon. We sat awestruck admiring the stars for an hour straight. We had some of the deepest conversations I’ve been a part of for years. We brainstormed how to turn a falling down cabin into a hidden spa. Maybe we should create a water tower? Axe throwing. How would people feel about luxury outhouses? Let’s go try making a mini bar in the mine shaft.

We enjoyed life. We spun out ideas on how to make Cerro Gordo a space to enjoy life. Because that is what we do. It’s what we’re setting out to do. If we can’t figure out a way to do that, how could anyone else?

It was through those nights on the hill we all decided to work together. That we were cut from the same cloth. It was confirmation on both ends that we could successfully carry out the task at hand.

People that can’t enjoy life can’t create places for people to enjoy life.

What type of space are you trying to create? What type of people would be there? Make sure those are the same type of people you’re attaching to your project from Day 1.

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Stop “playing business”

“Playing business” is a very easy trap to fall into when scrambling to do any and everything you can think of to “help” your business. When I was starting HK Austin, “playing business” meant, among other things: setting up profiles on sites like AngelList, trying to get local bloggers to come to various BBQs, reaching out to other local business owners, researching complicated legal structures for when it was time to grow, trying to gain Twitter followers, spending weeks on logo creation, and plenty of other premature things that didn’t directly impact a guest’s stay at our hostel that night.

The reality is none of those tiny details matter if nobody likes your product.When we dropped the bullshit and focused solely on the guest’s experiences, our reputation grew, and all of the little details started to take care of themselves. Now bloggers reach out to us for write ups, people follow us organically on Twitter, and other business owners want to talk business with us.

If what you’re doing each hour doesn’t directly and immediately benefit your customer’s experience, you should probably be doing something else. Be honest with yourself: Are you setting up profiles on these sites for the dopamine hit of satisfaction they gave you, or because they will actually improve the business? Are you ignoring or avoiding some more difficult task that’s actually tied to your success, in favor of idling on social media websites, gaining “followers” who will never become customers, and planning for realities way off in the distance rather than focusing on the here-and-now?

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Your customer’s ideas for your business are probably wrong

In fact, it’s worse: Your customers can often lead you astray. But catering to the customer has become a kind of legendary goal, with companies like Zappos setting the standard for bend-over-backward service that tries to anticipate the customer’s every desire and respond to their every whim. In the hospitality business, high-end, five-diamond hotels are notorious for going out of their way to do anything and everything their guests ask for, and they often earn their reputations by their willingness and ability to fulfill a guest’s zaniest request.

But that doesn’t mean it’s always the best business practice, especially for a hostel. I learned this firsthand putting together our hostel common room. When they’re at their best, the common room becomes the nerve center of any hostel: It’s where you meet other guests, trade expert travel tips, swap war stories, and, importantly, where you plan the adventures you’re going to have with other hostel guests. It’s no exaggeration to say that a solid common room can make or break a hostel experience.

One of the most disheartening experiences in my own hostel travel was arriving at one in high spirits, only to find a few guests trapped indoors, glued to the television in the common room. Everyone silent, staring at the blue screen as if in a trance. No socializing, and none of the convivial banter that makes for the best memories. If you can judge a book by it’s cover, then you can judge a hostel by the amount of wine and conversation that flows in its common room.

For HK Austin, I decided to head this problem off at the pass: A ban on TVs in the common room. Our guests were, initially, surprised. No TVs? What gives? A few guests even went out of their way to tell us that we absolutely, positively needed a television in the common room. We flat-out refused — and we haven’t regretted that decision for a second.

I’m proud of the space that our common room has become, and I know that it’s due in large measure to the fact that there’s no television around. People use the space to play card games, concoct plans, strike up conversations, drink, and actually enjoy each other’s company, without the endless buzzing distraction of television. In other words, they use the common room to find out what they might have in common.

Sure, it can seem strange to come into a common living area in the 21st century and not see the boob tube against the wall. But the customer isn’t always right, and we had to trust our instincts and intuition. Besides, people will remember their stay at our hostel; they won’t remember the show they never watched.

Think of what your customers say they want, but that you know in your gut isn’t good for the business. Then stand up for yourself, and make your case if you have to. Don’t let the cult of the customer crowd out your own strong instincts for what you know is best.

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Just because your competitors fail at something, it’s not your job to improve it

Most hostels provide a meal approximating breakfast for their guests. Emphasis on “approximating”. One glance at a review of most hostels, and you’ll find the all-too-frequent complaints about the quality of breakfast. “They put out boxes of pizza and old doughnuts (half a donut each, if that),” wrote one traveler on the review website HostelWorld. From another: “The hostel’s ‘free breakfast’ consisted of ROTTEN EGGS, Stale BREAD.” And that’s only scratching the surface. A hostel breakfast is a culinary roll of the dice.

Why is that? Simple: It is labor-intensive and cost-prohibitive to cook great breakfasts for dozens of guests, each one with their own specific tastes, allergies, and preferences. Hostels run on relatively low margins, so simple decisions like whether or not to serve a gourmet breakfast can actually make a big difference. The result: a meal that begins the day and starts with the best intentions turns out to be too much of a hassle for the hostel owner, and you, the unfortunate hostel guest, are left smearing peanut butter onto white bread and calling it breakfast.

I know what you’re thinking: HK Austin decided to make breakfast amazing, right? Nope. In fact, we decided not to serve breakfast at all. Here’s why: Across the street from HK Austin are the best breakfast tacos in the city (and possibly the world). We encourage our guests to visit Veracruz All Natural, and we’ve never had a single complaint about the tacos or about our lack of breakfast. After all, half the enjoyment of staying at a hostel is taking in the local flavor and culture. We want to encourage that for our guests, and we knew that our own pitiful attempts at breakfast would never compete with the Veracruz migas (a taco that Food Network named one of the Top 5 in America). Competing against that was a losing battle, and one we had no intention of fighting.

Here’s the truth: Competitive advantages are excruciatingly hard to find, and it’s tempting in business to think that any one of your competitor’s weaknesses is something you can exploit. But sometimes what can seem like a hidden advantage for you turns out to be a warning. That was the case with our breakfast issue. If you notice a defect in your competitor’s product, rather than race to say, “We can fix that!”, take a step back and ask yourself, “Why is that a defect? What is keeping them from fixing it themselves?” More often than not, you’ll discover good reasons why they’ve chosen to leave a flaw in their product, and that knowledge can be valuable competitive intelligence.

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Give People Something To Talk About: Or, Why You May Want To Buy A Goat Off Craigslist

If you want people to talk about your project, you have to give them something to talk about.

It’s what we end up telling almost all our marketing clientsEveryone wants press but nobody wants to do anything interesting.

What is the handle you’re giving someone to pick up the story about your project, carry it over to their friend and talk about it?

A few days ago I saw an ad on Craigslist for a baby mini-goat that the owners were going to get rid (read: kill). I text them at 6:15 and by 7:15 the same mini goat was at my hostel, HK Austin, living his best life. Immediately guest wanted to take photos for Instagram. Call their mom who used to have goats for advice. Tell their friend about the hostel in Austin with a goat. A hostel with a goat? A hostel with a goat.

People want to be the center of attention. They want to be the interesting person who does interesting things in their friends eyes. They WANT interesting material about your project to tell their friends. Your job is to give it to them.

The result is the most powerful form of marketing available – word of mouth. Even the most complex and expensive marketing campaigns are all set up just to spark word of mouth. That is what sells in the long run. A McKinsey study shows that 20-50% of all buying decisions happen because of word of mouth. And that an endorsement from a close friend converts 50X any other type of marketing.

You need an entry point to your project. A handle. A reason for people to talk about it with friends. Give it to them.

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