Pricing questions

My owner, though, wants the same rate in our 15-bed dorm (generally used for men) as in 4- and 6-bed rooms.
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is it something that fits better for very large hostels where guests' room assignments are made at check-in time?

In general, I think most hostels would probably offer the 15-bed dorm for less money that the smaller options. Using the same price isn’t necessarily bad though. Most likely it will make your 4- and 6-bed dorms look like a much better deal by comparison and boost bookings for those rooms.

Pacific Tradewinds in San Francisco (a small hostel) sells all of their beds for the same price because they have the philosophy that a guest is booking one place in the hostel community rather than one bed in a specific dorm. I think that’s a pretty cool concept!

I'm also seeing that our starting/lowest bed rate is comparable to that of hostels in large, expensive cities, higher than the lowest-cost bed rate published by 80% of the hostels I found. My owner thinks that should be workable given that we're only a mile from more expensive hotels with thousands of rooms.

Are there other hostels in your city? Are their prices comparable to yours?

What you can charge depends a lot on why your guests visit your area and how much demand there is. If people want to go there and there is a steady flow of tourism or convention business, then you can charge higher rates and it can still work. If you have to create the demand for your area and try to attract people there, then it is much harder to do if nearby cities are a lot cheaper than your hostel.

If you’re successfully drawing business away from those expensive hotels a mile down the road, then you may be right on target.

It would be interesting to experiment with the prices and see if that changes the type of people you attract. If lowering the price attracts more backpacker-style travelers who stick around for longer periods, then it might be more beneficial in the long run to do so. On the other hand, that might just siphon off more hotel customers. Or more likely, sacrifice money that hotel seekers would have been willing to pay since it’s still cheaper than the 1000-room place down the road. Guests who really want a hotel but book with you because it’s cheaper will probably be a lot harder to please, unless that’s your target market.

It strikes me as more likely, though, that backpackers and travelers will be reluctant to come from other hostels they've just stayed at in other cities to ours... or will be happier to take their chances on a cheaper Airbnb option.

We suffer from that. Some of the hostels in the surrounding cities are a lot cheaper than we are. People who just stayed there sometimes perceive us as being expensive and choose alternate destinations instead. Luckily all of my local competitors charge approximately the same price as ours, which helps to validate to the guests that we ask for the appropriate price for our city.

Are most of your guests looking for a hostel experience, or do they just want cheap accommodation? If it’s the first case, you don’t need to worry too much about AirBnB. If it’s the second, then you may need to adjust your prices to compete with the local AirBnB hosts.

What clientele do you WANT to attract to your hostel? Is there enough demand from that market to fill your hostel?