Budget travel accommodations can be a lucrative market. If you’ve ever stayed at a guesthouse or hostel and thought you could run it better, here are 50 tips on how to open your own budget place:
Location, Location, Location
1) Nearby attractions are needed. A suburban estate may be beautiful but sights, restaurants and nightlife nearby are necessary to attract a crowd.
2) Transportation links are vital. If you build it they will come? Only if there are planes, trains or buses to get them there . . . and around.
3) Ensure you’re in a safe area. Run-down areas are cheaper, but most people won’t compromise safety for saving a few bucks.
4) Complement the community. Carefully consider the impact of your business on the locals.
5) Do you have the language for the location? Ordering food is one thing, but do your language skills extend to business speak?
6) Be on top of travel trends. Are you in a budget traveler hotspot or are they moving out as luxury development moves in?
7) Central isn’t always necessary. Assuming a safe area with transportation links, a good vibe and facilities can compete with a central spot.
Location is the most important factor. Photo by Pocheco.
The Business End
8) Decide whether to rent or buy. Consider that getting landlord approval can be tricky but has lower outlay but also a lower asset value.
9) Think through finances. Plan early. Home banks may refuse to finance a business in a foreign country. Private equity may be an option.
10) Get advice on local laws. Don’t think you can get by without legal advice, instruct early. Also check your residency rights if you’re not native.
11) Make contacts. Who you know is as important as what you know. Network with local business people and seek their advice and support.
12) Don’t forget additional services. Extra rules apply if you want to include a café or bar. Understand the income verse expense of complying.
13) Maximize revenue streams. More revenue streams make a stronger business, for example accommodation, tours, bar, café.
14) Understand all of your costs. Factor in mortgage/rent, professional fees, utilities, staff, maintenance, marketing and contingencies.
15) Plan for low season. Multiplying beds by rate per night is only effective if all beds are full.
The deal must be done before the doors can be opened. Photo by moriza.
Designing Your Accommodation
16) Decide on your target market and outfit accordingly. Spend more if you want flash-packers. Don’t splurge if you’re seeking budget backpackers.
17) Skimping can be costly. Cheap mattresses and other fittings will require more frequent replacement.
18) Install good kitchen facilities. Don’t make it too small. Add plenty of cheap, replaceable utensils. Don’t think a microwave will suffice.
19) Keep your guests comfy. Air conditioning is expensive, but nobody wants to sleep in a sauna. Likewise, supply blankets for cold weather.
20) Plan your social areas. Reviews are driven by experience and the social area is an essential ingredient. Make a space that’s comfy and fun.
21) Not everyone wants to party and some people are night owls. Have a separate quiet area from a place for people to chat at night.
22) Consider a movie room. TV kills conversation. Put it beyond the main social area.
23) Bathroom planning. Think robust. Ensure ventilation to avoid mildew. Get the shower/people ratio right (1:10 is good). Don’t forget hooks.
24) Security sells. Lockers are essential and should be large enough for laptops. Also include a luggage storage area.
25) Don’t forget about laundry. Either ensure there is a local launderette or install your own washer and dryer.
The social area is an essential ingredient. Photo by Barnacles Hostels.
26) Free breakfast. You’ll be at a competitive disadvantage if you don’t serve at least free toast or cereal. Pancake batter is a cheap alternative.
27) Free tea, coffee and water refills. Another perk that is low cost but keeps guests happy.
28) Capitalize with a shop of essentials. Offer padlocks, snacks, laundry detergent and other small items for sale.
29) Don’t be an information overload. Have a board with maps and other local info to cut down on staff repetition and overload when guests arrive.
30) Homely entertainment. Keep the kit travelers may not carry. Have a book exchange, games, DVDs, headphones for Skype, guidebooks and even a guitar.
31) Offer free tours. Encourage socializing with city tours, bar crawls, visits to local restaurants, market trips and other activities like bowling.
32) Operate a tour desk. Team up with a reputable company to offer affordable tours while making a commission.
33) Consider your own transportation. A hostel bus can generate revenue through tours and airport pickups. Check regulations first.
34) Be connected. Install enough computers and get a speedy WiFi connection to compete. Also, put in plenty of electrical outlets.
Keep your guests happy with plenty of services. Photo by Barnacles Hostels.
35) Have a well-run front desk. Maximize but don’t overload staff. Check-in/out, tour booking, admin and being an information point are usual tasks.
36) Say good-bye to office hours. Night buses and early flights mean travelers want 24-hour check-in/out.
37) Find multi-talented staff. Have clear job roles, but hire staff who can cover a few functions (light cleaning, local advice, breakfast preparation).
38) Cleaning is king. There’s nothing like dirty bathrooms or bed bugs to generate a bad review.
39) Consider work for beds. Allowing travelers to earn a bed for the night in exchange for duties can be mutually beneficial.
40) Multilingual matters. Front desk staff in particular should have good English in addition to the local language.
41) Have minimum contracts. Aim for a minimum contract (3/6 months) to avoid high turnover and retraining costs.
42) Be a friend and hostel owner. Be friendly but also be prepared to enforce the rules.
43) Put processes in place. Job descriptions, clear tasks and planning for things going wrong provide a smooth operation.
Good staff can help your hostel survive. Photo by Barnacles Hostels.
44) Get a website. Perhaps obvious but also one of your best ways to advertise.
45) Gen up on Google Adwords, blogging and social networking. Driving traffic to your site translates to more potential customers.
46) List your hostel. Hostel World, HostelBookers . . . there are plenty of websites out there to sell through. Get listed on them.
47) Distribute flyers to hostels in other towns. Get recommended on the backpacker trail and return the favor to other hostels.
48) Don’t ignore feedback. Not all reviews are glowing. Read the comments and fix the problem.
49) Consider merchandise. Branded T-shirts can pull in cash if you’ve got a funky brand or a hostel that travelers are proud to visit.
50) Get in the guides. Lonely Planet and Rough Guide (amongst others) are travel bibles. Write to them and invite a reviewer along.
For people to visit they must know you are there. Photo by Jrwooley6.
Have you opened your own hostel? Do you have any extra tips? Let me know in the comments below.
If you liked this, you might also like: How I Turned My Passion for the Environment into an Award-Winning Eco-Business.
Main photo: Do you dream of running a guesthouse/hostel? By Barnacles Hostels.