You are passionate and were always dreaming to own your own hostel and now you have finally decided to start your own business. Congratulations we wish you all the best, you made the right decision since hostels are an ever growing industry. Start constructing a plan, by developing the idea you have. Make some researches and do not be ashamed to ask people, even if it takes going door by door to ask them how this thing works, or at least get informed hostel business in general.
Just before I have decided to open my own hostel, I started with simple analysis, the SWOT analysis S – Strength, W – weaknesses, O – opportunities and T – threats.
Strength: My strength was the place where I have opened my hostel, it was my family apartment and I didn’t have to pay any rent. I was very lucky I have to admit it especially when first 3 months were not that good money wise and was a great relief not having to pay the rent.
Weaknesses: I had no experience at all about hospitality business; I had to learn it on the way sometimes the hard way. I remember I was even asking guests to give some ideas and tips about improving my hostel. Experienced travelers here have helped me a lot, like one of the great tips that I got from a Spanish traveler was to ask for key deposits since guests were losing them all the time and to copy just one key was 5 euros. Today there are plenty of pages and blogs where you can get tips and advices, personally for me the best pages are “Hostelmanagement.com” and “hostel owners, manager, staff & consultants community”.
Opportunities: When I decided to open the hostel on 2012, at that time there was no hostel in my city and was a great opportunity for me to be the first hostel in the city. If you are not the first hostel in the town, you shouldn’t worry about this at all. New hostels open all the time, just look for a good location, an affordable place to rent and that you don’t have to make lot of renovations. Maybe there is a hostel for sale that has good location and good rent, but in this case you must check the duration of the lease.
Threats: One of the threats is that eventually new hostels will open near you or your location. This can have and most probably will have effect on the rates since more competition, rates will start going down. Threats can also be external forces, such as: political instability or natural disasters.
Other things that need to be taken under consideration are:
1) Nearby attractions are needed, Such as museums, sights, restaurants and nightlife nearby are necessary to attract a crowd.
2) Transportation links are vital. If you build it they will come? Only if there are planes, trains or buses to get them there . . . and around.
3) Ensure you’re in a safe area. Run-down areas are cheaper, but most people won’t compromise safety for saving a few bucks
4) Complement the community. Carefully consider the impact of your business on the locals.
5) Do you have the language for the location? Ordering food is one thing, but do your language skills extend to business speak?
6) Be on top of travel trends. Are you in a budget traveler hotspot or are they moving out as luxury development moves in?
7) Central isn’t always necessary. Assuming a safe area with transportation links, a good vibe and facilities can compete with a central spot.
I hope this article was helpful enough and will help and guide you to take important decisions.