Hello everyone,
I have decided to spend my time investigating on the proposition of investing in a hostel business. Currently, I am in the early research stage and have much time on my hands for about a year and a half before entering into dental school.
Because of my obligations in the near future, how feasible is it to start a hostel business that becomes autonomous and able to manage with little time in the beginning and/or in the future?
If it can be done, what factors may be needed? I have been tossing up ideas like hiring a manager and renovating a place with 100-200 beds. I want to incorporate a restaurant and bar in the future. Does that make it easier for it to become autonomous due to higher profits (an assumption) and the ability to pay a higher equipped manager? I'm basing this on my (very) short research that a medium sized hostel with 100 beds, charging $22 per night at 50% capacity would yield about $30,000 per month ($3000/month expenses) or 200 beds, charging the same price at the same capacity would yield about $60,000 per month ($6000/month expenses).
This question of autonomy is also important for the future stages because I want to scale the business into other markets and thus would not be able to manage all of them myself.
Thank you for your time in reading this guys!
10 years
I'm sorry, there seems to be a double post. Can someone delete this thread?
Edit - It seems as if the forum shows two separate threads but after commenting on one, it comments on both. Maybe they're somehow joined or maybe it's my computer glitching? Anyways, I want to apologize (again) for this double post!
10 years
I'm quite wondering where you can find a building with 200 beds for only $6000 expense (including water/electricity bill, rent/mortgage, and salaries?)
The profit margin sounds too good if it makes up only 10% of total revenue.
10 years
That's without salaries. I was thinking about starting 55k/year + bonus + accommodation + benefits (if I can muster it) depending on performance for a managerial salary (rough estimate). Then I don't know how many other staffers I need (maybe 1 receptionist and 2-4 cleaners (high season)/1-2 cleaners (low season)?). I think out of personal ideals, I'd like to pay people above minimal wage as well, but I don't know how feasible that is.
10 years
Even if USD6000 is just the rent, it seems to be too cheap.
Is it in the downtown of an American city?
10 years
I have one cleaner for a 20 bed hostel so for a 100-200 bed hostel I think you definately need more than 2.
You will need 24hour reception with maybe one reception and security at night depending on area.
Also take into account commissions on beds from the OTAS. 10-15% of every bed sold going to commission from OTA.
Also you have to subtract the VAT depending on the area.
I think you greatly underestimate the costs.
It is difficult for us to know the costs as it can widely depend on the area and what regulations needed.
Also what initial investment is needed in the project.
For that size you might need maintenance person as well.
10 years
So the general consensus in this forum appears that after 80-100 beds, a 24hr reception should be placed. I'm assuming that'll be 3 full-time receptionists and 2 full-time cleaners. For the weekends, that will be 4 part time receptionists, 2 cleaners, and 1 maintenance guy. Then probably 1 full-time manager and 1 full-time assistant manager?
Would all this (6 full time, 8 part time) be correct or is there too many staff as it is?
10 years
I think even 3 receptionists are not enough.
We have 200 beds and need two cleaners, 4 receptionists to fill up all 24 hours (8 hours / shift ). The 4th staff is needed when others are off for holidays.
In addition to regular shift, we also need two extra staff for sharing the workload of the front desk and room service. But the requirement for them is less demanding, so it takes less time for training, and they can be a volunteer. Our offer is free accommodation, and they need to work 8 hours a day, 15 days a month.
Besides all these, we outsource our maintenance to different guys. They will charge small money for fixing anything. Linen washing is outsourced as well.
Then there's a manager as well.
10 years
I'm now thinking about a place that is leaning more towards 60-75 beds, potentially reaching 80 if the floor plan allows me to convert some space into rooms. Do I still need as much staff? Is there a rule of thumb for employees?
In regards to work for accommodation, how do you arrange the accommodation? Do they stay in their own separate rooms or do they take one of the bigger rooms and share it with 3 other people?
10 years
We have one weekday manager (8-5) and one weekend manager (8-5) with 3 rotating night supervisors (5-10:30 and on call all night). Our hostel sleeps 85 people.
It's pretty intense at times, your staff have to be very competent to keep up with the work.
My night supervisors work for accommodation. One works 3 nights per week for a small private room, the other 2 work 2 nights per week in exchange for a week's accommodation in a 4 bed dorm (different rooms, we all have nightmares about the phone ringtone).
You're talking about adding a restaurant and bar - This can be a good money spinner if successful but costs also skyrocket when you start including these. Finding a building with enough space for all this will be a challenge as well.
Regarding running costs - you're generally looking about 50-60% of revenue including staffing costs. However that's for an established hostel with an established reputation. Startup costs can be very high (insurance, licensing, furniture, advertising etc etc.)
You need to work out what your local laws are as well. Some places have very strict requirements, others are more relaxed. For example here in Perth you need 1 toilet, shower and sink per 10 people etc etc.
10 years
That's incredible. How did you guys manage receptionists and cleaners?
I've decided the bar is no dice. I'd probably need massive funds which I don't have to find a building big enough to have space for both a bar and enough beds in a high traffic area to justify it.
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