Occupancy rates

We opened our first hostel in Vienna in August 1999 (back then 164 beds). The first couple of months were a it slow but in 2000 we already had 79%.
In the following years we always had around 85% even though we added 100 beds in 2002.
We opened our second house in Vienna in May 2006 - our worst month there was November 2006 with 80%. On average, this house (236 Beds) runs on 95%. The second house had an impact on the "old" though, where the average occupancy rate is back at 80% now.

In Munich it was a bit more difficult as there is much more competition there. In the first full year (2005) we barely reached 60% , but in 2007 we´ll have over 80% there, too.

were you guys expecting/relying on that sort of occupancy? or just hoping?

thats the one thing that ive had trouble trying to work out - occupancy projections. theres no real point in picking an arbitrary number, but you need something to start the financial ball rolling.

i remember the people at gomio describing your vienna sites as cash-cows... looks like they were right.

I remember when they hired me at Wombat´s I asked them what they hope for. Their answer was they´ll reach break-even at 50%. I´ll never forget their smile when I told them anything under 70% would really surprise me - I have worked in another Viennese hostel before and knew from own experience that everything in town would be full almost every day between April and Oktober.
The break-even at 50% turned out to be a little bit too optimistic as they had no idea how much staff is really needed in a busy hostel. Besides, if you want good staff to stay you´ll have to pay a few Euros more than everyone else.

When it´s time to get your financial ball rolling make sure you can reach break-even at 60%. If you can´t make ends meet with 60% forget the project - way too risky.

I wonder who exactly told you that our Vienna houses are cash-cows! :cool:
Of course that´s right. Vienna is still a very easy market - not much competition and real estate is cheap. That´ll change though: Meininger opened shop here in September and they say they´re already looking for another house. A&O will open a huge one next year. Another one called "Vienna City Hostel" (we don´t know the guy) will open in summer 2008. Easy Hotels just announced they found a franchisee for FOUR new Easy Hotels in Vienna. Finally, we will open a third house (capacity: 500 beds) in summer 2009 in a really cool location. We will then use our original house ("The Base") only for groups, maybe even re-brand it. We focussed heavily on backpackers in recent years, which was a good strategy but that way we cleared the way for the Meiningers ans A&Os here.

So: anyone reading this with thoughts to open shop in Vienna: the gold rush will soon be over.

Just our luck we had enough time to make the brand known and earn a good reputation. It´ll be fun watching all those greenhorns struggle!

Running cash-cows is nice but it´s also a curse. You can solve any problem with money and when you have plenty that´s exactly what you´ll do. Our guys in Munich don´t have that much and so they´re much more innovative. They are also much more alert about what the competition is doing.

When we decided to expand to Munich we had no idea that A&O would open two hostels at the same time there (together with over 800 beds), Meininger opened a month before we did (400 beds) and the Easy Palace opened a second venue right at the station in the same year. To be honest, we didn´t think it would take us three years to reach 80%. But then, life would be too boring without minor setbacks! :cool:

thats a LOT of new beds in vienna. wow.
you seem pretty in-the-know about what the other hostels are doing - what sort of relationship do you have with those guys? is it pretty positive? ive seen massive differences in the places ive worked in that regard. sometimes we have great relationships with other hostels, othertimes... well...

i have to admit, i do find it interesting that germany/austria is so full of chains, and all the hostels being what i would call BIG. thats a lot of beds in these cities being controlled by only a few groups - must be pretty intense competition between you guys.

This is an interesting thread buried & pertinent to my current research.

Can any US hostel owners respond to this (of course, anyone welcome to respond)? I understand MULTIPLE factors will influence occupancy #'s: city size, location, season, advertising, etc, etc.

BUT,

I am just trying to get a feel for basic occ #'s for 1st year start-ups. As of now I am thinking a 30% average for the first year with 15% bumps in the following 2 years could be a relatively conservative estimate & a good model to follow.

What is your thoughts on this?

It might be difficult to get these occupancy from competitors in Budapest.

What you could do is pick a few hostels and try to calulate this yourself.

Now this might be hard to do but you could list the rooms and dorms they have in total and then today check what they have left close to the check in cut off point.

So a hostel with 5 doubles 10 triples and 20 dorms check what is available to book at last minutes and see how much of the rooms you have listed are taken.

Now at the moment you can only see current data day by day using this method.

I now in Ireland the tourist board publishes the occupancy depending on the accommodation type so if the Hungarian tourist board might do the same.

There is also staywyse who if they have members in budapest would be giving them this occuapncy data that you can look at if also you become a member.