Hostel in Bali

Now this is just based on my experience travelling around Bali (and I must say I didn't go to the likes of Kuta, or anywhere too full of Australians), but judging on what I found I think it may be hard to make it financially viable. Accommodation is cheap in Bali, on the budget side of things it is very easy to stay in a private room in a family homestay with breakfast internet hot water for 50,000 rupees pp (double room), which is about £3 or $5.

Most of the accommodation I stayed in was with families who already had the spare rooms, so they had no real overheads, In order to attract backpackers you would have to make up for not staying with a true Bali family by making it a really amazing atmosphere, but while also keeping the price really low. Even then, I personally don't feel people would be prepared to stay in dorms when private accommodation is so cheap. I certainly wouldn't have stayed in dorms...

These are just my personal opinions, and by all means I may well be wrong!