The first time I set foot inside a hostel was 2007 in Puerto Viejo, Costa Rica. That weekend at Rockin’ Js was my first taste of hostel camaraderie and I was hooked.
In the 12 years since, I’ve stayed in hundreds of hostels across the world and my love for hostels spilled into my day-to-day life as I started a few myself. In 2012 I started, lived in, and managed a hostel in New York City. In 2014 I transitioned to Austin, TX where I founded HK Austin, the first hostel on Austin’s now-popular East Side. The hostel would quickly become one of the top rated hostels in the United States. Since, I’ve helped advise the formation of a few dozen other hostels and fielded a few hundred emails and phone calls from prospective hostel owners.
I’d guess most backpackers have thought about starting a hostel at some point. Maybe that is how you came to this article. Owning your own hostel can lead to the most rewarding times you can ever have. It can also be a nightmarish experience that leaves you with a prison of your own making. This list will hopefully lead to the former.
To any aspiring hostelier out there, here are 21 quick tips to starting the hostel of your dreams:
1. Your first trip needs to be to the city’s planning department. I know, a bummer way to start the list. BUT, you need to figure out exactly what type of permits, licenses, and building requirements will be needed to open the hostel. What areas in the city are zoned to allow hostels? It will guide your real estate search. I understand you’d much rather be daydreaming about duvet colors and the tracklist for your opening party, but you’re just wasting time until you do #1.
2. When you’re looking at spaces for the hostel, make sure the space can legally hold at least 25 guests. Under that it is hard to make a business out of your hostel and your initial enthusiasm for a ‘passion project’ will wear off. Most hostel owners burn out around year 2 because the hostel can’t produce enough income. Most of the time this is due to lack of beds.
3. More bathrooms. Always error on a space with more bathrooms than you think you need. Minimum 1 full bath (shower/toilet) per 4 bunk bed sets (8 beds). Even if city allows less.
4. Kitchens are important no matter the type of hostel. Make sure your space has an adequate one available for all to use.
5. Consider this scenario: You get sick and go to the hospital for 2 months. How does your hostel survive? You need an answer for that from Day 1.
6. The answer to #5 is systems. Systems run the hostel. People run the systems. Systems are the difference between building a hostel business and building a beautiful prison. You need to establish systems before Day 1 so you can effectively manage the hostel. Create systems for every aspect of your business and refine those as you take on employees. Create a system for everything you do too so you can eventually be replaced.
7. Assign a cost to your time, even if you won’t take a salary. Two reasons: a) you will need money to live and b) eventually you will need to hire someone to fill your role and they will not work for free.
8. Volunteers make the hostel world go round. When attracting hostel volunteers it is important to create a private space where they can get away from all guests. People are going to be in their face all day long. Create a space for them to go and unwind. They’re your most valuable asset. Take care of them.
9. Consider ALL the fees and taxes you’ll pay. When you sell a bed for $30, think you’re going to get $30? Wrong. HostelWorld is going to take 15%, then your city is going to take a 10% occupancy tax, then the government is going to take 25%, and so on. You cannot overlook these when putting together your projections.
10. Make sure it is easy to book directly on your website. Everytime someone books direct you make an extra 15% over paying HostelWorld. I’ve really enjoyed Cloudbeds.
11. What type of hostel are you trying to create? What type of guest are you trying to attract? “Travelers” is not an answer to this question. You don’t want to please everyone. Pick a specific traveler (maybe yourself) and let that singular guiding muse direct all your decisions.
12. What are you adding to your hostel that people can talk about? Give your potential guests something at the hostel to talk to their friends about. A crazy mural to Instagram. A room with sand on the floor. Maybe buy a goat. That’s how word of mouth starts.
13. Don’t have a TV in your common room. It ruins a hostel’s environment and all a hostel has is its environment.
14. Consider NOT serving breakfast. Quality breakfast is hard to maintain and expensive. Non-quality breakfast gives guests one other thing to complain about. Find your competitive advantage elsewhere. Plus, once you start serving it will be hard to stop. “I read you all served breakfast!” I feel the same about printers.
15. Buy good mattresses. People are essentially paying to sleep. You will never, ever have enough money when you start. And so, you’ll have to cut a few corners. BUT, beds are not the corner to cut.
16. Don’t allow locals to stay or for any guest to stay longer than 14 days. You need a circulation of people to maintain the traveler vibe. You don’t want long term tenants feeling entitled to special privileges. If someone is local, why are they staying at your hostel?
17. The day you accept guests is the day you start getting reviews. Think about that. There is no such thing as a ‘soft launch.’ People don’t care if you’re still getting your act together. If they paid to stay, they’re going to review their experience. Not your promise of what the experience will one day be.
18. Control what you can control. Meaning, there are certain elements that go into a guest’s experience (and review) that you fully control – the cleanliness of the hostel, the attentiveness of your staff, the activities you provide. You can’t control how every guest will react to your atmosphere or location, but you have to control what you can control. Starting with cleanliness. No excuses.
19. How will guests meet other guests? That’s why they’re staying there. You need to create adequate opportunities to meet each other.
20. On the flip side, where can a guest go if they need an hour to themselves? If there is nowhere but just the common room and their beds, they may feel overwhelmed.
21. Just start. If you’ve made it this far and you’ve always wanted to own a hostel, start now. There will never be a perfect time to launch. Next year may as well be a lifetime from now. My main regret with hostels is not trying to start one sooner. I’d have learned the lessons above quicker, pushed myself earlier. My current projects today would have been better as a result. When you’re looking back on your life, you’ll be more upset for never trying than if you try and it doesn’t work out.
If you are thinking of opening a hostel, feel free to drop me a note. I love hostels and I love the people trying to open them. I’m happy to help however I can!
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