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Times Online on YHA's London Central Hostel (Video)

Hostel Trends and News

Josh started this discussion 16 years 7 months ago

Times Online:
"Whatever happened to Youth Hostels?
The YHA has shaken off its image with a trendy £4m London hostel offering wifi, pop art and organic cider."

link to video

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aboriginalhostel

16 years

I think this is their first answer for the challenge of the independent hostels.
Independent hostels were riding on HI hostels at the very first times... and proved to be better! :)

At least some people at the HI realized they need to compete in quality with the independent ones. I wish most of them would be at least as good as the one I've seen on the video! :cool:

Non-profit organizations are not as bad as you think: Being non-profit doesn't mean you don't want any money at all... but you don't put money on the first goal. Which means the money you make is invested back into the organization(company), also unable to be sold or take out its capital. ;)

I wonder how come I haven't seen any HI hostels invested back any money into it's hostels until now??? :confused:

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santa klaus

16 years

I think this is their first answer for the challenge of the independent hostels.
Independent hostels were riding on HI hostels at the very first times... and proved to be better! :)

Not really. When they opened the Marco Polo Hostel in Budapest (also HI-affiliated) they called it "the pearl of a new generation of hostels"! :D

The Marco Polo isn´t bad either - it´s a nice building with fantastic facilities, but just like that one in London it´s totally overpriced.

Non-profit organizations are not as bad as you think: Being non-profit doesn't mean you don't want any money at all... but you don't put money on the first goal. Which means the money you make is invested back into the organization(company), also unable to be sold or take out its capital. ;)

Of course they are not bad per se. The problem with HI (I can speak of HI Germany and HI Austria here) is that their bosses have usually not much clue about their business. They obviously never stay in hostels themselves and certainly are not aware how much the industry has changed during the last decade.

As making a profit is indeed not very high on their priority lists, they don´t care very much if their hostels are full or empty. Incompetent staff never gets replaced.

I know how bad they are running in Vienna - if there would be a similar decline of guests in our hostels my bosses would probably fire me without even asking me for an explanation.

As naive as that might sound, money is not our one and only goal even though we´re a "for-profit" chain. We have 150 persons staff and most do this job because they like it. Most would make more money elsewhere. If the owners tried to force down a policy to squeeze the last cent out of our hostels, the staff would revolt and/or leave.
They never took any capital out (except their own salaries which aren´t outrageous) and half of our profit is directly invested back into our properties. The rest is spent on building new ones.

The problem I have with HI is that they are a distortion of competition. For example, we have to pay 19% VAT in Germany on all our revenue while they don´t have to pay any taxes at all. That´s a huge competetive advantage! They even get subsidies for their investments. If they wouldn´t be as incompetent as they are they would be a major pain in the ass for us. It´s just totally unfair that in the end we pay for their mismanagement with our taxes.

Non-profit-organizations should only get tax breaks for a venues without for-profit competitors, i.e. they should only get them for hostels in rural areas where no independent hostels (can) exist.

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aboriginalhostel

16 years

Not really. When they opened the Marco Polo Hostel in Budapest (also HI-affiliated) they called it "the pearl of a new generation of hostels"! :D

HI hostels and HI-affiliated are two different bowl of soup... We could be an affiliate of HI-network but we prefer to be independent! :cool:

You should see their other summer "pearls", Kinizsi and Schonhertz!

The Marco Polo isn´t bad either - it´s a nice building with fantastic facilities, but just like that one in London it´s totally overpriced.

IMHO, it's only problem is it doesn't have a soul... as it's been run the same way you mentioned! Any of us could round it up by 10% in a few months! :D
Although the group who owns won't care, hence they own half of the City in properties already!

Erm... Just to let you know, their winter price was lower than ours! ;)

Of course they are not bad per se. The problem with HI (I can speak of HI Germany and HI Austria here) is that their bosses have usually not much clue about their business. They obviously never stay in hostels themselves and certainly are not aware how much the industry has changed during the last decade.

There was no need for a change. They had good times and bad times, but only in the past few years were very bad times. Sooner or later, but they start realizing how far away they've got from the main stream and now they can realize that they are too close to the ravine. HI has a bad reputation & will be hard to recover.

The lack of know-how is partly right to some independents as well. :(

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santa klaus

16 years

Quoted from there

Development Manager (Fundraising)

Hostelling International-USA seeks a highly motivated and experienced individual to serve as its Director of Development to establish and achieve its fundraising goals. This is a management level position that raises philanthropic and government funds for HI-USA's operations, programs and real estate projects.

There! Why can´t they keep their fingers from the taxpayer´s money?

HI-USA is a nonprofit charitable organization with a mission to "help all, especially the young, gain a greater understanding of the world and its people through hostelling." It has an annual operating budget of $15 million and a national headquarters staff of 20, with 160 other employees based at six large youth hostels in major cities. Seventy additional hostels are operated by local chapters and licensees to deliver the HI-USA mission.

Excuse me, 20 headquarters staff for six hostels?
Our headquarters staff (for four "very large" hostels)
- Operations, controlling: 2 persons, full-time
- Accounting: 1 person, full-time
- Sales, PR: 1 person, part-time
- Webmaster, server admin: 1 person, part-time

I´m just trying to figure how to keep 15 extra headquarters staff busy... :confused:

HI hostels and HI-affiliated are two different bowl of soup... We could be an affiliate of HI-network but we prefer to be independent! :cool:

You should see their other summer "pearls", Kinizsi and Schonhertz!

I know these. I was a freelance contributor of this guidebook. I wrote most reviews about the Budapest hostels.

HI doesn´t really have "affiliates" in Austria and Germany though. They own all their hostels.

There was no need for a change. They had good times and bad times, but only in the past few years were very bad times. Sooner or later, but they start realizing how far away they've got from the main stream and now they can realize that they are too close to the ravine. HI has a bad reputation & will be hard to recover.

It´s different in Vienna and Munich. I worked for an HI hostel in Munich in 1992 and one in Vienna in 1997. They were practically the only ones in town, hence almost always full. Both above 95% occupancy rate (yearly average).
That has changed a lot - not only in the last two years, but way before that already. They have lost practically 100% of the backpacker market and I guess chains like Meininger ans A&O are biting deep into their group market as well.
I know some people who still work there and they tell me their managers live in total denial.

The lack of know-how is partly right to some independents as well. :(

That is true, but you can observe very well in Berlin how the market takes care of that.

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Tim

16 years

While I understand that a non-profit organisation can provide a good product, I am generally a bit suspicious about them. In many cases they seem to be run mostly as a bureaucracy focused on committees and regulations rather than a business focused on looking after their customers.

They sometimes get it right, such as the new London hostel and a lot of the Australian and New Zealand YHAs; which means that they can provide a good product and don't need to operate their outdated youth hostels that unfortunately still exist in many smaller towns and villages.

What annoys me most of all is the way that many HI organisations, like the YHA in England, act all self-rightous about being a non-profit. They somehow think that it makes them better or more important than the thousands of independent hostels out there.

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aboriginalhostel

16 years

Quoted from there

There! Why can´t they keep their fingers from the taxpayer´s money?

Because there is a possibility in the law for non-profit organizations. You can ask for tax redeem, reduced tax payment and a lots of other features, such as not paying taxes... :cool:

Excuse me, 20 headquarters staff for six hostels?
Our headquarters staff (for four "very large" hostels)
- Operations, controlling: 2 persons, full-time
- Accounting: 1 person, full-time
- Sales, PR: 1 person, part-time
- Webmaster, server admin: 1 person, part-time

I´m just trying to figure how to keep 15 extra headquarters staff busy... :confused:

Indeed. They have to waste money as they can't spend it. There is no "profit" or stake-out. That's why they are not cost-effective, because they are not interested about saving for profit.

I know these. I was a freelance contributor of this guidebook. I wrote most reviews about the Budapest hostels.

HI doesn´t really have "affiliates" in Austria and Germany though. They own all their hostels.

:) When? So you know some about Budapest then? The City has changed a lot though, but those "hostels" never. No renovations or major changes, people complain a lot about missing shower curtains in mixed showers, lack of cleaning and overall bad facilities. People still use them because a.) it is cheap b.) there is nowhere else to stay during the mid-summer. Thats how MMG could get rich and invest into 20+ hotels in Budapest, as there was either them or the very few independent hostels here, back in the nineties...
[/QUOTE]

It´s different in Vienna and Munich. I worked for an HI hostel in Munich in 1992 and one in Vienna in 1997. They were practically the only ones in town, hence almost always full. Both above 95% occupancy rate (yearly average).
That has changed a lot - not only in the last two years, but way before that already. They have lost practically 100% of the backpacker market and I guess chains like Meininger ans A&O are biting deep into their group market as well.
I know some people who still work there and they tell me their managers live in total denial.

Correct me if I'm wrong but wasn't your neighbor in Munich already open by then? I meant the Euro one... Also I guess Ruthensteiner was in Vienna couple of decades before... anyhow, private hostels are more cost-effective and quality managed than the HI ones.

That is true, but you can observe very well in Berlin how the market takes care of that.

Same-o-same in Budapest... There are about 10-15 hostels closing down each year and about 20 new ones opening... :rolleyes:

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santa klaus

16 years

Indeed. They have to waste money as they can't spend it. There is no "profit" or stake-out. That's why they are not cost-effective, because they are not interested about saving for profit.

Well, there is a stake-out in the form of a huge bonus at the end of every year for the big bosses to annihilate any profit previously made (in Vienna, they always did exactly that). So, there even is an incentive to be cost-effective, but they´re too incompetent.

:) When? So you know some about Budapest then? The City has changed a lot though, but those "hostels" never.

Long time ago. In an epoch when all Budapest hostels still could be checked out in 1 1/2 days. I think it was in 2002.

There are about 10-15 hostels closing down each year and about 20 new ones opening... :rolleyes:

It´s time to reverse that trend, then! I figure a large Wombats in a good location could do that! :cool:

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aboriginalhostel

16 years

Well, there is a stake-out in the form of a huge bonus at the end of every year for the big bosses to annihilate any profit previously made (in Vienna, they always did exactly that). So, there even is an incentive to be cost-effective, but they´re too incompetent.

That's right... HI shows the business model how to NOT make a business! We can always learn from their mistakes! :D

Long time ago. In an epoch when all Budapest hostels still could be checked out in 1 1/2 days. I think it was in 2002.

Well, you can do the same again only with the good hostels around.
Just as I could do in Prague and Berlin! ;)
But in case you come, I hope you will stop by for a beer...

It´s time to reverse that trend, then! I figure a large Wombats in a good location could do that! :cool:

I thought you first want to invade London and Prague!
But if you want to come, then you are more than welcome!
You only need to fight down MMG and the 90+% hostels... but I'm sure for such qualified man like you Klaus, it won't be as big headache! :cool:

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santa klaus

16 years

That's right... HI shows the business model how to NOT make a business! We can always learn from their mistakes! :D

That sounds terribly arrogant but it´s true. I have worked in two HI hostels and they tought me a lot about how not to do it.

I thought you first want to invade London and Prague!
But if you want to come, then you are more than welcome!
You only need to fight down MMG and the 90+% hostels... but I'm sure for such qualified man like you Klaus, it won't be as big headache! :cool:

Eventually, we will rule the world! :cool:
Places we pick for invasion are insignificant tactical decisions made ad-hoc. Very much like old-school backpackers decide that over a beer or two.

The move to open shop in Berlin was much more coincidence than you might think. Everybody in Berlin told us what a terribly difficult market it is. That we would be spoiled by Vienna, were there isn´t much serious competition.

Our occupancy rates in Berlin (we opened there on Feb 15 with 348 beds):
Feb 15-29: 78%
March: 90%
April: 88%
May 1-13: 95%

I´ll admit that we have used a very aggressive pricing policy at the beginning. Dorm beds were only 9 Euros until April 10. Since then, they cost 15 Euros, which is still a bit less than most high-rated hostels charge, but then you can still book beds in Berlin for 10 Euros - now in May.

These occupancy rates demonstrate nicely the impact of a well-known brand name like ours.
I guess Budapest would still be more difficult but with that experience in Berlin it´s quite hard not to become megalomaniac! ;)

Budapest isn´t very high on my list, but then it´s certainly among Europe´s top 20 travel destinations - and it´s just a two hour drive from Vienna. Sooner or later, we will look for properties there.

You are right that MMG would be a problem. They are not afraid to use nasty tricks. When I went to Budapest last time, their hookers boarded the train at the border and tried to talk me out of the Backpack Guesthouse (where I made a reservation) very obstrusively. They told me all sorts of stories like "health inspectors closed it" and what an awful place that would be. After I got rid of their train hookers, more hookers awaited me at the station. It´s like in a bazaar in Morocco.

I doubt that we would have to "fight down the 90+% hostels". There will always be enough customers for good hostels. The ones near the bottom of the list would notice our presence much more.

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aboriginalhostel

16 years

That sounds terribly arrogant but it´s true. I have worked in two HI hostels and they tought me a lot about how not to do it.

Most people learn from their mistakes (if they do learn from it), but smart people learn from other people's mistakes... :cool:

Eventually, we will rule the world! :cool:
Places we pick for invasion are insignificant tactical decisions made ad-hoc. Very much like old-school backpackers decide that over a beer or two.

As the theory of large numbers show, people made the same decisions regarding same logical parameters. (Or maybe it belongs to the same flavour of beer? :D )

The move to open shop in Berlin was much more coincidence than you might think. Everybody in Berlin told us what a terribly difficult market it is. That we would be spoiled by Vienna, were there isn´t much serious competition.

Our occupancy rates in Berlin (we opened there on Feb 15 with 348 beds):
Feb 15-29: 78%
March: 90%
April: 88%
May 1-13: 95%

I´ll admit that we have used a very aggressive pricing policy at the beginning. Dorm beds were only 9 Euros until April 10. Since then, they cost 15 Euros, which is still a bit less than most high-rated hostels charge, but then you can still book beds in Berlin for 10 Euros - now in May.

The promotional prices were good, but that's because you have opened in February... Although that's the time when most Americans visit Berlin, as I've heard. :rolleyes:

A good hostel bed can be sold at almost any price. You can always ask for more if you offer more than the others.

These occupancy rates demonstrate nicely the impact of a well-known brand name like ours.
I guess Budapest would still be more difficult but with that experience in Berlin it´s quite hard not to become megalomaniac! ;)

Budapest isn´t very high on my list, but then it´s certainly among Europe´s top 20 travel destinations - and it´s just a two hour drive from Vienna. Sooner or later, we will look for properties there.

This game is like the one I played several years ago: Risk.
You attack the neighbor countries especially where you can move more soldiers at a round. Each round you get bonus soldiers which you can use for expansion.

I suppose you move along towards Prague, as Berlin, Munich, Vienna is already neighbor cities. I don't even understand how come you haven't opened there already... If not the expectation of the Euro. :confused:

As long as you are busy with your 2009 opening of the third, downtown hostel in Vienna, also as I can see there is One Klaus - One year - One hostel strategy, I expect you guys not before than 2011-2013. We won't get the Euro before that anyway! And I guess you gonna wait until the office building bubble blows first... Also taxation wont change before elections (2010).
And many more reasons... :cool:

You are right that MMG would be a problem. They are not afraid to use nasty tricks. When I went to Budapest last time, their hookers boarded the train at the border and tried to talk me out of the Backpack Guesthouse (where I made a reservation) very obstrusively. They told me all sorts of stories like "health inspectors closed it" and what an awful place that would be. After I got rid of their train hookers, more hookers awaited me at the station. It´s like in a bazaar in Morocco.

I doubt that we would have to "fight down the 90+% hostels". There will always be enough customers for good hostels. The ones near the bottom of the list would notice our presence much more.

Not to mention the agencies at the train station, also the HI is on their pocket, and many more. At least they concentrate more on their hotels, also their hostel business is getting worse, regarding the more quality demand and the expansion of hostels. Maybe you need a good moment to buy their hostels out? ;)

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