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Small Hostel Vs Big Hostels

The Ideal Hostel

rohit1008 started this discussion 8 years 2 months ago

Hello All,

I am crunching some numbers to see if a small hostel is feasible in Los Angeles. I was wondering how are the small hostels (10 - 30 beds) doing against the bigger (corporatized) hostels that offer so many amenities and comforts?

What is the USP for smaller hostels over bigger hostels?

Thank you,

Rohit

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Rucksack Brian

8 years

Small hostels can adapt to changes in the market and changes in guest expectations much faster than big hostels. They can offer more personalized experiences and a more intimate atmosphere. Guests usually feel a lot more “heart and soul” in smaller hostels.

The financial risk for the owner is much smaller, although guests don’t care about this part. The staffing requirements are significantly lower than large properties, which is also irrelevant for guests but good for you.

In LA the rent and labor cost may make it very difficult to run a profitable small hostel. To make it work you might need an additional income stream like a bar, tours, long-term apartments, or an additional day job.

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rohit1008

7 years

Thank you Brian..

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jason_noronha

7 years

Small hostels tend to have a better and more intimate atmosphere than the larger hostels which feel a bit machine-like and impersonal. Small hostels also tend to have the owner (or manager) in the spotlight and this definitely helps guests put a face to the business. Guests tend to associate small hostels with the growing trend of shopping local and they are a lot more forgiving of any short-comings.

From my experience, our small hostels tend to have a higher review percentage (because of the factors above) and this results in a higher occupancy. Small hostels also tend to have larger margins (percentage and not absolute) and quicker breakeven periods (big hostels - more staff - big costs - big investments)

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HostelKabeh

5 years

...yet small Hostels' margins aren't very realistic since 'profit' is generally calculated without a salary for the owner/manager, and from what I find, that number is generally less than what you'd have to pay someone to reasonabily and responsibally manage the Hostel in a long-term condition.

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