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Shmaarts started this discussion 10 years 2 months ago

I've been thinking about opening a hostel for about 4 years and I have finally decided to go for it. I've been reading this forum for couple of weeks trying to get as much information as possible to create something that sounds reasonable and this is where I currently stand.

My background: I have no first hand experience in hospitality industry. I have, however, organized some group travels including booking accommodation and transportation services. I'm an expat living in my current town for more than 7 years and I can speak local language + 2 neighbor country languages + English. I believe that excellent customer service in these types of businesses is almost and sometimes even more important than location.

Location: I am planning to open hostel in a town with population of approx. 100k people and well above average proportion of young people. I have found a place that is available for rent located 100-150 meters away from main bus station and 600-700 meters away from town square and area where most of bars, restaurants and cafe's are located and where majority of outdoor events and festivals take place (there are many of those throughout the summer). I have 380 m2 property available for rent that can be increased to 700 m2. Long term lease (10+ years) available and owner is (surprisingly) supporting the idea of opening a hostel there.

Competition: According to official statistics, somewhere between 250-300 hotel/hostel/b&b rooms are being used per day and I estimate that there are about 400-450 available in total (there's only one 100+ room hotel, others are smaller establishments, 2-3 room guest houses and rental apartments excluded as I doubt they report anything to statistics office). There are only 2 hostels listed on HW and their total capacity is under 30 beds (2 specialty hostels for academics and sports teams are available, but have no atmosphere whatsoever).

Rooms: I want to have 40 beds in the hostel and I am planning to divide 380 m2 as follows:

33 m2 - kitchen and dining area (doesn't share walls with rooms)
60 m2 - reception and common room (partially connected space)
13 m2 - storage room for late checkout luggage and other things (behind reception, limited access)
40 m2 - approx. 5 showers, 4 toilets, 4 sinks
10 m2 - laundry room (1 washer for hostel use, 1 washer for guest use, 1 dryer)
39 m2 - corridors etc.
185 m2 - for rooms divided as follows:
* 2 x private twin room ~12 m2 each
* 6 x private double room ~12 m2 each
* 4 x 4 bed dorm (2 male, 2 female) ~16 m2 each
* 1 x 8 bed dorm (mixed) ~25 m2

I have read suggestions to divide private/dorm rooms with ratio 30/70, however by looking at competitor occupancy rates (I check their room availability on daily basis), double (and not so much but still) twin rooms are almost always sold out while dorms usually have some free beds available all the time.

Staff: 2 full time staff members (me + 1 more), 3 part time people for cleaning/night shifts/weekends/etc.

Random things:

* Flexible check-in time
* Groups not bigger than 15-20 people
* Free basic breakfast (including gluten free and lactose free options)
* Bike rental during the summer (5 bikes, 5 EUR / day) to supplement income

Things I am not sure about:
* Supplier of beds and mattresses. I like Sleeptite POD range, don't have pricing on those yet, but they seemed to be on expensive side. IKEA is much cheaper, though, not everyone's happy about them.
* Door locks - simple keys or magnetic locks? Anyone can recommend reasonably priced supplier?
* Software for managing reservations
* Taxi prices are low in my town. Can I make any money from referrals?
* How difficult is it to get commissions on referrals/ticket sales for tours and activities?

This is my attempt at putting stuff together as right now there's a bit of a mess in there. :)

PS You are more than welcome to point out some flaws you have noticed and suggest anything else I might need to think about and add.

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Rucksack Brian

10 years

Hi Shmaarts. Welcome to the Forum!

Congratulations on making your dream into a reality!

It sounds like you have done a lot of planning already. That’s great! I have a few questions for you:

On which continent will your hostel be located? (In case anyone has recommendations for suppliers)
Is the property broken down in the way you have described it, or will you have to remodel an existing space to get the layout that you have planned?
Does your 39m2 of corridor space include storage for clean linens and housekeeping supplies? If not, do you have another place in mind to store them? It is usually wise (and sometimes required by law) to store your clean linens separately from the dirty ones.
You mentioned that you keep an eye on the occupancy of the competition. Are the other two hostels in the city frequently full or do they struggle to fill their beds?
At 12m2 your Twin rooms might feel a little cramped, but I have seen hotels with simple rooms that were about that size. Is that similar to the other hotels in your area?
Is the other full-time worker going to be your business partner or will it be an employee? If you think that you will be full on a reasonably basis, then you will probably want a full-time housekeeper too. Remember that everyone (especially you!) will need time off.
How were you thinking of breaking down your shift schedule? For example:
- 12-hour day and night shifts plus a housekeeping shift
- 8-hour morning, evening, and night shifts plus a housekeeping shift
- No housekeeping shift - the receptionist will also do all the cleaning
- 24 hours on then 24 hours off, plus help in the busy times of the day

I like Sleeptite POD range, don't have pricing on those yet, but they seemed to be on expensive side. IKEA is much cheaper, though, not everyone's happy about them.

Anything that can be broken in a hostel will be broken sooner or later. If you can afford to buy solid equipment from the beginning it will pay off in the long run.

Door locks - simple keys or magnetic locks?

In my opinion magnetic locks are safer for you and for your guests because they can be programmed for a limited time and canceled when needed. Metal keys could easily be copied or lost. With a card system you can easily make a new key whenever you need one.

Taxi prices are low in my town. Can I make any money from referrals?

Sometimes taxi drivers tip the bellmen at nice hotels to call them first for the trips that will earn more money. You may be able to make a little supplemental income this way, especially if you work exclusively with particular taxi partners. That may not be the most convenient thing for your guests though, especially if they have to wait longer for your partner to arrive when another taxi might be close by.

How difficult is it to get commissions on referrals/ticket sales for tours and activities?

For some hostels those commissions provide a significant amount of their income. Commissions for tours and activities should be the easiest to secure if someone has already set them up and wants to attract customers. If there are no tours organized yet, then you could be the one that sets them up and make even more money. Tickets to concerts and other one-time events may be more difficult unless there is a central ticketing agency that sells for all of the events.

Some hostels also charge for pub crawls, or simply collect a commission for guests that they send to bars and clubs. You could set up a deal where the guest pays you for a ticket that gets them admission and a drink, and then you take a commission from that sale.

Keep us updated on your progress as everything develops!

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Shmaarts

10 years

Hi Brian!

I was expecting your reply as you seem to be the most active here. :)

Regarding your questions:

On which continent will your hostel be located? (In case anyone has recommendations for suppliers)

I am in Northern Europe.

Is the property broken down in the way you have described it, or will you have to remodel an existing space to get the layout that you have planned?

The property was used as office space and right now has 12 rooms. About 5 or 6 rooms will need no changes, others will be adjusted (some bigger ones split into smaller, 2 small rooms turned into showers, etc.). I am planning to get my handyman there next week to figure out exactly how it could look (not everything that looks good on paper looks goo in reality). Good thing about the place is that all walls can be easily taken down and redone as necessary. There are few columns that support the roof and that is basically all I have to take into account.

Does your 39m2 of corridor space include storage for clean linens and housekeeping supplies? If not, do you have another place in mind to store them? It is usually wise (and sometimes required by law) to store your clean linens separately from the dirty ones.

I was actually planning to use 13 m2 room behind reception to store supplies and use it for luggage storage as well when necessary. I am not sure if that would be enough. Another alternative was to have some space in laundry room where it makes most sense.

You mentioned that you keep an eye on the occupancy of the competition. Are the other two hostels in the city frequently full or do they struggle to fill their beds?

Just last week one of them had 4 and the other 5 sold out days. July is over 90%, August around 85%, September so far around 40-50%, but I expect more bookings to come as booking window seems to be much shorter than for hotels (mostly 2-3 weeks with many bookings in less than a week). January and February I do not expect much more than 30-40%, but that is perfectly fine if I can fill the beds in summer. I believe current hostels are loosing some business because they are too small and can't anymore accommodate 3-4 people group when they are 80% full. On top of that - none of those places has strictly male/female dorms which can be an issue for female travellers (haven't heard guys complaining).

At 12m2 your Twin rooms might feel a little cramped, but I have seen hotels with simple rooms that were about that size. Is that similar to the other hotels in your area?

They vary. I've seen smaller and bigger. If not mistaken, hotels must have 15 m2 for twin/double, but they must include bathroom as well. I will see. I might give up one double room to give a bit more space to other rooms. If I have to loose 2 beds to make my guests happier, I will do that. :)

Is the other full-time worker going to be your business partner or will it be an employee? If you think that you will be full on a reasonably basis, then you will probably want a full-time housekeeper too. Remember that everyone (especially you!) will need time off.

The other full time employee is most likely going to be just a regular employee, my wife is going to help me as part-time employee and I have a couple of friends who are looking to be part of this adventure (yes, I know that some people prefer not working with friends).

One more thing I was actually considering is giving free accommodation and maybe a little pay to 1-2 students from September until May who could look after the hostel during nights as I am not expecting to have a lot of sellouts during that time. It would add very little extra cost and I would always have someone in the hostel.

How were you thinking of breaking down your shift schedule?

This is something I haven't decided yet but I think I will try to cover reception by both full time employees and housekeeping with part-timers.

Thanks for your feedback!

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