Opening a hostel has become a popular option for travelers looking for a more affordable experience than a traditional hotel.
This type of lodging has unique features that make it ideal for certain types of guests, especially those on a tight budget or who want to interact with other travelers. That’s why we’re asking here: Is it a good idea to open a hostel instead of a hotel?
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What is a hostel?
A hostel is a type of budget accommodation that offers shared rooms and, sometimes, a limited number of private rooms. Unlike hotels, hostels typically have common areas where guests can socialize, such as kitchens, lounges, and terraces.
Its main goal is to be much more affordable by having guests share rooms. Hostels are often frequented by backpackers, students, or young tourists looking for a simple and inexpensive place to stay.
What’s the difference between this and a hotel?
The main difference between a hostel and a hotel is the level of service and the room layout. Hotels offer more privacy, with private rooms and additional services such as room service and spas.
In contrast, hostels offer shared spaces (rooms and bathrooms). Although they also have a more relaxed and social atmosphere, they aren’t as private. Another difference is the price, as hostels are considerably more affordable.
However, if we could sum up all of the above in one point, it would basically come down to privacy. The thing is, in a hostel, you share common areas with many people, whereas in a hotel, that’s not the case—unless you’re traveling with someone.
What is the business model for opening a hostel?
A hotel’s business model is similar to, but different from, a hostel’s. In this case, the hostel focuses on offering affordable prices in exchange for more basic services. For example, sacrificing a private room for a lower rate.
Revenue comes from the number of guests staying in shared rooms and their rapid turnover. In addition, some hostels generate additional revenue by selling tours, social events, or services such as bike rentals and food.
That said, we can summarize that a hostel’s entire business model is based on the same thing as a hotel’s: reservations. If there are no reservations, there is essentially no revenue.
Advantages of Opening a Hostel
According to experts, these are some of the advantages of opening or starting a hostel.
Low operating costs
Since this business is based on providing basic services, operating costs—such as staffing and maintenance—are lower than those of a hotel. Furthermore, maintaining 200 private rooms is not the same as maintaining 20 shared rooms.
High Guest Turnover
Hostels attract young travelers and tourists who typically stay for short periods, which allows for higher turnover and a steady cash flow. This way, you can have a higher volume of reservations in the same period of time compared to a hotel.
Initial investment
What’s more, the initial investment to set up a hostel is much lower than that of a hotel. You won’t need the same amount of property, for example, or the same amount of materials to build the rooms.
5 points to consider when opening a hostel
Creating a business plan for a hostel can be just as challenging as creating one for a hotel in Bali , for example. That’s why we recommend considering these 5 points.
The Location of the Hostel
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” One of the most important factors when opening a hostel is its location. For it to be successful, it must be located in a prime, central spot near most of the local attractions.
Travelers often sacrifice comfort and privacy in exchange for a good location—for example, one where they don’t have to travel far or use vehicles for transportation. That’s why a hostel located far from the city center isn’t usually as popular as one in the city center.
Comfort of the Rooms
at
: Although the rooms at a hostel are shared, comfort is still a priority. Travelers look for beds where they can rest and clean bathrooms where they can wash up without having to worry about bugs, pests, or cold water.
So, when designing a hostel, comfort must be taken into account; even though it will be shared, it should not be overlooked. This will help the hostel stand out from the competition.
Hygiene and Sanitation
Just because these are shared spaces with low rates doesn’t mean guests have to sleep among cockroaches, rats, and foul odors. Remember that hygiene is key—here, just like in hotels, reviews are crucial.
That’s why it’s important to create a cleaning and hygiene plan for your business that includes maintaining high-quality shelves. This will ensure a positive experience for your guests.
Spaces for coexistence and social interaction
As we mentioned, the lack of certain amenities is compensated for, for example, by shared social and communal spaces. This includes dining areas or kitchens where travelers prepare their meals and socialize with each other.
Other amenities that can be added include sports courts, as well as game areas with pool tables or foosball tables, patios, and even a swimming pool. All of this is designed to provide guests with the best possible experience.
A Good Business Plan
Finally, as we recommend at IHCS, it’s essential to have a good business plan. Here, you should go into detail about everything—from the market you’ll be serving and your room offerings to your rates and marketing strategies.
In our Consultant Hub, you’ll find the support you need to create the best business plan for your hostel. This will increase your chances of building a successful business that always has travelers eager to book their vacations.
