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Hostels Opening Next Door To Another

General Hostel Operations

rjd1983 started this discussion 9 years 11 months ago

I was just wondering what experience you have had with a competitor opening a hostel a few doors down from you, or you opening a new hostel near to a competitor?

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Rucksack Brian

9 years

A new hostel was planning to open up right across the street from us. They bought the building and poured a lot of money into renovations to make the place really nice. It looks great! In the end, due to a mutual friend’s (another hostel owner’s) advice, they decided to open a pension instead of a hostel because the potential to earn their money back and turn a profit was significantly higher. Now we can work together instead of competing against each other. We got really lucky.

Did someone just open up near you?

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rjd1983

9 years

That was fortunate for you. :)

I saw a building that was/is a hostel (it's closed right now, but I think they are doing a refurb), good area, then I saw 50m down the road another hostel on the same side of the street.

I was just wondering what the impact was. Both would have been good sized hostels.

In the end, it turned out that the hostel was not up for lease, just the restaurant downstairs (which you enter through the hostel entrance).

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Rucksack Brian

9 years

That was fortunate for you. :)

Yes, “fortunate” is a very gentle word. I was watching the progress with very close interest to say the least. The rumor in town is that more are already in the works and they’re going to sprout up like mushrooms this year.

I saw a building that was/is a hostel (it's closed right now, but I think they are doing a refurb), good area, then I saw 50m down the road another hostel on the same side of the street.

I was just wondering what the impact was. Both would have been good sized hostels.

A professor once gave the scenario of a Burger King opening up a restaurant right across the street from an established McDonald’s. He said that contrary to popular misconception, the business for McDonald’s would probably increase rather than decrease, because now the corner would be even more established as the place to go to eat.

A hostel owner in Lisbon told me something similar. He said that most of the hostels in the city are NOT located in the center, but rather in a commercial district which is more popular with backpackers. Why did it become viewed as a “better location” for travelers? Because that’s where all the hostels opened up.

Maybe being 50m apart would boost the business for both hostels rather than reduce it. I don’t know. But I don’t think I would want to test it with someone opening up next door.

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rjd1983

9 years

Kings Cross, Sydney is like that. Kings Cross is located about 30-40 minutes walk from the centre (outskirts of the CBD), and the majority of the hostels are located there. Everyone says it's in a great area, as it's all geared up for the backpackers, and the Red Light District is there.

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mcarolina

9 years

This is happening to me actually. 6 years ago i was the only one in this area, now there are 4 new. each one a block from here. Lucky for me, none of them seem to get the 'backpackers' idea YET. But they can still change their direction.
The main problem i see is that there might be too many options in one small area in a city that is only a 'pass throught city'

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