student hostel business plan

Before you go, check this out!

69 Things Owners Wish They Had Known Before Starting A Hostel

How To Write A Hostel Business Plan + Free Template

If you’re currently struggling with creating your hostel business plan, you’ve just struck gold.

This guide will cover everything you need to know about how you can create your business plan and receive funding. It includes free templates for you to download and a complete example case for every step along the way.

The template itself is based on real examples of other hostel owners to ensure you’re working with proven concepts.

Alrighty! Let’s get to the meat!

Hostel Business Plan - Basics

What is a business plan.

At its heart, a business plan is a for mal written document about HOW your hostel business works and WHY it will be successful, i.e. profitable. This is achieved through an analysis of your industry, customers, and competitors as well as the creation of an elaborate marketing and operations plan.

However, the centerpiece is the financial plan that tells you and the reader how and why your business is a profitable system. After all, the purpose of every business is – and should be – to make a profit.

Now there are two different forms of business plans depending on their respective purpose:

• 1) A business plan for personal planning vs.
• 2) A business plan to obtain funding

A business plan for your own planning is typically less comprehensive, written in informal language, less formatted, and typically comes down to a collection of notes. Obviously, you don’t need a nice-looking cover page if you’re the only one who’s going to read your plan.

In this blog, we’re solely focusing on a business plan that’s written to obtain funding.

But let me be very clear. Regardless of whether you need funding or not: Building your business according to your precisely constructed business plan is an approach that is as close to assured success as can be. Hence, I highly recommend you read along and follow the outlined steps regardless of your individual funding needs.

Why Is A Business Plan Important?

Imagine a stranger rings your doorbell and asks you to invest $20.000 in his new business. Would you go ahead and get your checkwbook out just like that?

Of course not.

You probably would want to know what the business is about, what qualifies him as a person to build and run a successful business and what’s in it for you, right? Well, guess what, that’s just what your bank or sponsor is dying to know beforehand as well.

Your business plan is a tool that helps them understand the nature of your business and is the means to winning your bank or sponsor over. After all, they’ll only give you their money if they’re confident that they’ll receive something in return that they want.

Since a business plan forces you to think about your hostel intensively and requires several specific analyses, you’ll appreciate all the groundwork you did in the long run. 

That said, the financial calculations will be assumptions when you first start out. Over time, you’ll get a feeling for it and your assumptions will change into predictions .

You’ll understand why, in retrospect, many hostel owners confirm that their business plan was a bunch of nonsense juiced up on steroids , especially when they look at their initial calculations. This blog will make sure you get as close to the truth as you can get.

Let’s start with the basics.

How Long Should A Business Plan Be?

For the impatient: aim for 25 pages (+/- 5 pages excluding the appendix) and here’s why:

The length of a business plan depends on several factors:

• c) How much funding you require → the more dough you need, the longer your business plan

For the reasons above, some new tech companies have to write business plans that exceed 100 pages! The good news: you’re not the first lodging facility that applies for a loan. There were many before you and there will be many after you.

20-30 pages have been proven to be the optimum for a hostel. It’s important to note that longer might not necessarily equal better . Let me tell you what most banks won’t tell you: no one reads a business plan from A-Z .

Hence, think about your reader on the other end and boil it down to the essential elements he needs to know. You furthermore give a signal that you value the other person’s time.

Plus, make sure it’s reader-friendly:

• Use bullet points
• Highlight the most important parts
• Use white space and graphics

The more you get your potential bank clerk or investor interested and invested in your paper, the easier to convince him/her.

How To Write A Hostel Business Plan

To receive my master’s degree in business administration and engineering back in Germany, I had to write more than 10 academic papers: The shortest being 35 pages, the longest exceeding 170 pages.

Having a very low affinity towards language and writing at that time, I had to learn to write papers through the school of hard knocks: By trial and error.

Here’s my advice to you. Learn from my mistakes, apply the following basic rules and thank me later.

Following the rules will make your process a hell of a lot easier and will save you weeks if not months down the road.

• #1 Go step-by-step!

Writing your first business plan can be overwhelming. Be assured that this feeling is completely normal. I even got reminded of that when I wrote this blog article about it.

So how do you eat this elephant? – The answer is: one bite at a time.

Consider every chapter as an individual project. You might even set goals to read and implement one chapter each day. That way, you focus on one thing at a time and your workload is cut up into bite-sized pieces.

• #2 Use a template

Don’t try to reinvent the wheel and use what’s proven successful. Especially for the generic part of your hostel plan, a template will save you a lot of time. Don’t worry, you can download all the templates here .

• #3 Finish your writing before proofreading & editing

While writing you build momentum. Don’t let proofreading and editing interfere with that. Instead, do it AFTER you’ve written all the different chapters.

Also, make sure you have a second person who can proofread your business plan. You’ll be so deep in the tunnel that you won’t recognize your own typos anymore.

Any spelling mistakes will impair the professional and respectable image you’re trying to create. It’s easy to lose people who are sensitive to things like that. So, be intentional with the paper you’re creating and go the extra mile to ensure its above-standard.

• #4 Format nicely and at the very end

Gosh, I have wasted so many hours in formatting my writings and designing beautiful-looking spreadsheets only to find out later that I won’t need them.

The best format is the one that entices the readers to read as much as possible. Remember: The better they understand your business the higher the chances for approval.

• #5 Create a track record of execution

Show your readers that you’ve done your homework! Include many stats and spend some extra time on formatting to create a nice-looking document.

Your business plan, as well as your presentation, need to create the impression that you’ve covered – at least – all key aspects of running a successful hostel.

• #6 Make precise statements

Stay away from general wishy-washy statements like “we will use social media for marketing.” This immediately suggests that you haven’t actually planned how to make effective use of it.

Better: “Facebook will be our primary social media channel to build brand awareness. The implementation of a marketing calendar will ensure that we consistently update our feed with new content every second day.”

• #7 Write it for your reader

It’s nice to know that you’re passionate about hostels ever since growing up. But get real! Your investors won’t give a damn. The sole purpose of your business plan is to have them take their wallets out of their pockets. Period.

Investors only care about one thing and one thing only: Will I get my money (+ a profit) back if I invest in your hostel or not.

Hence, be assured that every critical question that comes to your mind while writing your own plan will probably be asked during your presentation.

How do I know? Well, there was a time when I had my own financial consulting business. I’ve been in contact with various investment companies and experienced first-hand what matters to them – and what doesn’t.

The best way is not to skip critical aspects. Instead, bluntly mention them in your paper, deliver an approach that takes care of the problem and demonstrate your responsible and considerate approach to business challenges.

• #8 Follow through

Lastly, as basic as these rules might sound, remind yourself on a regular basis to actually use them!

Your business plan isn’t just an attractive sales paper in order to twist your investors around your little finger. Be sure to follow through with the things you say and promise. Opt for the value-driven approach and show your character. That’s where true leadership comes into play.

Hostel Business Plan Template (+ Download)

Here’s a quick overview of how to structure your business plan. Don’t be surprised to see other business plans that use other names for their chapters. There’s no standard.

However, this approach has been tried and tested by many other hostel owners. Hence, I recommend you follow in their footsteps:

1. Cover Page

2. executive summary, 3. table of contents, 4. the business.

• 5.1 State Of The Marketplace

5.2 Trends In The Industry

6.1 target market, 6.2 competition analysis, 6.3 competitive advantage, 6.4 government regulations, 7.1 advertising & promotion, 7.2 pricing, 8.1 organizational structure.

• 8.2 Job Descriptions & Responsibilities

8.3 Action Plan & Timetable

9.1 start-up costs, 9.2 funding requirement, 9.3 profit/loss statement, 9.4 break-even point.

• 10 Appendix

Breathe. We’ll go over this one step at a time.

My goal is to make it as easy and convenient as possible for you to write your first business plan. Hence, I’m going to give you a quick explanation at the beginning of each chapter about what this part should include (called “content”). Below it, you’ll find a written example of how this could look like (called “template”).

You can download a FREE template for all your financial calculations HERE.

Before we dive right into it… may I ask you for a favor? 

I really want to help you in the best possible way. Hence, please let me know in the comment section below

• a) If any instructions are unclear
• b) If you believe an important aspect is missing
• c) What I can do to make it even more convenient for you to write your business plan

Thanks! That means the world to me.

Lastly, the example below is a fiction. I’ve chosen Cairns as the location simply because I’m currently living in Cairns. “Hostel Shark” is the name of one of my domains. This is going to be a website on which I will show you step-by-step how you can easily build your own website for less than $100.

Okay, let’s go!

People judge a book by its cove r and the same holds true for your business plan.

I highly recommend you create your cover with Canva . It’s a free and intuitive online tool that allows you to create the nicest images within seconds. Simply use a Din A4 format and search for “business plan”.

• Business name
• Creation date
• Contact details (name, address, phone, email)
• Website (if available)
• Business logo (if available)

T E M P L A T E

Note from Kevin: It took me about 10min to create this cover (incl. logo) with Canva .

An executive summary is an overview of your business plan. Its purpose is to summarize the key points for the respective readers. This is the most crucial part of your business plan and often the make-or-break component .

While few people will read your entire business plan, the executive summary is going to be read by everyone. It should be no longer than one page.

Write this part at the very end!

• The Business: Business name, legal structure, offered services, manager and his or her credentials
• Location: What makes this the “perfect” place?
• Industry Analysis: Quick info about the general market
• Target market: Who is buying your product or service?
• Your competitive advantage: Your unique selling proposition (USP)
• Financial projections: Break-even point and chart of profit/loss statement for the first 3 years.
• Funding requirement: How big is the loan you’re asking for?

Hostel Shark LLC is a hostel that provides low-budget accommodation for tourists in Cairns. It is owned and managed by Kevin who has 6 years of hands-on experience in various functions throughout the hospitality industry and holds a master’s degree in business administration and engineering. The primary service will be the accommodation of guests.

Cairns offers great potential for additional hostels. It’s mild winter temperatures and the fact that it is one of the major stops along Australia’s popular east-coast-tour makes it especially attractive for hostel travelers. Other hostels in the area achieve above-average occupancy rates compared to all hostels worldwide.

Hostels have a strong business model and can clearly differentiate themselves from other lodging establishments through their unique community and social atmosphere. They are especially sustainable in crises and cost-effective due to the fact that several guests share the facilities and rooms.

They have proven to be sustainable throughout economic recessions since they offer a cost-effective guest experience in shared facilities and rooms.

The hostel aims to attract travelers between 18-30 years of age. This target market has been statistically proven to be the most profitable and resilient compared to other tourist groups. The hostel will include 16 rooms with a total of 64 beds.

The biggest competitors of Hostel Shark are other hostels. However, there’s a market gap when it comes to serving tech-savvy guests. Hostel Shark will offer high-speed Wi-Fi in the entire building and additional sockets and USB plugins to close this gap. Moreover, we are going to concentrate on the social aspect of our hostel to further differentiate it from other lodging models.

Our marketing plan is based on successful and proven methods. Online travel agencies are the core driver for new bookings and will be complemented by our mobile responsive and SEO optimized website.

The business is projected to be profitable from year one and will increase its net profit over time. The break-even point is reached at an occupancy rate of 29% (1694 booked nights). The average occupancy rate of hostels in Cairns is 68%.

Funding requirement: The management is seeking to raise $200.000 for the development of the hostel.

My favorite part of a business plan 😅

Use a tool like Microsoft Word to create your table of contents automatically. This ensures your titles are linked to the content, i.e. clickable text, and readers are efficient going through your paper.

This section should give your reader a general impression of what you’re doing and where.

• Our Mission Statement: Company name, legal structure, goal, and how you’ll achieve it
• Location: What makes this location perfect for your hostel? Include statistics .
• Services: What additional services do you offer besides accommodating people?

Our Mission Statement

Hostel Shark LLC’s mission is to provide low-budget quality accommodation for both domestic and international tourists visiting the city of Cairns. Our company’s core focus is to accommodate travelers who are traveling alone and or are unfamiliar with the city and seek an easy way to connect with other travelers.

Having a thriving community combined with a highly personal atmosphere and plenty of common areas is the key success driver in our business. We aim for a clear differentiation by developing a culture unique to Hostel Shark. This will help us gain a strong market share at the early stage of operations, and will attract more customers over time through word-of-mouth. 

To further cultivate the community aspect of our hostel, we decided to implement a loyalty program for guests who are staying with us for more than one consecutive week. In addition, there will be weekly team building activities to strengthen and expand the community.

Tourist information for local sights, events and activities will be provided as well as various snacks through two 24/7 vending machines.

The location we chose for our hostel is the city of Cairns in Australia. Cairns is located in Tropical North Queensl and has a population of about 150.000 inhabitants. Around 2 million tourists are visiting Cairns each year. [ 1 ] The city is considered “the gateway to the Great Barrier Reef” and is popular for its beautiful rainforest areas, Aboriginal culture, its esplanade, and the free swimming lagoon.

In 2015, around 7.4 million tourists visited Australia. Despite the fact that Cairns contributes only 0.6% of Australia’s total inhabitants, approximately 27% of all tourists did stop for a visit in Cairns. [ 2 ]

With its unique climate, Cairns is the perfect location for our hostel. Since it’s located in the north of Australia, we experience mild winters with an average temperature of 20°C. Many backpackers take advantage of the Cairns climate from April up to December when it’s too cold in the big cities like Sydney, Melbourne, and Perth. That’s why lodging facilities around Cairns experience above-average occupancy rates even in the colder months.

Cairns is a safe bet and stopping point for people who’re traveling the popular east-coast-tour in Australia. The two leading hop-on / hop-off bus companies Greyhound and Premier offer several trips from Cairns to other big cities like Brisbane, Sydney, and Melbourne. In fact, Cairns is an established starting or endpoint of travelers before they leave the country. Both contribute to a steady flow of new guests and longer average stays.

The venue we are looking into buying is located in the center of the city. All famous sights can be reached by foot. The local bus station nearby provides access to all outside sights within the region. All important premises to meet the daily necessities of our guests are located within 400m. This includes several grocery stores, cafes, restaurants, bars, night clubs, and hairdressers. 

Hostel Shark LLC’s core service is to accommodate guests. It will feature private rooms as well as shared rooms. We plan to provide ten dorm rooms (6x 4 beds, 4x 8 beds), two double rooms (2x 2 beds), and four private rooms (4x 1 bed). In total, we have a capacity of 64 beds across 16 rooms.

We will charge more for private rooms than for dorms and more for smaller shared dorms compared to larger ones. The double rooms and private rooms have en-suite bathrooms, the dorms will have shared bathrooms.

Besides our core service, we offer bicycle rental, towel rental, laundry service, and snacks in our vending machines. Our free services include book exchange, access to a movie library, weekly social events, Wi-Fi, two computers as well as luggage storage.

A fully equipped kitchen will be available to our patrons and includes a variety of pots, pans, dishes, basic spices, free coffee, and free tea. Our customers can bring, prepare and store their own food in there. They will be responsible for cleaning up their own dishes. 

5. Industry Analysis

Still with me? Let’s take a look at the Industry Analysis.

BE AWARE that most bankers and other investors are unfamiliar with hostels and their industry. Hence, I recommend you don’t miss out on the chance to “sell” them how awesome this industry is because – as a matter of fact – IT IS AWESOME!

• State Of The Marketplace: How well the industry is developed, what’s the status quo and why it is a great market to be in. You can also include location-specific statistics like you’ll find in the example below.
• Industry Trends: Current trends and how they impact the industry and your hostel. Tell them how you are able to cope with the new demands and how you considered them in your operation.

5.1 State Of The Ma rketplace

The hostel industry is growing rapidly across the globe. In fact, “the hostel industry is projected to grow seven to eight percent year-over-year until 2020. [ 3 ] This is a reflection of its strong business model that is based upon two factors:

• 1) Sustainability

Hostels have proven to be less likely affected by economic crises. Here are several examples:

• “Even as the city’s hotel occupancy rate has fallen to 66 percent in February, from 81 percent in the same month last year, despite steep discounts, many youth hostels are reporting banner business.” [ 4 ]
• “Even during the 2008 economic crisis, many hostels reported increased occupancy numbers in a time when hotel bookings are down.” [ 5 ]
• “If you look at the financial crisis of 2008, 2009, the first companies which were hit hardest were the five and four-star hotels because business travel is put on hold.“ [ 6 ]
• “According to the survey, one of the main reasons for a relatively strong performance of the hostel sector is the tendency for operators to innovate and adapt their products to suit market conditions. The fact that hostel operators could generally sustain business levels through the economic downturn of 2008-2010 was one of the main reasons why overall average bed rates for 2009 rose by more than 3% compared with 2008.“ [ 7 ]
• 2) Profitability

The management believes there’s a reason why the second paragraph on Wikipedia about hostels begins with the following sentence: “Many hostels are family-owned or run, and are often cheaper for both the operator and occupants than hotels”. [ 8 ] In fact, “some cities report a higher average income per room for hostels than hotels […] due to several paying guests residing in a room.” [ 9 ]

Industry experts believe this is the case due to lower expectations and the efficiency of shared facilities: “The other interesting thing about hostels is that they’re a lot more financially viable […]. That’s because hotel rooms need to have a certain square footage and that has to include a bathroom, there are certain expectations.” [ 10 ] 

Furthermore, Australia shows great potential for hostels compared to other continents. Worldwide the average occupancy rate among hostels is 56%. Oceania and Asia are the leading continents which further strengthens our choice for the location. [ 11 ] From 2001 till 2009 total international visitors have grown by 3% per year in Australia. Over the same period, total international visitors grew by an average annual rate of 1%. [ 12 ] 

The hostel industry has seen several changes over the last couple of years. Originally, hostels only offered dorms and no private rooms. Today, 9 out of 10 hostels provide private rooms. [ 13 ] That’s why Hostel Shark will dedicate 25% of its rooms (4/16) to private rooms.

Remote working, freelancers and digital nomads grew by 140% between 2005-2018. [ 14 ] To be able to meet their needs, we’ll offer multiple desks in the common areas with sockets for several devices. Multiple routers will be installed across the establishment to ensure high-speed Wi-Fi.

Female travelers are a rapidly growing target group. Security, cleanliness, and atmosphere are set to be the biggest booking influencing factors for women. [ 15 ] To meet their needs, all common facilities are going to be cleaned twice daily and there will be several security cameras as an additional safety feature across the hostel.

The latest industry report from Hostelworld shows that tomorrow’s travelers are much more drawn towards hip and trendy hostels. In fact, there’s a 44% increase in the importance of decor when making a choice on booking compared to a few years ago. [ 16 ] This is why we chose to work with an experienced interior designer who’s responsible to make our hostel appealing in every conceivable way.

Hostels have a reputation for being just a cheap form of accommodation. In the meantime, competition has increased and other establishments can partly compete with their prices. For future hostels, it is going to be crucially important to focus on the social aspect and to deliver a unique experience rather than just a cheap bed. [ 17 ] We will further discuss this challenge in the competition analysis chapter.

6. Market Analysis

• Target Market: Major demographic, economic, social and cultural factors. What’s unique about your target market?
• Competition Analysis: Competitors, their strengths & weaknesses. If there are too many competitors in your area, describe them as a whole and limit your analysis to a few exemplary cases.
• Competitive Advantage: What’s your unique selling proposition (USP)? Why should travelers book your hostel? Your competitive advantage is one of the most crucial aspects of your business plan. It basically covers the questions of why guests should stay at YOUR hostel and not at your nearest competitors. Think of it as your “reason to exist”.
• Government Regulations: Legal and zoning requirements and how you’ve taken them into consideration throughout your plan

Hostel Shark LLC aims to attract domestic and international travelers between 18-30 years of age. Hence, we’ll serve mainly two generations: Millennials and Generation Z.

Millennials are people who were born between 1981 and 1996 (23-38 years old). They are tech-savvy, family-centric, and tend to have a strong craving for attention. Generation Z describes people who were born after 1996. The major difference is that they grew up in a globalized and interconnected world. Hence, they tend to be even more tech-savvy and technology is a major part of their lifestyle.[ 18 ]

The management of Hostel Shark is confident in their target market selection and based their decision on statistics: 

• The youth market is of high value

Although millennial travelers have a lower than average income, they spend more money on longer trips. Many tend to be time-rich which allows them to spend more time at a destination compared to any other tourist. [ 19 ] Compared to other tourists, Australian hostel travelers spend around double the amount of money during their trip in Australia. [ 20 ] 

• The youth market is resilient

When the going gets tough, young travelers keep traveling. They are relatively intrepid when it comes to economic problems, political unrest or epidemics.

• 2009-2010: Although the youth market was affected by the global fiscal crisis, it declined less and recovered faster than mainstream tourism.
• 2011: 2/3 of Australian travelers were affected by the strong Australian dollar. Despite that, the trip length did not appear to have altered significantly.
• 2014: The Ebola epidemic had little impact on their travel plans. [ 21 ]

Some evidence even suggests that a poor economy stimulates young travelers to do longer trips until more job opportunities become available. [ 22 ]

Bottom line: The youth market is more profitable and less volatile than the tourism market as a whole. Since this is rather counterintuitive, the management sees great potential in the hostel sector.

In total, there are 28 hostels, 30 hotels, 306 Airbnb rooms, and several hundred apartments listed in Cairns (Sept. 2019). In this analysis, we will cover all the accommodation types that we consider direct competition of our future hostel.

The management is firmly convinced that apartments will affect our business to only a very small percentage. Most apartments in the location we’ve chosen cost 3-4x times the amount compared to our cheapest available room and have minimum stay requirements beginning from 2 months up to 6 months. Other hostel owners in the area confirm that only a very small percentage of “slow travelers” move into a private apartment.

Most hotels in Cairns are located at the esplanade and accommodate predominantly families, business travelers, and elderly visitors. A study about millennial travelers revealed that the price for value (#1) as well as the location (#2) and the social atmosphere (#3) are the three major reasons for young travelers to opt for hostels. [ 23 ]

6 hotels can compete with the pre-planned prices for our private room. That said, they are not nearly as centrally located as our hostel and can’t keep up with the social aspect. This makes us very confident in our belief that hotels are a small peril for our hostel.

Several Airbnbs are located within 500m of our hostel. They tend to be more pricey than our cheapest available room and do not provide the desired community. Hence, our main competitors are other hostels.

The following analysis includes all well-established hostels that are situated within 500m of our hostel.

• 1) Palm Hostel Cairns

This hostel opened its doors in 2009 and is located 500m away from the city center. Palm Hostel Cairns offers a wide variety of facilities (incl. pool) and has a capacity of 35 beds. With $32 per night as their cheapest option, they belong to the most expensive hostels in Cairns. What’s special about this hostel is that they don’t provide bunk beds (only twin beds), offer a weekly barbeque night and have built a reputation for their tour desk. Their main target market are 25-40 years old travelers. Their overall rating on Hostelworld is 9.2 stars.

• 2) Travelers Paradise

Travelers Paradise was built in 2003 and is located in the city center. It provides only basic facilities (no pool, few common areas) and can accommodate up to 102 guests. Their cheapest dorm costs $17 per night and makes them one of the cheapest available accommodations in Cairns. Furthermore, they offer free pancakes for breakfast and have a built-in pizza restaurant. Guests who’ve booked through Hostelworld rate this hostel with 8.2 stars. According to TripAdvisor, most guests tend to be between 18-24 years old.

• 3) Crazy Chick Hostel

This hostel is one of two existing party hostels in Cairns. Their main focus is travelers who come to Cairns to party. They are well known among young partiers for their daily ping pong championship. The location is 300m away from the city center. The Crazy Chick Hostel has an overall capacity of 56 beds and doesn’t offer any private rooms. Their smallest dorm is for 4 people. The hostel is rated with 8.0 stars on Hostelworld. The facilities provided are rather basic and designed for the nightly parties. Dorm prices range from $22 to $25 per night.

The main advantage of other hostels in the area is that they are already established and have many reviews across several online travel agencies. To overcome this hurdle we’re going to offer the cheapest available price for our dorms in the first month and reward every guest with a free breakfast for every online review.

When setting up our marketing plan for our hostel, we have taken special considerations to market gaps in our area: None of the hostels offers special facilities for young tech-savvy guests. We plan to provide several sockets at each wall, inside as well as outside of the establishment. To provide optimal high-speed Wi-Fi, we’ll install 5 routers across our hostel to ensure the signal is strong enough in every room to stream videos without buffering. Moreover, every bed will have its own private USB plugins.

Most hostel travelers choose hostels for their community and the opportunity to meet new friends. Our hostel will focus on a family-like vibe by offering free social activities every second day as well as common areas that are designed to facilitate interactions. We believe the social aspect is the main reason why hostels will always prosper no matter how many other accommodation forms actually do compete with our prices. Hence, this is our approach to guarantee long-term success.

Other unique advantages for staying at our hostel is that we offer free jello in the morning and free coffee + tea during the day. We also have a collaboration with a local fitness studio that allows our guests to work out for free. Since we know many business owners in the area, we will also be able to offer jobs on a regular basis. We are sure this will help us to get more long-term guests as well as a stable occupancy rate in the off-season.

The management understands the importance of zoning and other legal regulations. To prevent any issues, we’ve already been in contact with the local zoning commission, building department, fire department, health department, and the Disability Support Queensland.

The property we intend to buy is zoned for max. 22 rooms. This allows for six additional rooms to what we’ve planned. Furthermore, our hostel requires a fire sprinkler system that is already installed as well as a commercial kitchen with a separate hand-washing sink.

The only major change we have to make is to add a ramp to the pre-existing steps. All renovations will be supervised by an architect and contractor who are both experienced in lodging facilities to make sure we meet all necessary requirements.

7. Sales & Marketing Plan

• Advertising & Promotion: How will you attract guests and make sure you achieve your projected occupancy rate? How will you manage your availability? Which distribution channels will you use and how?
• Pricing: How do you price your services & rooms?

Pro-Tip: It creates an awesome impression, if you can show them that you already have a website. It immediately signals: “Hey, I’m serious about it.” 

And the best part: This is WAY easier than most people think. In this step-by-step guide , I show you how you can create your own professional website within 15 minutes and for less than $100.

The management at Hostel Shark LLC believes in copying successful and proven methods rather than reinventing the wheel. Hence, our marketing plan is based on statistics, trends and our own extensive experience within the hostel industry.

Our primary source for bookings will be several online travel agencies (OTAs). OTAs allow our young hostel to get instant access to millions of travelers worldwide. In 2019, 70% of hostel travelers use OTAs to reserve their beds and this trend greatly increased over the last few years. [ 24 ]

For maximum efficiency, we will sign up for Hostelworld.com, Booking.com, Hostelculture.com, and Hostelclub.com. The first two OTAs account for approx. 91% of all hostel reservations. [ 25 ] Furthermore, they are the only two OTAs that are used by all of the top 41 hostels worldwide. [ 26 ] To reduce the overall commissions and attract more people who are specifically looking for hostels, we further diversify with Hostelculture.com, and Hostelsclub.com.

Over and over again, studies have proven that the presence on various OTAs increases direct bookings by 9-26%. [ 27 ] Hence, we’ll provide our own hostel website which has already been created: www.hostelshark.com

We are aware of the fact that direct bookings are a declining trend in the hostel industry. To increase the effectiveness thereof, we’ll set up a blog that covers several guides about the sights, attractions and general information about Cairns. To increase our monthly traffic, we will also consider free accommodations in return for blog articles on our website in the off-season.

The availability of rooms across several websites as well as all the other aspects of a reservation (e.g. collecting all necessary data, sending an automated confirmation email, etc.) will be managed through a channel manager and property management system from Cloudbeds. This will help us prevent overbookings and saves us many additional staff hours per month. Cloudbeds software is the most commonly used software among the leading hostels. [ 28 ]

Our website is optimized for SEO and offers various additional bonuses for people who’re booking directly. The number of hostel travelers that book via mobile has greatly increased over the last few years. Hence, we have designed our website for best mobile responsiveness. [ 29 ] The booking engine is provided by Cloudbeds.

We will use social media as a way to build our brand and have social proof through followers, likes, and reviews. To achieve this, we focus solely on Facebook which is used by 70% of the top 41 hostels [ 30 ]. Since we know about the inefficiency of social media for new bookings in 2019, we will keep promotions for our hostel at a maximum of 10%.

Offline promotion will also play a role in our overall marketing plan, but it is not our primary focus since it’s a declining trend. Among several smaller offline marketing tactics, our intention is to attract most customers by giving away rack cards to local premises as well as other hostels in nearby cities. Cairns is part of Australia’s popular east-coast-tour. Hence, we’ll contact hostels in neighboring cities about a joint-venture for mutual lead-generation. 

All marketing activities will be managed with a custom-designed marketing calendar to ensure consistency. That way we have a standard to measure results and improve it accordingly to the feedback we receive.

The management is aware of the fact that prices are a critical positioning indicator and greatly affect the clientele a hostel attracts. For this reason, we do not intend to be the price leader in our area and instead aim to be within the upper range of prices.

We will also include flexible pricing since guests expect lower prices in the off-season and higher prices in the high season.

Additional services are priced as follows:

• Bike rental: $15 per day
• Laundry service: $4 for washing, $3 for drying
• Vending machine: prices for items range from $2-$5

Note from Kevin: What feeling do you get from reading through this? Would you invest in Hostel Shark? – If it’s a “goddamn, this dude knows what he’s talking about”, then your investors will probably think the same. If not, focus more on “selling” and yourself and your hostel!

8. Operations Plan & Human Resources

• Organizational Structure: Organizational chart of your hostel
• Job Description & Responsibilities: Information about your relevant experiences. It’s also highly recommended to add a full CV in the appendix. Include a list of all key employees, their tasks, and responsibilities. What background and experience should they have? 
• Action Plan & Timetable: What are the milestones until you’re welcoming your first guest? Always include a security buffer for unforeseen occurrences.

Hostel Shark LLC will have a flat organizational structure. The short communication ways allow us to be flexible and act quickly in case of emergencies.

8.2 Job Description & Responsibilities

General Manager

Our General Manager will be the owner himself. He holds a master’s degree in business administration and engineering and has been working within the hospitality industry for more than 6 years.

While operating a successful consulting business, he developed excellent verbal and written communication skills. In combination with his analytical background as a former engineer, he’s confident in his skills in operating the new hostel.

Further information including a CV of the manager can be found in the appendix section A3.

Responsibilities:

• Hiring and managing staff including external service provider
• Organizing and coordinating current operations
• Executing the marketing plan
• Measuring and analyzing key metrics on a weekly and monthly basis
• Creating systems through checklists and manuals
• Bookkeeping in cooperation with an accountant and the use of an accounting software called “Quickbooks” 
• Maintaining an excellent standard of customer service
• Identifying customer needs and responding proactively to meet them

To ensure that all operations run smoothly, the manager will be actively involved in all aspects of running the hostel for the first few weeks. Moreover, weekly meetings with all staff members will take place to speed up the feedback cycle.

To ensure regular bookkeeping as well as the consideration of all other legal requirements, the management is going to hire an accountant. The accountant has to be familiar with the requirements of the lodging industry and has to have an appropriate track record. He also has to be familiar with our software “Quickbooks”.

Quarterly meetings will ensure that we take advantage of all the financial opportunities available. All in all, the management believes that this expense will increase the overall profit and considers it to be an investment.

The management knows about the importance of the first impression as well as the impact of staff on overall customer satisfaction. Hence, all applicants have to go through a 3-step procedure before we hire any staff. The front desk has to be very familiar and knowledgeable about the city and its sights to be able to serve our customers better. They also need to be above-average friendly, patient and be able to create a warm and welcoming atmosphere. 

• Welcoming guests
• Checking in guests
• Managing and receiving bookings via phone, email and in-person
• Providing guests with directions and information about all important premises
• Balancing cash at the end of the shift
• Contacting the manager when a problem is reported
• Doing the laundry 

Front desk staff is not allowed to live in the hostel but have to live close-by. The management believes that maximum focus and commitment can only be achieved when there’s a change in the work environment. Two people will be employed full-time and one person part-time. Their payment will be the statutory minimum wage plus 10%. Wage raises are optional depending on their measured performance over time.

Housekeeper

At Hostel Shark, we separate customer service from cleaning the facilities. We want our front desk staff to be 100% focused on our guests’ satisfaction. Hence, we will make use of an external cleaning company to keep our facilities in great condition. The hostel will be deep-cleaned 3x per week in high season and 2x per week in the off-season. Bathrooms and the kitchen will be cleaned twice a day; all other facilities will be cleaned on a daily basis.

• Sweeping, scrubbing, mopping and polishing floors
• Cleaning metal fixtures and fittings
• Tidying up rooms
• Cleaning wash basins, mirrors, and showers
• Cleaning the kitchen and washing the dishes
• Changing bed sheets
• Monitoring and reporting necessary repairs and replacements

Occasionally, the hostel will make use of work/trade employees for specific work and never longer than one week. The management has experienced first-hand how hard it is to motivate people in the long run without a monetary payment. Hence, all work/trade agreements will be made on a daily basis and exclusively in the off-season. 

Tasks may include cutting the lawn, easy paint works, and blogging for our website.

We plan to welcome our first guests on April 30th, 2020. All necessary renovations have been discussed with our architect and contractor and will probably take 55 working days. Since we have experience with similar projects in the past, we added one additional month to guarantee the completion of our hostel.

More information about the necessary renovations and the floor plan can be found in the appendix A4.

9. Financial Plan

The financial plan is the centerpiece of your business plan. No matter how nice your business plan is looking, if your hostel isn’t profitable, you won’t get funding. Period.

• Start-Up Costs: The more detailed you can calculate your start-up costs the better! Also, include 6-12 months to cover operating costs (called “working capital”). The bank will want to see that you’ve accounted for that!
• Funding Requirement: How much money are you asking for? How fast are you going to pay it back?
• Profit/Loss Statement: A detailed breakdown of all revenue, expenses and net profit. Typically, your bank will want to have a monthly calculation for the first year and a 3-year statement. However, every bank has different requirements. Some might even want a 10-year breakdown. Ask them in advance.
• Break-Even Point: At what occupancy rate is your hostel profitable? There are different ways to calculate that. The easiest and fastest is to use your spreadsheet and play with your numbers. However, be sure to have proper reasoning prepared in your presentation!

It takes time to establish your hostel. Between 50-66% of the average occupancy rate is a standard recommendation for your first year. On average, it takes around 3 years to match the average occupancy rate of your competition.

If you exceed this mark in your second year, you’re doing really well! Thanks to OTAs, this process can be massively accelerated!

The profit or loss can be calculated as follows:

• Profit or Loss = Revenue – Expenses – Taxes
• Revenue = Average Room Rate x Number Of Rooms x Number Of Operating Days x Occupancy Rate
• Expenses = Total Operational Costs + Loan Payment

Ideally, your hostel should generate a profit of about 120% of the debt service after all expenses.

Click here to download all the following templates for free.

Don’t worry. All tables including easy explanations on how to do the calculation can be found in the spreadsheets. You don’t have to be a math whiz. I made it super easy for you. 

The total start-up costs for Hostel Shark LLC are $240.000.

Here’s a break-down of all the costs:

Kevin is seeking to raise $200.000 from Westpac Bank Cairns Central in order to launch the operation of Hostel Shark LCC. $40.000 are covered by equity capital. The exact terms, interest rates, and conditions are to be determined during negotiation. This business plan assumes a 10-year loan with a 9.5% interest rate on the outstanding balance.

The financing will be used to buy the planned property, renovation works and financing the first six months of operations.

The expected payment plan is:

Note from Kevin: There’s a calculator in the spreadsheets you can download for free here .

In order to calculate the net profit of our hostel, we had to make several assumptions. The average occupancy rate in Cairns for hostels is 68%. For the first year, we assumed an occupancy rate of 50% of the average occupancy rate (34%). Since we do have several years of experience in marketing, we are confident that we will achieve the average occupancy rate in the second year (68%) and exceed it by 5% in the third year (73%).

We wouldn’t start a new hostel if we weren’t absolutely sure to be better than the average hostel.

Utility costs are based on data from other lodging facilities in the area. We did not consider additional income streams from our bike rental and vending machines in our calculations. Furthermore, we took the prices for the shoulder season as an average price for our beds.

Profit / Loss Statement (First Year)

Profit / Loss Statement (3 Years)

Our hostel has to exceed an occupancy rate of 29% to be profitable. In absolute numbers that’s 1694 booked nights per year.

10. Appendix

There’s no standard rule on what documents you can add in your appendix. Only provide relevant information here. Don’t clutter your business plan with too many or unnecessary details. That said, the following documents have been useful for other hostel owners:

• Floor plan of your hostel: how do you intend to structure your hostel?
• CV of you and all other principals
• Copy of the purchase agreement for the building
• Copy of the architect’s or contractor’s plan

Et voilà, you’re ready to go! 🙂

STOP! 🤚 I need your help.

Before you leave: Answer this quick question and help our community.

How can I make this template better for you? What would you change/add? 

I want to continually update and improve this template to ensure starting out as a new hostel owner becomes as easy as possible. Hence, if you’re willing to share your business plan with me after you’ve finished yours – that’d be greatly appreciated!

P.S. People who read this article were also interested in:

• Buy or lease a hostel property?
• 8 keys for choosing the best hostel location

Join Our Community Of Like-Minded Hostel Owners!

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TheHostelHelper

24 thoughts on “ How To Write A Hostel Business Plan + Free Template ”

Regarding your marketing plan:

JESUS. Now imagine all hostels would only do that… only that… they would be SO INCREDIBLY successful.

That’s the goal! 🙂

You’re my lifesaver. I’d have paid for these templates. No joke. Cheers, Joseph

Hi Joseph, wow, thanks for the compliment! I really appreciate it.

Awwwwwwwwww!!! You’re a legend! Thanks a lot!!!

My pleasure, Todd 🙂

haven’t finished reading yet, but there are plenty of great ideas in it! thanks for all the information!

Anytime, Penny 🙂

Thanks so much for this ! It’s really simple and easy to understand and covers everything , love you!

Your welcome, Rola 🙂 Glad you like it!

Finally a business plan that I understood! Gosh, thanks so much !

My pleasure, Leslie 🙂

Just tested Canva for the cover page … Gosh, this is AMAZING!! I’m really not the creative kind of dude, but damn, my cover looks like a professional designer spent years on it hahaaha 😝 Thanks for the tip!

Awesome! That sounds great, Edwin 🙂 Glad you like it.

….did I already tell you how much easier you’re making my life with this article??? This is genius, man. Seriously. Thank you so much!

My pleasure, Carolyn 🙂

Wow, there are some pretty awesome tips included in the template! Thanks for your effort!

I’m glad you like it 🙂

Wowowowowow! I like my coffee like I like this post…clean, elegant, and 6-12 months of operating costs.

Great to heart that 🙂

Wow. I am motivated!!

Awesome! Go for it 🙂

Thank you so much ! It’s very interested

My pleasure 🙂

Comments are closed.

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How To Write A Hostel Business Plan

May.08, 2023

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Table of Content

1. Private Hostel Business Plan Sample and Template

A hostel business plan is an important document that outlines the strategy and objectives of how to open a hostel business plan. It provides the roadmap for business operations and financial projections. The plan should include the hostel’s budget, marketing plan, and operational plans. 

It should also include the hostel’s goals and objectives, including potential revenue sources and potential partnerships. A well-crafted Hotsel Business Plan will help ensure the business’s success.

2. Executive Summary

Business overview.

The business plan for building a private hostel outlines our vision to become a leader in the hostel industry by providing a safe and comfortable environment for travelers. We aim to provide a variety of lodging and services that enhance the traveler’s experience. Our services will include dorm-style rooms, private rooms, recreational areas, and an on-site café.

Similar to the Hotel Business Plan Sample , we plan to target backpackers, budget travelers, and other young professionals who are looking for a cost-effective place to stay. We will offer clean and comfortable rooms at competitive rates and will also offer additional amenities such as free Wi-Fi and laundry services. We will provide a safe and secure environment with on-site security personnel at all times.

We plan to build a strong reputation in the industry by offering excellent customer service and providing a unique atmosphere for our guests. We will also invest in marketing and advertising to increase our visibility and attract new customers. We believe that with our quality services, competitive price points, and customer-oriented business strategy, we will be successful in gaining a loyal customer base and gain a strong foothold in the hostel industry.

The business plan hostel example is a comprehensive strategy that seeks to provide a safe, comfortable, and homely environment for travelers at an affordable price. Our products and services include: 

• Convenient and comfortable beds and bunk beds 
• Fully equipped kitchen and dining area 
• Clean and spacious bathrooms and showers 
• High-speed Wi-Fi 
• 24-hour reception desk 
• Entertainment area with TV, exercise equipment, and ping pong table 
• Laundry service 
• Tour and excursion packages 
• Free shuttle service to local attractions and airports 
• Secure storage for luggage and personal items

Customer Focus

This sample of business plan for hostel business focuses on providing a comfortable and affordable travel experience for our customers, who are mainly young travelers looking for a safe and convenient place to stay. Compared to the Motel Business Plan , we will achieve this by offering various services, such as free Wi-Fi, laundry facilities, a well-stocked kitchen, and a friendly and knowledgeable staff that can provide helpful advice on local attractions. We aim to create a unique and enjoyable experience that will leave our customers satisfied, relaxed, and eager to return to our hostel.

Management Team

Our hostel business, The Adventurers Inn, is run by a team of experienced professionals in the hospitality industry. Our team consists of a General Manager, a Manager of Operations, a Sales and Marketing Manager, and a Financial Controller. Our team members have extensive knowledge in their respective fields and strive to provide our guests with the best possible experience. We are passionate about providing unique and quality services to our customers and are committed to being the best hostel business in the area. With our expertise and dedication to customer satisfaction, we believe The Adventurers Inn will be a successful and profitable venture.

Success Factors

The youth hostel business plan focuses on providing affordable, comfortable, and safe accommodations for travelers worldwide. We will differentiate ourselves from the competition by providing unique amenities and services that will make our hostel stand out by learning Hotel Feasibility Studies . Our success will be based on our ability to provide a superior customer experience, a convenient location, and a reliable and secure facility. We will also strive to create a unique, fun atmosphere that will attract and retain guests. Furthermore, we will focus on creating a strong online presence and utilizing digital marketing strategies to reach our target customers. By leveraging these strategies, we are confident that our hostel business will become a success.

Financial Highlights

The Adventurers Inn is a unique hostel concept that will provide travelers with an affordable and comfortable place to stay while exploring the city. With this business plan, we are seeking $500,000 in capital to create our first hostel in the city’s heart. 

• Projected sales of $1.6 million in Year 3 
• Gross profit margins of 70% 
• 10% of profits reinvested into hostel growth 
• Year 1 ROI of 17.3% 
• Year 3 ROI of 29.1%

3. Company Overview

Who is the adventurers inn hostel, highly efficient service.

Highly Efficient Service! I am incredibly happy with the outcome; Alex and his team are highly efficient professionals with a diverse bank of knowledge.

The Adventurers Inn Hostel is a modern hostel located in Florida, offering both short and long-term accommodations for travelers. We aim to provide a safe, welcoming, and affordable place for travelers from all walks of life while creating a unique atmosphere to explore the city and meet other travelers.

Our hostel is run by a team of experienced professionals with a combined experience of over 30 years in the hospitality industry. We are passionate about creating an environment conducive to a great experience for all our guests.

At the Adventurers Inn Hostel, we offer our guests a full range of amenities, including a fully-stocked kitchen, laundry facilities, and a common area. We also have a 24-hour front desk, where our helpful staff can assist with any queries or questions.

Our hostel is also designed to be a hub for travelers and local residents alike. We provide a space for travelers to meet and share their experiences and a place for local businesses to promote their services and products.

The Adventurers Inn Hostel is committed to providing an exceptional experience for our guests. Our goal is to create a place where travelers can explore the city while feeling at home and making lifelong memories with their newfound friends.

The Adventurers Inn Hostel History

The Adventurers Inn Hostel was founded by two close friends, David and Sarah, who wanted to create a unique accommodation experience for travelers. The two were inspired by their travels worldwide and wanted to create a place where travelers could feel at home and make new friends.

David and Sarah opened the first Adventurers Inn Hostel in 2017 in a charming Victorian building in the heart of Florida. The hostel quickly became a popular spot for travelers, offering a unique and homey atmosphere in addition to free Wi-Fi, private rooms, and shared spaces.

Since then, the Adventurers Inn Hostel has grown to have multiple locations in the United States and Canada. Each hostel offers a unique experience, from cozy rooms to vibrant common spaces and activities like barbecues and movie nights. The Adventurers Inn Hostel is dedicated to providing a comfortable and memorable stay for all its guests.

David and Sarah have been working hard to ensure that each location maintains its unique character but also offers consistent service and amenities. The Adventurers Inn Hostel is dedicated to providing travelers with a unique and memorable experience, and the team is passionate about creating a welcoming and safe atmosphere for everyone.

4. Industry Analysis

The hostel industry is an ever-growing and profitable industry. The global hostels market size will grow from $6.04 billion in 2022 to $6.35 billion in 2023 at a compound annual growth rate (CAGR) of 5.2%.  This growth is driven by the increasing popularity of budget travel and the growing number of young people who are looking for affordable accommodation options.

Source: https://www.thebusinessresearchcompany.com/report/hostels-global-market-report

The hostel industry is highly competitive, with several large companies such as Hostelworld, Hostelling International, and YHA dominating the market. To succeed in this industry, businesses must provide quality services, competitive prices, and a great customer experience.

It is important to analyze the industry trends to understand the current market dynamics. The most important trend in the hostel industry is the increasing demand for private rooms. This trend is driven by the growing number of travelers looking for more privacy and comfort during their travels. Additionally, hostels are increasingly catering to business travelers by providing amenities such as Wi-Fi and in-room dining services.

It is important to understand the target market to gain a competitive edge in the market. The hostel industry is primarily focused on the budget traveler market, with most guests between the ages of 18-35. Additionally, there has been a rise in the number of families using hostels to accommodate their travel needs.

Finally, it is important to consider the impact of technology on the hostel industry. Hostels are increasingly using online technologies to facilitate bookings and improve customer experience. Additionally, social media is becoming an important tool for hostels to build brand awareness and reach out to potential customers.

Ultimately, the hostel industry is growing and profitable. To succeed in this market, businesses must focus on providing quality services, competitive prices, and a great customer experience. Additionally, understanding the target market and utilizing technology will help businesses gain a competitive edge.

5. Customer Analysis

Demographic profile of target market.

The target market for how to start a hostel in the USA includes budget-minded travelers seeking affordable accommodations. These travelers are typically younger adults aged 18-40, with a median age of 25-30. The demographic profile of the target market includes the following: 

• Predominantly singles or couples
• Predominantly from the United States and Europe
• Predominantly college-educated
• Predominantly students, interns, digital nomads, backpackers, and other budget travelers
• Predominantly seeking a short-term stay of less than one week
• Predominantly seeking basic, shared accommodations with access to local amenities

Customer Segmentation

• Backpackers and Adventurers : This segment consists of people who are looking for the adventure of staying in a hostel and who are willing to pay for the experience. This group of customers tends to be young travelers and usually has limited budgets. They enjoy exploring new places and are usually looking for a place to stay that offers a unique, exciting experience. 
• Budget Travelers: This segment includes people who are looking to save money when traveling. They tend to be more cost-conscious and prefer to stay in a hostel due to the lower cost. They are often seeking a place to stay that offers basic amenities and services at an affordable price.
• Business Travelers: This segment includes those traveling for work and needing to stay in a hostel due to the lower cost. They tend to be looking for a place to stay that offers basic amenities but also has more modern amenities such as Wi-Fi and laundry services.
• Families: This segment includes families who are looking for a place to stay that is both affordable and family-friendly. They may be looking for a hostel that offers private family rooms and amenities such as a playground or a pool. 
• Groups: This segment includes groups of friends or families looking to stay together in one location. They usually seek a hostel that offers private rooms or large dorms to accommodate their group.

6. Competitive Analysis

A competitive analysis allows an entrepreneur to assess their potential competitors’ strengths and weaknesses and understand the market they are entering. The following is a brief competitive analysis of the hostel business plan.

Direct and Indirect Competitors

Direct Competitors

• Hostels.com: Hostels.com is a top hostel booking website that offers competitive prices on a wide range of hostels in various locations worldwide. They offer budget-friendly rates with access to amenities like free Wi-Fi, kitchenettes, and bike rentals.
• Airbnb: Airbnb is an online platform that allows travelers to find short-term accommodations in various locations worldwide. They offer a variety of different types of accommodations, including private rooms and entire homes.
• Hostelworld: Hostelworld is an online booking platform for hostels in over 170 countries. They offer many amenities, such as free Wi-Fi, bike rentals, and kitchenettes.
• HostelBookers: HostelBookers is an online booking platform for hostels in over 170 countries. 

Indirect Competitors

• Hotels: Hotels offer a wide range of accommodations in various locations worldwide. They offer amenities such as swimming pools, fitness centers, and spas.
• Bed and Breakfasts: Bed and breakfasts offer a more intimate, home-like experience than a hotel. They are often located in quaint, rural areas and offer amenities such as home-cooked meals and access to outdoor activities.
• Guest Houses: Guest houses are typically smaller than hotels and offer a more personal experience. They offer free Wi-Fi, private bathrooms, and access to local activities.
• Vacation Rentals: Vacation rentals are typically private homes that are available for short-term rental. They offer amenities such as private pools, hot tubs, and access to beaches and other outdoor activities.

Competitive Advantage

The competitive advantage of our hostel business plan is that it provides a unique and affordable accommodation experience for domestic and international travelers and you can start your own hostel by taking help from this business plan. It will offer a unique atmosphere of comfort and relaxation that is not found in other hostels or hotels. It will also offer a variety of amenities and services, such as free Wi-Fi, cable TV, and laundry facilities. Additionally, it will feature an on-site restaurant and bar, providing an opportunity to socialize with other travelers and make the most of their visit. It will also be conveniently located in a major city, providing easy access to all the city’s attractions and activities. Finally, our hostel will provide excellent value for its price, offering more amenities and services than other hostels in the area.

7. Marketing Plan

The marketing plan of a hostel should focus on its competitive advantages, such as its convenient location, affordable prices, and unique amenities. To ensure that potential guests are aware of these advantages, the hostel should employ various promotional tactics to reach them. These tactics should include online advertising, direct mail, and local advertising.

• Online Advertising: Online advertising is a great way to reach a wide range of potential guests. The hostel should advertise on websites that cater to the type of guests they are targeting. This could include travel websites, student websites, and budget-travel websites. Additionally, the hostel should create its own website and social media accounts to reach potential guests. All accounts should be regularly updated with promotions, discounts, and new amenities.
• Direct Mail: Direct mail is another great way to reach potential guests. The hostel should create a mailer that contains information about the hostel and its advantages. The mailer should include photos, contact information, and a call to action. The hostel should target students, budget travelers, and other potential guests in their area with their mailers.
• Local Advertising: Local advertising is important for reaching potential guests in the immediate area. The hostel should create flyers, distribute them to local businesses, and create ads in local publications. Additionally, the hostel should create relationships with local businesses to promote their offerings. These businesses could include restaurants, attractions, and transportation options.

Promotions Strategy

Social Media: Utilize social media platforms such as Facebook, Instagram, and Twitter to promote the hostel. Post engaging content, such as pictures and videos of the hostel and its amenities, as well as discounts and special offers. Utilize influencers to reach a wider audience and create a buzz around the hostel.

Advertising: Create ads in newspapers, magazines, and online to reach potential customers. Focus on targeting young adults who are seeking a unique and affordable accommodation option.

Events: Plan events such as art shows, movie nights, or music festivals to draw in more customers. Partner with local businesses to provide discounts to hostel guests.

Referral Program: Create a referral program to incentivize existing customers to spread the word about the hostel. Offer rewards such as discounts or free stays for referring friends and family.

Word-of-Mouth: Encourage customers to share their experiences at the hostel with their friends and family. To do this, provide an exceptional experience to ensure customers are excited to share their positive experiences.

The pricing strategy for the hostel should be competitive and value-oriented in how to start and manage a hostel business. Offer discounts for extended stays, group bookings, students, and other categories of guests. Consider offering membership discounts to encourage loyalty and reward frequent customers. Additionally, consider offering package deals that include meals, tours, and transportation. This will help draw in more customers looking for an all-inclusive experience.

8. Operations Plan

Operation functions.

Maintenance: The hostel will have a dedicated maintenance team responsible for the upkeep of the facility. This includes regular inspections of the hostel’s interior and exterior, addressing any maintenance issues such as plumbing, electrical, and structural repairs, and general cleaning.

Security: The hostel will have a security team in place to ensure the safety of guests and staff. This includes installing a CCTV system, regular patrols of the premises, and enforcing security guidelines.

Guest Services: The hostel will have a team of staff dedicated to providing excellent customer service. This includes managing bookings and reservations, processing payments, and providing any necessary information about the hostel and the local area.

Food Services: The hostel will also have a food services team responsible for preparing and serving meals to guests. This includes purchasing food supplies, preparing meals, and cleaning up after meals.

3/15/202X – Develop a comprehensive business plan

3/22/202X – Research current market conditions and industry trends 

4/1/202X – Secure a suitable location  

4/8/202X – Recruit and hire a management team

4/15/202X –Acquire necessary licenses, permits, and insurance

4/22/202X – Purchase furniture and equipment

5/1/202X – Market and advertise the hostel

5/8/202X – Open for business 

5/15/202X – Launch Third Product Line

5/22/202X – Monitor performance and adjust operations as needed

Licensing organization in the Hostel Business industry: https://www.sba.gov/business-guide/launch-your-business/apply-licenses-permits

9. Management Team 

The hostel business plan’s management team comprises individuals with backgrounds in hospitality, tourism, and business.

• The Hostel Manager: The Hostel Manager is responsible for the day-to-day operations of the hostel. They will be responsible for managing the staff and providing customer service to the guests. They will also oversee the hostel’s marketing, advertising, and budgeting.
• The Operations Manager: The Operations Manager ensures that the hostel runs efficiently. They will be in charge of the facility maintenance and housekeeping staff, as well as ensuring that all necessary supplies and equipment are stocked and readily available.
• The Marketing and Advertising Manager: The Marketing and Advertising Manager will create and implement marketing and advertising campaigns for the hostel. They will also be responsible for developing relationships with travel agents and tour operators to increase occupancy rates.
• The Financial Manager: The Financial Manager is responsible for the financial health of the hostel. They will be in charge of bookkeeping, budgeting, and financial analysis. They will also be responsible for setting up payment processing systems and managing accounts receivable.
• The Sales Manager: The Sales Manager will be responsible for developing relationships with tour operators, travel agents, and other companies in order to increase occupancy rates. They will also be responsible for creating and managing sales campaigns and promotions.

10. Financial Plan

Startup Costs: The estimated startup costs for the hostel business are estimated to be $200,000. This includes the cost of purchasing the building, renovations, furnishings, and other miscellaneous expenses.

Fixed Costs: The fixed costs for the hostel business include rent, utilities, insurance, staff wages, and other miscellaneous expenses. These costs are estimated to be $25,000 per month.

Variable Costs: The variable costs for the hostel business include food, beverages, and supplies. These costs are estimated to be $2,000 per month.

Key Revenue & Costs

Key Revenue

• Room rentals: $30,000/month
• Food and beverage sales: $10,000/month
• Miscellaneous services: $10,000/month
• Rent: $10,000/month
• Utilities: $5,000/month
• Insurance: $2,000/month
• Staff wages: $6,000/month
• Miscellaneous expenses: $2,000/month

Variable Costs

• Food: $1,000/month
• Beverages: $500/month
• Supplies: $500/month

Funding Requirements and Use of Funds

Funding Requirements 

• $250,000 for the purchase of the building and land 
• $200,000 for renovations and repairs to the building 
• $50,000 for furnishings, fixtures, and equipment
• $50,000 for business start-up costs 
• $100,000 for working capital

Use of Funds

• Purchase of the building and land 
• Renovations and repairs to the building 
• Furnishings, fixtures and equipment 
• Business start-up costs 
• Marketing, advertising and promotion 
• Payroll expenses 
• Insurance 
• Technology infrastructure 
• Legal and accounting fees 
• Working capital

Key Assumptions

Target market size: 5 million college and university students 

Starting occupancy rate: 40% 

Room rental rate: $30/night 

Market occupancy rate: 60% 

Annual capital expenditures: $100,000 

The average growth rate of the target market: 2% 

The number of hostel rooms: 100 

Total operating expenses: $200,000 

Average personnel costs: $50,000 

Average marketing costs: $20,000

Financial Projections

All tables in Hostel Business Plan PDF .

11. Unlock the Keys to Your Hostel’s Success: Let OGS Show You the Way!

The OGS Capital team is highly experienced when it comes to helping entrepreneurs and business owners launch their dream hostel. 

Our team has years of experience in the hospitality industry, and we are experts in designing and executing hostel business plans tailored to each client’s needs. We understand the unique challenges of the hostel industry and can create a comprehensive plan that includes everything from market analysis and financial planning to marketing and operations. 

Our experience ensures that your hostel will have the best chance of success. We can provide the guidance you need to make sure your hostel is profitable and successful. 

So if you’re looking to start a hostel, don’t hesitate to contact us today for a free consultation, and find out how much it costs to start a hostel with OGS Capital.

Is it profitable to run a hostel? 

Yes, it can be profitable to run a hostel. Hostels can offer travelers budget-friendly accommodations and can be highly profitable if managed correctly. Many hostels have found success by offering amenities like free Wi-Fi, complimentary breakfast, and organized activities for guests. Additionally, hostels can benefit from leveraging social media to promote their business and attract customers.

What makes a hostel successful?

Successful hostels provide a unique combination of a comfortable and clean atmosphere, friendly staff, and a great range of amenities and activities that appeal to guests. They offer a convenient and affordable accommodation option, as well as a community atmosphere that encourages guests to socialize and explore the area. Successful hostels are usually well-equipped with modern amenities, such as free Wi-Fi, laundry facilities, and a shared kitchen and lounge area. They often provide activities and events that help guests to connect with each other and the local culture. They also have a variety of room types, from private rooms to shared dorms, to accommodate different budgets and expectations. In addition, successful hostels typically have a helpful and friendly staff that can provide information and advice on local attractions, transportation, and other services, as well as answer any questions guests may have.

Download Hostel Business Plan Sample in PDF

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Opening your Dream Hostel: the Simple 5-Step Plan for Success

Build an outstanding hostel experience.

Do you dream of opening a successful hostel? Or perhaps you’re closer to making it a reality, having already scoped out locations and gathered the required investment. Wherever you are on your journey to opening your very own successful hostel, I can relate from my own first-hand experience with my hostel management company .

I’ve worked through all types of pain points and concerns with countless hostel owners to create a strong foundation built for success, maximize profits and alleviate stress triggers.

If when assessing your hostel idea you ask, “What am I missing?” or “How can I improve my opportunities for success and minimize potential problems?”, you are in good company. The best and most profitable hostels make sure to ask and address these types of questions from the beginning. In fact, doing so is a sign that you are priming yourself for a profitable hostel business.

Here is a simple 5-step plan to help ensure your hostel prospers, which can also inform much of your business plan.

1. Define your dream hostel

For your hostel to succeed, it requires a clear and consistent concept. It should align every single detail that will make up your hostel to convey one consistent idea.

We can kick off with identification of your source of inspiration. Getting inside the minds of travellers and hostel guests – in particular, what they really want from a hostel – is key. If you have stayed at hostels, you can ask what you were drawn to and what turned you off. What would you have liked to see as a hostel guest? Where did hostels impress you and let you down?

The internet provides an incredible range of resources to understand how hostel guests think. You can study hostel review websites, forums and online travel agency websites for guest feedback. In particular, looking at the reviews of the hostels that will be your competitors can be especially insightful. Armed with information gleaned from studying such customer feedback, you can better create a concept to wow your guests and outperform your competition.

A foundational exercise to defining your dream hostel should include:

• Target audience
• Concept design and architectural needs
• Management and operational needs

2. Decide your hostel’s unique selling points

A hostel addresses a target cohort that wants to spend a limited amount of money. Added to this, competition is fierce for the hostel sector. With these two undercurrent factors in mind, differentiation via a unique concept is arguably more important than ever before. Therefore your concept can be your most important USP. But how exactly do you come up with one that sells?

• Research your market to identify opportunities
• Choose your target group: couples, students, digital nomads, young professionals and so forth
• Choose a niche: technology, physical activities and sport, culture, luxury hostel and so forth

Here are some inexpensive tactics you can also implement to increase your hostel’s popularity:

• Include a free, quality breakfast. Buying inexpensive products in bulk such as cereal, cold cuts and fruit can trim produce costs, and the breakfast add-on can boost reservations.
• Offer private rooms Some hostel guests actively search for private rooms. It also offers an avenue to charge a higher price and increase revenues.
• Partner with a concept design educational institution While concepting is generally expensive, you can cut such costs by aiming to partner with a design school, academy or university. This way, students can propose design concepts for your hotel. Design educational institutions are usually eager to partner with companies to give their students real-world business exposure and experience. And while they may not be so experienced, students are often passionate, dedicated and eager to impress.
• Create a unique common area and brilliant bar The most successful hostels typically have a common area and bar that they are known for. Hostel guests often want to meet other guests. Your bar is your platform to make this happen and as a result, drive your revenues through food, beverage and entertainment sales. The bar itself can be an extension of your general concept or have its own complementary concept that attracts guests and even locals from the area.

3. Work out the set-up and costs

Cost analysis is necessary whatever your own situation. Whether you are a joint investor, it is a family venture or you are flying solo, working out the hostel’s set-up and required costs is essential.

a) Typical costs

• Rent or mortgage amortization
• Hostel design and architecture
• Furniture: beds, wardrobes, lockers, towels, sheets, bookcases, TVs, First aid kits, fire extinguishers and more
• License related to the building’s activity
• License to serve alcohol and food
• Music and broadcasting licenses
• Insurance: this can include public liability insurance, professional indemnity insurance and employer’s liability insurance. You will be required to check your insurance obligations with the relevant national authorities.

b) Sources of revenue

• Private beds and dorms in short stay
• Mid-term stay beds
• Restaurant and bar
• Spa, gym and/or leisure
• Bike rental
• Laundry service or pre-paid washing machines
• Local tourism services that your hostel may provide

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4. Build a strong guest relationship and leverage your hostel’s cultural environment

• Hostels are known to be a location for budget-conscious travellers in which cleanliness is king. Here are some points to bear in mind that will help you cultivate strong relationships with your guests.
• Digital nomads travel around the world. They are often on the lookout for a work area as well as somewhere to relax and unwind.
• The number of families travelling is increasing. Those that are on a budget often look to hostels. Private family rooms with beds for children, a changing area and a microwave are therefore in increasing demand.
• Solo travellers tend to choose hostels because unlike hotels they offer a much better opportunity to meet like-minded people, many of whom may also be travelling alone.
• Travel is multinational and multicultural. Therefore, if you want to attract people from far and wide, it is advised to accommodate different tastes, cultural mores and preferences.
• Activities should reflect your target market. For instance, if it is students, you may choose to host a movie night with drinks and snacks. Alternatively, if it is young professionals or digital nomads,you may elect to organize business and innovation meetups, professional guest speaker events or even speed dating.
• A small shop that provides essentials and entertainment options such as movie rentals meets traveller needs and of course augments your revenues.

5. Join a reputable hostel association and build a business network

Reputation is critical to a hostel’s success. One way to grow and maintain a strong reputation is by joining hostel networks that provide a seal of approval.

Being part of an organization that is internationally recognized such as Hostelling international will show your potential guests that your hostel is committed to certain standards in service provision.

You can also grow your reputation by:

• Partnering with local businesses whose services complement your own. For instance, if your target market is digital nomads, partnering with co-working offices to promote each other’s businesses and offer promotions can offer a viable route to success.
• Contacting language schools to offer in-hostel classes.
• Developing relationships with local startups and businesses on the lookout for short-term hires.
• Contacting your local council to be aware of cultural activities, trade fairs and events that may interest your guests. You can also avail of possible opportunities to offer promotions and win recommendations for your hostel from local council departments, such as the tourist board.

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The final word

The most important task when carrying out your initial hostel plan is to get your ideas out of your head and onto paper. This task turns a dream into a goal. With this 5-step plan, you can implement a simple yet powerful route to shaping the success of your hostel business. Its thorough and meticulous execution will help ensure maximized prosperity. And in realizing this 5-step method, you will be well positioned to develop your subsequent business plan , as well as your marketing, distribution strategy and revenue management plans, all of which will prime your hostel for outstanding success.

As ever, please let me know your thoughts or if you have anything to add in the comments!

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How to open or start your own hostel, step by step

Eva Lacalle

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Table of contents

If you’re interested in how to start a hostel , there are a lot of things you need to have in mind. For starters, location is key. The location will affect your target audience, your budget, your strategy and basically anything you need to consider to get started. 

Other important decisions are related to making sure you have a plan to cover the basic needs of your guests: good service, a good product, safety and cleanliness are some of the fundamentals. With a complete understanding of your goal and with a business plan in place to reach that goal you can be on your way to starting a hostel.

In this article, we’ll cover the basic things to have in mind when opening a hostel as well as a step by step guide of how to get started.

Things to have in mind when opening a hostel

As we’ve already mentioned, location is fundamental. The location will determine your target audience, the price you can charge, the style of the hostel and the budget you need to get started. Furthermore, while decoration, style and your target audience can change over time, the location is not as easy to change – so you better like it. 

Once you’ve picked the location and done a cost analysis and business plan, the next thing to keep in mind is what services you are going to offer. As a hostel you need to meet a guest’s basic needs such as comfort, quality of service, and safety. Once you have the guests through the door, you’ll have to work on a range of services you can offer beyond just a place to sleep, whether it’s a tour, breakfast or other added services, this is one of the keys to profitability. Read more about how to upsell and boost ancillary revenue. 

Step by step guide for how to open a hostel

So now you know the keys to keep in mind when finding out how to start a hostel, it’s time to look step by step at how to open a hostel.

Step 1: Choose the location 

The first step of setting up a hostel is deciding where it is you want to be. This will help you to do market research and define what makes you unique to the area where your hostel will be. When choosing your location it’s important to have in mind your budget so that you can adapt your search for the right property and find out what’s feasible with your budget. 

Step 2: Perform market research and define your unique value proposition

Once you’ve decided on the location, it’s time to do your benchmarking. Find out what other properties are in the area that you’re thinking of setting up your hostel and see what they have to offer in terms of size, scale, services and price. This will help you find out what is available in the proposed area so that you can find a gap in the market. 

The market gap is where you will step in with your unique value proposition. This will also help define your offering because you’ll be able to see the panorama of what’s available and what is missing. Your unique value proposition will be your guiding star that you can design your messaging around and let customers know the benefit of staying at your hostel over others.

Step 3: Define your resources

Once you’ve chosen the location, done market research and defined your unique value proposition, it’s time to pinpoint your resources, both human resources and the equipment you will need in order to run. The items and the human resources that are necessary in order to run your hostel will help you understand your operating costs so that you can make financial projections for your hostel. 

When deciding your staffing needs it’s important to keep in mind how you will operate so that you know how many people are needed and what specific skill set you need to look for. As a starting point you’ll most likely need a front desk staff, a housekeeper, a maintenance person and an operations manager. 

Beyond the obvious beds, pillows, blankets, bathroom supplies, furniture for common areas, and equipment for reception, it’s also important to have a property management system in mind in order to simplify and automate operations. The right property management system will make bookings, as well as front desk and revenue management, easier and faster.

Step 4: Business and marketing plan

Once you’ve defined the resources needed, you’re ready to start with the business and marketing plan. Part of the business plan will be coming up with a cost analysis and projected costs in order to analyze the profitability and economic viability. 

This will help you better understand the target room price, the average use of utilities and other operational costs. You can read more here about pricing strategies . For this, it’s also important to decide whether you will rent or buy the property because that will affect your fixed costs. 

Another important part of the business plan is the marketing plan. You must define your target audience and choose the best channels for distribution depending on those targets. For example, if you want to target international backpackers who tend to stay longer in each place, it’s important to have an idea of which channels they are using to book. 

Your distribution plan will help you decide the best way to invest your money in the different marketing channels based on your target audience. As backpackers tend to be younger, having a social media marketing strategy will be key to capturing clients. Paid social media ads may be a good idea as well to factor into your marketing plan. 

Step 5: Start operating 

Once you’ve chosen the location, carried out a benchmarking, defined your resources and created a marketing and business plan, it’s time to start operating. One of the keys to operating is having a reservation management software that’s capable of facilitating direct reservations in order to maximize revenue. With reservation management software you can also manage billing and room assignments, all of which will facilitate the smooth operation of your hostel from the beginning.

Of course there will be bumps in the road and kinks to work out as you go in order to optimize performance, but this is completely normal. One of the most important things to keep in mind after opening is to maximize revenue, by minimizing unoccupied rooms and thereby increasing profitability. You can run promotions and other campaigns to increase visibility and of course work with OTAs and metasearch engines to improve distribution. 

In this article we’ve discussed how to start a hostel, including things to keep in mind and steps to take in order to open your doors. By having a good idea of your target audience, having a clear study of profitability, including a business and marketing plan, and following the steps outlined in this article, your hostel is bound to be on the road to success. 

The key to staying successful is offering a unique value proposition as well as an unparalleled customer experience that will keep guests coming back, reducing your acquisition costs, and ensuring you remain profitable.

Eva has over a decade of international experience in marketing, communication, events and digital marketing. When she's not at work, she's probably surfing, dancing, or exploring the world.

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Hostel Business Model: All You Need To Know

When it comes to affordable travel accommodations, hostels have become a popular choice for budget-conscious travelers around the world. 

Hostels offer travelers the opportunity to save money on lodging while providing a social, communal experience. But what exactly is a hostel business model, and how do hostels operate to make their business profitable?

In this article, we'll dive into the details of the hostel business model, exploring the key factors that make hostels successful, including pricing strategies, marketing tactics, and the importance of customer service.

What is a Hostel?

Before we can dive into the specifics of the hostel business model, it's important to understand what a hostel is and what it offers to travelers. 

A hostel is a type of budget accommodation that typically offers dormitory-style rooms with bunk beds as well as private rooms for individuals or small groups. Hostels often have shared bathrooms and communal areas, such as lounges, kitchens, and dining areas.

In addition to providing affordable lodging, hostels also offer travelers the opportunity to socialize and meet other like-minded individuals. 

Many hostels organize group activities, such as pub crawls, walking tours, and other events, to encourage socialization among guests.

What Kind of Business is a Hostel?

A hostel is a type of accommodation business that provides budget-friendly accommodations to travelers. 

Hostels typically offer dormitory-style rooms with bunk beds or private rooms with shared facilities, such as bathrooms and kitchens. Hostels may also offer common areas, such as lounges, dining areas, and outdoor spaces, where guests can socialize and relax.

Hostels are often geared toward budget-conscious travelers who are looking for affordable accommodations, and they may appeal to a wide range of travelers, including backpackers, solo travelers, groups of friends, and families. 

Hostels may also offer additional services or amenities, such as tour booking, laundry facilities, and free breakfast.

In terms of business structure, hostels may be owned and operated by a single individual or a group of investors. Hostels may also be part of a larger hostel chain or franchise. The business model typically involves generating revenue through nightly room rates, and may also include additional revenue streams such as sales of food, beverages, and travel-related services.

In summary, a hostel is a hospitality business that provides budget-friendly accommodations and a communal atmosphere for travelers.

Hostel Business Model 

Now that we understand what a hostel is, let's dive into the details of the hostel business model. 

At its core, the hostel business model is based on providing affordable lodging to travelers while keeping operating costs low and seeking out additional revenue streams to maintain profitability.

Hotels use a variety of business models, depending on their target market, location, size, and amenities. Here are some of the most common hotel business models:

Here are some of the key factors that make the hostel business model successful:

Full-Service Hotels

These hotels offer a range of amenities and services, such as restaurants, room service, fitness centers, spas, and meeting rooms. 

Full-service hotels typically cater to business travelers and upscale leisure travelers, and they charge premium rates for their services.

Limited-Service Hotels

Limited-service hotels provide basic amenities such as a fitness center, breakfast, and Wi-Fi, but they do not offer full-service amenities such as restaurants or room service. 

Limited-service hotels are often located in suburban or rural areas, and they cater to budget-conscious travelers who prioritize value and convenience.

Luxury Hotels

Luxury hotels provide the highest level of service, amenities, and accommodations, such as fine dining restaurants, luxury spas, and personalized butler service. 

Luxury hotels cater to affluent travelers who are willing to pay a premium for exclusive and personalized experiences.

Boutique Hotels: Boutique hotels are small, stylish, and unique hotels that offer personalized service, upscale amenities, and distinctive designs. 

Boutique hotels typically cater to leisure travelers who prioritize personalized experiences and unique surroundings.

Resort Hotels

Resort hotels are located in vacation destinations such as beaches, mountains, or theme parks, and they offer a wide range of activities, such as golf, skiing, water sports, and entertainment. 

Resort hotels cater to families and leisure travelers who are seeking a fun and relaxing vacation experience.

Budget Hotels

Budget hotels provide basic accommodations and amenities at a low cost. Budget hotels are often located near transportation hubs such as airports or train stations, and they cater to budget-conscious travelers who are looking for affordable lodging options.

Hotels use a range of business models to cater to different types of travelers and meet their unique needs and preferences. 

The key to success in the hotel industry is to understand the target market and develop a business model that provides the right balance of value, service, and amenities at a competitive price point.

Hotel Business Pricing Model

One of the key components of the hostel business model is pricing. Hostels typically offer lower rates than traditional hotels or vacation rentals, making them an attractive option for budget-conscious travelers. 

Regardless, to maintain profitability, hostels must carefully balance their pricing strategy to ensure that they are charging enough to cover their operating costs while remaining affordable for their target market.

Some Common Pricing Strategies Used by Hostels Include

Tiered pricing.

Hostels may offer different price points for different types of rooms, such as dormitory-style rooms with multiple beds or private rooms with a single bed.

Seasonal pricing

Hostels may adjust their prices based on demand, charging higher rates during peak travel seasons and lower rates during slower times of the year.

Discounted rates

Hostels may offer discounted rates for longer stays or for guests who book directly through their website or booking platform.

Hostel Business Marketing Tactics

Another important factor in the hostel business model is marketing. Hostels must effectively market their services to a wide range of travelers to attract guests and maintain high occupancy rates.

Some common marketing tactics used by hostels include:

Social media

Hostels often use social media platforms, such as Instagram, Facebook, and Twitter, to showcase their accommodations and promote their services to potential guests.

Reviews and ratings

Positive reviews and ratings on travel websites, such as TripAdvisor and Hostelworld, can help increase visibility and attract new guests.

Partnership marketing

Hostels may partner with local businesses, such as restaurants, bars, or tour companies, to offer package deals or discounts to guests.

Hostel Business Customer Service

Finally, the hostel business model relies heavily on customer service. Hostels must provide a high level of customer service to attract guests and encourage positive reviews and word-of-mouth recommendations.

Some ways that hostels can provide excellent customer service include:

Staff training

Hostel staff should be trained to provide friendly and helpful service to guests, answer questions, and offer recommendations for local attractions and activities.

Cleanliness and maintenance

Hostels should be clean and well-maintained, with regular cleaning and upkeep of common areas, bathrooms, and guest rooms.

Security 

Hostels should have adequate security measures in place, such as locks on doors and lockers for guests

Is Hostel Business Profitable?

The profitability of running a hostel depends on a variety of factors, including location, occupancy rates, pricing strategy, and operating costs. While some hostels may be highly profitable, others may struggle to break even.

Overall, running a profitable hostel requires careful planning and management. Hostels that are able to maintain high occupancy rates, find the right pricing strategy, and keep operating costs low are more likely to be successful. 

Nevertheless, profitability can vary widely depending on location, market conditions, and other factors. 

It's important for hostel owners to conduct thorough research and planning before starting a hostel business to ensure that they have a realistic understanding of the potential profitability of their venture.

Key Factors That Can Affect the Profitability of a Hostel Business

The location of a hostel can have a significant impact on its profitability. 

Hostels located in popular tourist destinations or in areas with high demand for budget accommodations are likely to have higher occupancy rates and may be more profitable than those located in less popular areas. 

Regardless, these prime locations may also come with higher operating costs, such as rent or utilities.

Occupancy Rates

The occupancy rate is the percentage of available rooms that are occupied at a given time. Hostels with high occupancy rates are more likely to be profitable than those with low occupancy rates. However, maintaining high occupancy rates can be challenging, particularly during off-peak seasons or in highly competitive markets.

Pricing Strategy

The pricing strategy is another key factor that can affect the profitability of a hostel. Hostels that charge too little may struggle to cover their operating costs, while those that charge too much may struggle to attract guests. Hostels must find the right balance between affordability and profitability to remain competitive.

Operating Costs

The operating costs of a hostel can also affect its profitability. These costs can include rent or mortgage payments, utilities, staff salaries, cleaning supplies, and maintenance costs. Hostels that are able to keep these costs low while maintaining a high level of service are more likely to be profitable.

What Makes a Successful Hostel?

A successful hostel is one that fosters a welcoming community atmosphere, offers competitive pricing, and provides excellent customer service and additional amenities.

There are several key factors that contribute to a successful hostel. These include:

A successful hostel is often located in a prime location that is easily accessible to popular tourist destinations or transportation hubs. It may also be situated in a safe and vibrant neighborhood with access to amenities such as restaurants, cafes, and shops.

Comfortable and Clean Accommodations

Hostels that offer clean, comfortable, and well-maintained accommodations are more likely to attract and retain guests. This can include comfortable bedding, sufficient storage space, and adequate lighting and ventilation.

Competitive Pricing 

Hostels that offer affordable rates are more likely to attract budget-conscious travelers. However, it's important for hostels to balance affordability with quality, ensuring that their pricing strategy remains competitive without sacrificing the guest experience.

Community Atmosphere 

A successful hostel often has a welcoming and social atmosphere that encourages guests to interact with one another. This can include communal areas such as lounges, kitchens, and outdoor spaces, as well as social events and activities.

Excellent Customer Service

Providing excellent customer service is essential for a successful hostel. This includes having friendly and knowledgeable staff who are able to assist guests with their needs and provide recommendations for local attractions and activities.

Additional Services and Amenities

Offering additional services and amenities, such as laundry facilities, tour bookings, or free breakfast, can also contribute to a successful hostel. These services can enhance the guest experience and set the hostel apart from its competitors.

Positive Reviews and Reputation

A successful hostel often has positive reviews and a good reputation in the travel community. This can be achieved through consistent and high-quality service, positive guest experiences, and a commitment to guest satisfaction.

How to Improve Your Hostel Business

Improving a hostel business involves implementing strategies to enhance guest satisfaction, increase revenue, and reduce costs. 

Improving a hostel business involves a combination of enhancing the guest experience, increasing revenue, and reducing costs. By implementing strategies in these areas, hostels can attract more guests, increase revenue, and improve profitability.

Here are some key ways to improve a hostel business:

Enhance Guest Experience

A great guest experience is essential for a successful hostel. This involves providing clean and comfortable accommodations, excellent customer service, and a welcoming atmosphere. 

Consider implementing guest feedback systems to gather feedback on areas for improvement, and make changes based on this feedback.

Develop a Strong Online Presence

A strong online presence can help to attract more guests and increase bookings. Ensure that your hostel has a user-friendly website, is listed on popular booking platforms, and has a strong presence on social media.

Offer Additional Services and Amenities

Offering additional services and amenities can help set your hostel apart from competitors and increase revenue. Consider offering services such as laundry facilities, bike rentals, or tours.

Optimize Pricing Strategy

Pricing is a key factor in attracting guests and generating revenue. Review your pricing strategy to ensure that it is competitive and in line with market trends. Consider offering discounts or promotions during low-season periods to boost occupancy rates.

Improve Operational Efficiency

Improving operational efficiency can help to reduce costs and increase profitability. This can involve implementing cost-saving measures such as energy-efficient lighting, improving inventory management, and optimizing staffing levels.

Partner with Local Businesses

Partnering with local businesses such as tour companies, restaurants, or transportation services can help to enhance the guest experience and increase revenue. Consider offering package deals or discounts in partnership with local businesses.

Invest in Marketing 

Investing in marketing can help to attract more guests and increase bookings. Consider partnering with influencers or bloggers, running targeted social media campaigns, or participating in travel trade shows.

Integrating Hotel Property Management System Into a Hostel Business Model

Integrating a hotel property management system (PMS) into a hostel business model can be a beneficial step in managing the hostel's operations efficiently. 

A PMS can automate various functions, including managing reservations, room assignments, check-ins, and check-outs. Here are some steps to integrate a PMS into a hostel business model:

Assess your needs

The first step is to evaluate the requirements of your hostel business. Identify the specific features you need in a PMS, such as managing reservations, room occupancy, housekeeping schedules, billing and invoicing, and guest communications.

Choose the right PMS

Once you have assessed your needs, research the available PMS solutions in the market and select the one that meets your hostel's requirements. You may want to consider factors such as cost, ease of use, integration with other systems, and customer support.

Train your staff

It is essential to train your staff on how to use the PMS to ensure seamless integration. Provide them with adequate training and support to understand the new system and its features.

Set up the system

Once you have chosen a PMS, set it up according to your hostel's requirements. Customize the system to reflect your hostel's brand and configure it to automate the functions that you need.

Test the system

Before going live with the PMS, perform a series of tests to ensure that it works correctly. Test the system's functionality, compatibility with other systems, and overall performance.

Implement the system

After testing, implement the PMS in your hostel's operations. Monitor the system's performance closely and make adjustments if necessary.

Final Thoughts

In summary, integrating a hotel PMS into a hostel business model can help streamline operations and improve the guest experience. 

By assessing your needs, choosing the right system, training your staff, setting up the system, testing it, and implementing it, you can ensure a successful integration of the PMS into your hostel's operations.

To learn more about the Booking Ninja Hotel Property Management System and how our services can enhance your hostel business model, schedule a free call with us right now!

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A Sample Student Accommodation Business Plan Template

By: Author Tony Martins Ajaero

The real estate industry is a very vast industry and new businesses keep unraveling in the industry from time to time. There is a wide range of businesses with good turnover that an aspiring entrepreneur who is looking towards starting a business in the real estate industry can successfully start. One of such businesses is a student accommodation rental business.

This business requires minimal startup capital and minimal manpower and can be started from a home office especially if you are not going to raise money to develop the properties yourself. If you have decided to start a student accommodation business, then you need to write your own business plan.

The essence of writing a business plan before starting any business is for you to have a blueprint of how you would setup, manage and expand your business. Below is a sample student accommodation rental company business plan template that will help you successfully write yours with little or no stress.

How to Write a Student Accommodation Business Plan [Sample Template]

1. industry overview.

Student accommodation business is classified under the real estate industry and the real estate industry is one of the many industries that is a major contributor to the growth of the economy of many nations of the world. As a matter of fact, a real estate agent can become a millionaire ‘overnight’ from just one real estate deal; little wonder the industry is responsible for making many instant millionaires in South Africa, as well as the rest of the world.

The Bureau of Labor Statistics projects 11.1 percent job growth for real estate sales agents between 2012 and 2022, which is about as fast as average. During that time, an additional 38,000 jobs will open up.

south africa is attracting a good number of foreign students and the latest research by Jones Lang LaSalle (JLL) has found that the number of young adults aged 18-25 will increase to almost 100 million by 2022, and that the demand for new, purpose-built student accommodation is set to top 500, 000 beds in the next five years.

Current accommodation arrangements can accommodate fewer than one in five students who apply for residency, and student numbers are growing annually as increasing numbers of young people complete their secondary schooling.

The real estate industry involves the buying, the selling, or the renting of lands, buildings or housing facility. Real estate agency or a real estate agent (broker) is a person who acts as a middleman between the sellers and buyers of real estate. They are involved in searching for sellers who sell properties and buyers who to buy properties.

A real estate agency (brokerage firm) usually receives a payment called a commission for successfully matching a seller’s real estate with a buyer’s real estate need such that a sale or rent/lease can be made. In most cases, the commission generated is shared with other real estate brokers or agents who played their parts in ensuring that the property is sold or rented out as the case may be.

It is important to state that in South Africa, each province has its own unique laws that clearly define the types of relationships that can exist between real estate agencies (professionals) and property owners (clients). Nonetheless, it is always a win – win for both real estate agencies and owners of properties because real estate brokers and their salespersons (commonly called “real estate agents” or “brokers”) usually assist sellers in marketing their property and selling it for the highest possible price under the best terms.

The real estate industry is highly regulated in South Africa and anyone who aspires to become a real estate agent or start a real estate agency must apply and obtain a license before they can legally receive remuneration for services rendered as a real estate agency or real estate broker. But as a lawyer, you can handle real estate deals in South Africa and make your commission without operating as a licensed real estate agent.

The practice is that a real estate licensed agent is required to disclose to prospective buyers and sellers the nature of their relationship within the transaction and with the parties involved in the deal. It is the practice for most standard student accommodation rental companies to also engage in other forms of rental businesses as it relates to properties . Some even go as far as engaging in property development.

Service delivery for a student accommodation rental company is simple and straight forward, especially if they are not involved in other complimentary services within the scope of their business.

2. Executive Summary

Oliver Tambo & Co® Real Estate Agency, LLP is a real estate agency that will operate in all the Province in South Africa but will be headquartered in Cape Town close to the University of Cape Town which happens to be the oldest University with the highest enrollment in South Africa.

We intend to become specialists in owning, developing, acquiring, managing, selling and renting/leasing students’ accommodation, office apartments and hall facilities. This can generally be summed up as clean, safe accommodation within easy reach of campus at an affordable price, and in our experience, the most consistent demand is for newly-built and pre-owned one and two-bedroom sectional title apartments with high tech security, parking and good access to shops and other amenities as well as the campus.

Part of our goal as a real estate agency is to grow to become one of the top 5 largest real estate companies in the whole of South Africa and to rent and manage properties across university campuses in South Africa.

Oliver Tambo & Co® Real Estate Agency, LLP will be committed when it comes to maintaining a diverse portfolio of high quality students’ apartment, office structures and hall facilities. We will also focus on providing a dynamic, proactive and vibrant work environment for all our employees such as discounted rentals for all our student agents and caretakers, and mouthwatering bonus for every deal that comes through any of the staff.

Oliver Tambo & Co® Real Estate Agency, LLP is going to be a self-administered real estate investment trust (REIT). We will engage in a wide range of student accommodation rental services. We will work towards becoming one of the largest student accommodation rental companies in South Africa.

As part of our plans to make our customers our number one priority and to become one of the leading student accommodation rental companies in South Africa, we have perfected plans to adopt international best practices that can favorable compete with the best in the industry. Oliver Tambo & Co® Real Estate Agency, LLP has overtime perfected plans that will help us to become a specialist in our area of business.

Oliver Tambo & Co® Real Estate Agency, LLP will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

Oliver Tambo & Co® Real Estate Agency, LLP is founded by Rowland Oliver Tambo, Sean Mbeki and Sarah Zuma. They are the major financiers of the company. R. Oliver Tambo is the company’s president and CEO. Rowland Oliver Tambo has over 10 years of real estate experience in significant senior management positions in the areas of sales, marketing, new technologies and franchise management.

3. Our Products and Services

Oliver Tambo & Co® Real Estate Agency, LLP is going to offer varieties of services within the scope of the real estate industry in South Africa. Our intention of starting our student accommodation rental company is to favorably compete with leading players in the student accommodation rental industry in South Africa.

We are well prepared to make profits from the industry and we will do all that is permitted by the law in South Africa to achieve our business goals and objectives. Our business offerings are listed below;

• Rental of one-unit student accommodation structures
• Rental of two- to four-unit student accommodation structures
• Rental of five- to nine-unit student accommodation structures
• Rental of 10- to 19-unit student accommodation structures
• Rental of 20- to 49-unit student accommodation structures
• Rental of 50- or more unit student accommodation structures
• Rental of manufactured student homes, mobile homes or trailers
• Real estate consultancy and advisory services

4. Our Mission and Vision Statement

• Our vision is to become one of the top 5 student accommodation rental companies in South Africa within the first 10 years of starting R. Oliver Tambo & Co® Real Estate Agency, LLP.
• Our mission of starting a student accommodation rental business is to grow the business beyond the city where we are going to be operating from to become a national and international brand by opening offices all across key cities in South Africa and franchising .

Our Business Structure

Our company’s structure is not entirely different from what is obtainable in the real estate industry, as a matter of priority, we have decided to create a structure that will allow for easy growth for our business, and we have created platforms that will enable us attract some of the best hands in the industry.

We are quite aware that the success of any business lies in the foundation on which the business is built on, which is why we have decided to build our student accommodation rental company on the right business foundation. We will ensure that we only hire people that are qualified, honest, hardworking, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders.

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more depending how fast we meet our set target.

Oliver Tambo & Co® Real Estate Agency, LLP is aware of the modus operandi in the student accommodation rental line of business, hence adequate provision and competitive packages has been prepared for independent real estate agents. Our marketing department will be responsible for managing this aspect of our business.

Below is the business structure we will build R. Oliver Tambo & Co® Real Estate Agency, LLP on;

• Chief Executive Officer
• Company’s Lawyer / Secretary

Admin and HR Manager

Real Estate Agents

• Business Developer/Sales and Marketing
• Customer Service Executive / Front Desk Officer

5. Job Roles and Responsibilities

Chief Executive Officer – CEO (President):

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization

Company’s Lawyer/Secretary/Legal Counsel

• Responsible for drawing up contracts and other legal documents for the company
• Consult and handle all corporate legal processes (e.g. intellectual property, mergers & acquisitions, financial/securities offerings, compliance issues, transactions, agreements, lawsuits and patents et al)
• Develops company policy and position on legal issues
• Researches, anticipates and guards company against legal risks
• Represents company in legal proceedings (administrative boards, court trials et al)
• Play a part in business deals negotiation and take minutes of meetings
• Responsible for analyzing legal documents on behalf of the company
• Prepares annual reports for the company
• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Designs job descriptions with KPI to drive performance management for clients
• Regularly hold meetings with key stakeholders to review the effectiveness of HR Policies, Procedures and Processes
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defines job positions for recruitment and managing interviewing process
• Carries out induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversees the smooth running of the daily office activities
• In charge of leasing and renting out student accommodations and other properties under our list
• In charge of inspecting and reporting on the structural attributes of a building
• Evaluates the component systems of a building (electrical, fire, roofing and plumbing)
• Assesses compliance with building, electrical, plumbing and fire codes
• Evaluates building plans and permits
• Reviews and approves plans that meet building codes, local ordinances and zoning regulations
• Keeps daily logs, including photographs taken during inspection

Marketing and Sales Executive/Business Developer

• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects.
• Responsible for supervising implementation, advocate for the customer’s need s, and communicate with clients
• Finds and qualifies land for development based on company’s land requirements; maintains a land search database; initiates discussions with property owners about the possible sale of property
• Develops, executes and evaluates new plans for expanding sales
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company
• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Provides managers with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting for one or more properties.
• Responsible for developing and managing financial systems and policies
• Accountable for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the company
• Serves as internal auditor for the company

Front Desk/Customer’s Service Officer

• Receives Visitors/clients on behalf of the organization
• Receives parcels/documents for the company
• Handles enquiries via e-mail and phone calls for the organization
• Distributes mails in the organization
• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the line manager in an effective and timely manner
• Consistently stays abreast of any new information on the company’s properties that are put up for sale to ensure accurate and helpful information is supplied to clients when they make inquiries.

6. SWOT Analysis

Starting a student accommodation rental business in South Africa comes with its own fair share of challenges, you would have to abide by the law and also compete with loads of other entrepreneurs in the real estate business value chain who also are interested in making a living and building a business in Cape Town – South Africa.

In order to compete favorably in the student accommodation rental line of business, we have been able to hire the services of a tested and trusted HR consultant to help us conduct our SWOT analysis. Here is a summary from the result of the SWOT analysis that was conducted on behalf of R. Oliver Tambo & Co® Real Estate Agency, LLP.

Some of the strengths that we will be bringing to the table in the student accommodation rental industry are our robust relations with student accommodation owners in the whole of South Africa. Also, we have a team of experts that have cut their teeth in the real estate industry cum student accommodation line of business. Our commission structure and relationship with freelance real estate agents in Cape Town and other Provinces in South Africa will also count towards our advantage.

As a newbie in the student accommodation rental line of business, we might have some challenges competing with big time realtors and other student accommodation rental companies that have been in the industry for many years; that perhaps is part of our weakness.

• Opportunities:

The opportunities in the real estate industry especially as a student accommodation rental company is massive considering the rapid growth of university enrollments in South Africa, this trend has been bolstered by highly favorable demographics. We are well – positioned and ready to take advantage of any opportunity that comes our way.

Some of the threats that we are likely going to face as a student accommodation company are unfavorable government and university governing board policies, and global economic downturn. Global economic downturn usually affects spending power and the real estate industry is known to encounter decline in sales and profits during this period.

There is hardly anything we could do as regards these threats other than to be optimistic that things will continue to work for our good.

7. MARKET ANALYSIS

• Market Trends

The market trends in the student accommodation line of business in South Africa is such that international students are targeted since they are the ones who are willing to pay more to get secured and decent students’ apartment. As a matter of fact, security is a key factor when it comes to renting a student apartment in South Africa and next to security is closeness to the campus.

Another obvious trend that is common with student accommodation rental companies in South Africa is that most of them are improvising on more means of making money in the real estate industry and as matter of fact they are also acting as property developers and home staging agents amongst many other functions.

One thing is certain for every student accommodation rental company; if they are hardworking, creative and proactive, they will always generate enough income to meet all their overhead and operational costs, keep their business going without struggle and make reasonable profits from their business deals.

8. Our Target Market

As a student accommodation rental company, our target market cuts across students of different classes and cultures. We are coming into the student accommodation rental industry with a business concept that will enable us work with local and international students who are interested in renting student apartments at an affordable price.

Our Competitive Advantage

The availability of competent and reliable real estate agents under our payroll, our business process, the financial structure of the company, management of a high-quality asset portfolio, superior financial and debt management and of course our pricing model, are part of our competitive advantage.

Another possible competitive strategy for winning our competitors in this particular industry is to build a robust clientele base and ensure that our student apartments are trendy. Our organization is well positioned, key members of our team are highly reliable and competent and can favorably compete with the some of the best in the student accommodation rental industry.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and objectives. We will also engage freelance marketing agents on a commission to help us market our services.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Oliver Tambo & Co® Real Estate Agency, LLP is established with the aim of maximizing profits in the student accommodation rental industry. Below are the sources we intend exploring to generate income for R. Oliver Tambo & Co® Real Estate Agency, LLP;

10. Sales Forecast

It is a known fact that as long as there are students in University campuses in South Africa, there will always be need to for them to hire the services of student accommodation rental companies from time to time.

We are well positioned to take on the challenges that are synonymous to student accommodation rental businesses in South Africa, and we are quite optimistic that we will meet out set target of generating enough profits from our first month of operation and grow the business beyond Cape Town to other Provinces in South Africa within record time.

We have been able to critically examine the student accommodation rental line of business, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projections are based on information gathered on the field and some assumptions peculiar to similar start – ups in Cape Town – South Africa;

• First Fiscal Year: R200,000
• Second Fiscal Year: R500,000
• Third Fiscal Year: R800,000

N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and any major competitor offering same services as we do within the locations we have strong business presence. Please note that the above projection might be lower and at the same time it might be higher since some factors are beyond our control.

• Marketing Strategy and Sales Strategy

We quite mindful of the fact that there are competitions in the student accommodation rental market in South Africa, hence we have been able to hire some of the best business developers to handle our sales and marketing.

Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis to meet their targets and the overall goal of the organization. The training is not restricted to only our full – time employees but also all our freelance brokers that are scattered all over university campuses in South Africa.

Our goal is to become one of the leading student accommodation rental companies in South Africa which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force in the industry.

Oliver Tambo & Co® Real Estate Agency, LLP is set to make use of the following marketing and sales strategies;

• Introduce our student accommodation rental company by sending introductory letters alongside your brochure to students and other key stake holders throughout the city where our company is located.
• Print out fliers (list of accommodations for rent) and business cards and strategically drop them in offices, car parks, libraries, public facilities and train stations et al.
• Use friends and family to spread word about our business
• Post information about our company and the services we offer on bulletin boards in places like car parks, schools, libraries, and local coffee shops et al
• Place classified advertisements in the newspaper, or local publication about our company and the services we offers
• Leverage on referral networks such as agencies that will attract clients (students) who would need our student apartments
• Advertise our student accommodation rental services company in relevant real estate magazines, newspapers, TV and radio stations.
• Attend relevant real estate expos, seminars, and business fairs et al to market our services
• Engage in direct marketing approach
• Encourage the use of Word of mouth marketing from loyal and satisfied clients
• Join local chambers of commerce and industry to market our product and services.

11. Publicity and Advertising Strategy

We have been able to work with our consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the student accommodation rental industry by storm which is why we have made provisions for effective publicity and advertisement of our company.

Below are the platforms we intend to leverage on to promote and advertise our student accommodation rental business;

• Place adverts on both print and electronic media platforms
• Maximize our company’s website to promote our business
• Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, LinkedIn, Google+ and other platforms (real estate online forums) to promote our business and list our properties for sale and for lease.
• Install our billboards in strategic locations in and around the university community in Cape Town
• Distribute our fliers and handbills in targeted areas from time to time
• Attend student association meetings with the aim of networking and introducing our business.
• Ensure that all our workers wear our branded shirts and all our vehicles are branded with our company’s logo

12. Our Pricing Strategy

Part of our business strategy is to ensure that we work within the budget of our potential clients to help them meet their expectations. It is the practice in most parts of the world for properties to be valued by professionals based on the area the facility is located, the type of facility and other factors.

Since we are not directly in control of the pricing system in the real estate industry, we can only abide by what is obtainable when it comes to fixing a price for our accommodations. But one thing is certain, we will ensure that we make available decent and secured accommodation when have we are contracted to do so.

Lastly, we will ensure that we keep our fees below the average market rate for all of our clients by keeping our overhead low. In addition, we will also offer special discounted rates to our clients from time to time especially when they recommend clients to us.

• Payment Options

At R. Oliver Tambo & Co® Real Estate Agency, LLP our payment policy is all inclusive because we are quite aware that different people prefer different payment options as it suits them but at the same time, we will not accept payment by cash because of the volume of cash that will be involved in most of our transactions.

Real estate deals usually involve huge amount of money. Here are the payment options that R. Oliver Tambo & Co® Real Estate Agency, LLP will make available to her clients;

• Payment by via bank transfer
• Payment via online bank transfer
• Payment via check
• Payment via bank draft

In view of the above, we have chosen banking platforms that will help us achieve our plans without any hitches and we will also pay our freelance sales agents with the same platforms. Our bank account numbers will be made available on our website and promotional materials.

Any agent who intends paying with cash will be directed to deposit the money into our corporate account and then present their payment tellers to us.

13. Startup Expenditure (Budget)

From our market survey and feasibility studies , we have been able to come up with a detailed budget on achieving our aim of establishing a standard student accommodation rental company in Cape Town – South Africa and here are the key areas where we will spend our start – up capital;

• The total fee for incorporating the business in South Africa – Name reservation application costs R50 and company registration R125
• The budget for permits and license – R1,000
• The cost for hiring Consultant – R2,500
• The cost for computer software apps (Accounting Software, Payroll Software, CRM Software, Microsoft Office, QuickBooks Pro, drug interaction software, Physician Desk Reference software) – R7,000
• The budget for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – R5,400.
• Cost of payment of rent for a suitable office facility in Cape Town for 12 months at R1.76 per square feet in the total amount of – R65,600.
• The cost for office remodeling (construction of racks and shelves) – R7,000.
• The cost for equipping the office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – R15,000
• Other start-up expenses including stationery and phone and utility deposits ( R2,500 ).
• Operational cost for the first 3 months (salaries of employees, payments of bills et al) – R30,000
• The cost of launching our official website – R600
• Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – R5,000

Going by the report from the market research and feasibility studies conducted, we will need over one hundred and fifty thousand ( R150,000 ) South African Rand to successfully set up a small scale but standard student accommodation rental company in Cape Town – South Africa.

Generating Startup Capital for R. Oliver Tambo & Co® Real Estate Agency, LLP

Oliver Tambo & Co® Real Estate Agency, LLP. is a business that will be owned and managed by Rowland Oliver Tambo, Sean Mbeki and Sarah Zuma. They are the sole financiers of the business which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources.

These are the areas we intend generating our startup capital;

• Generate part of the startup capital from personal savings and sale of his stocks
• Generate part of the startup capital from friends and other extended family members
• Generate a larger chunk of the startup capital from the bank

N.B: We have been able to generate about R50,000 ( Personal savings R30,000 and soft loan from family members R20,000 ) and we are at the final stages of obtaining a loan facility of R100,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all these factors are missing from a business, then it won’t be too long before the business closes shop.

One of our major goals of starting R. Oliver Tambo & Co® Real Estate Agency, LLP is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to rent out standard, and secured student accommodations a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.

Oliver Tambo & Co® Real Estate Agency, LLP will make sure that the right foundation, structures and processes are put in place to ensure that our staff are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.

We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

• Business Name Availability Check: Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts in various banks in South Africa: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Renting of Office Facility and remodeling the facility in Cape Town – South Africa: Completed
• Conducting Feasibility Studies: Completed
• Generating capital from the CEO and Business Partners: Completed
• Applications for Loan from our Bankers: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Printing of Promotional Materials: Completed
• Recruitment of employees: In Progress
• Purchase of the needed furniture, office equipment, electronic appliances and facility facelift: In progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business (Business PR): In Progress
• Health and Safety and Fire Safety Arrangement: In Progress

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Hostel Business Plan and SWOT Analysis

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The Hostel Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start a Hostel business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.

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Hostels are popular among young travelers given their low expense. These businesses are highly economically stable given that many people choose to travel when they are young either during college or shortly after their education is complete. As such, these businesses tend to remain profitable and cash flow positive in any economic climate. The gross margins generated from their services are extremely high. Typically, the gross margins on a nightly rental run anywhere from 90% to 95%. The barriers to entry are considered moderately low given that many people can acquire a small property that can act in a hostel capacity. Typically, the startup costs for new hostel stop hostel range anywhere from $200,000 all the way to $1 million depending on the size and scale of the property being acquired. The licensure required to operate a small hospitality business is usually pretty minimal and generally a simple innkeepers license is required from a municipality or from the state.

A hostel business plan should include a three-year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. Banks, lenders, and investors are all extremely receptive to providing the capital necessary in order to acquire and operate a hostel. This is due to the fact that these businesses are primarily engaged in renting rooms and require real estate facilities. All financial institutions love lending against real estate given that it is a highly tangible asset that allows them to recoup their investment in the event of a economic decline.

The marketing required for a hostel is somewhat limited. A hostel marketing plan should include a thorough online discussion regarding how a website will be developed and how an automated reservation system will be put in place. Most importantly, this website needs to be registered among a number of different online portals that cater to young traveler others that are looking for affordable accommodations. Many of these businesses will frequently maintain listings on websites that are geared for travel information. Additionally, many owner operators of hostels will also register the website with sites that allow for third-party bookings to be made.

A hostel SWOT analysis should be developed to outline the strengths, weaknesses, opportunities, and threats are commonly faced by these businesses. Most importantly, as it relates to strengths – hostels are able to generate significant profits from the daily rental of rooms to travelers. As it relates to weaknesses, only a severe economic recession impacts the way that these businesses operate and they are usually immune from competitive issues. For opportunities, these businesses frequently are able to establish additional locations that allow them to increase their revenues on a yearly basis. As it relates to threats, outside of a major economic catastrophe there is very little that would impact the way that these companies conduct business.

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Hostel business plan examples

Is anyone interested in sharing their hostel business plan with me or providing it to me for a fee?

Alternately, can anyone recommend one of the "canned" business plans I see available on the net? Here is one example: planmagic.com/business_plan/hotel/hostel_business_plan.html

Finally, I would be willing to work together with other folks on this forum to research and fill-in some of the generic parts of a hostel business plan template.

Having written several business plans for other businesses, I am fully aware that my own hostel business will end up being quite unique. However, having a template to work from saves a lot of time.

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Josh Hostels

I would be interested in contributing to a hostel business plan. Do you have a framework already started?

From looking at the website you mention above, I suspect that their plan will have much more detail in certain aspects than you will need. But their list of headings is very comprehensive.

I suggest you treat that list as a template, and it's free. Start with that list, and write briefly what you want to do under each heading, or omit it if, after consideration, you decide it's not relevant. Expand the items that are significant to you, using a Spreadsheet such as Excel for any financial calculations (so that you can keep altering it as you refine your figures.) Then there's your Business Plan!

Do you have a property in mind already? If not, it's a bit pointless to start your business plan yet, as most items will be highly dependent on location (city, outer city, country), size, and whether you can design it from scratch or have to use existing layout. But good luck, I'm always interested in hearing about hostels run by enthusiasts!

Report 'Re: Hostel business plan examples'?

The Hostel Management Wiki has a section on Hostel Business Plans . If anyone has ideas for a hostel business plan, or a framework that others could use to write a hostel business plan, please visit that page and click "edit" to add content.

I am also wanting to start my own hostel and I have been doing lots of research and found a pretty good template. However, I am also having some of the same problems as mentioned above... I'm not too sure what to include in these sections. I have a location in mind picked out but nothing has been finalized yet... I can't get the property without the funding and I can't get the funding without the business plan so I feel as though I am stuck between a rock and a hard place. I am writing my plan as if I had the property and then hoping for the best...

TABLE OF CONTENTS Your business plan is divided into the following sections:

Business Overview Description of the business Major demographic, economic, social and cultural factors Major players (suppliers, distributors, clients) Nature of the industry Trends in the industry: Government regulations Market segment Products & services Pricing and distribution Market trends Implications or risk factors Competitors and type of competition Competitors' strengths and weaknesses Competitive advantage

Sales & Marketing Plan Customers Suppliers Advertising & promotion

Pricing & distribution Customer service policy Operating Plan Business location & requirements / advantages / lease details Equipment / technology / R&D / environmental aspects

Human Resources Plan Key employees Policies & procedures Action Plan Action plan & timetable

Executive Summary A brief description of the project, the financing required, and additional information that help explain the business plan 8 APPENDIX: • Financial Plan • Floor Plan

I have been doing lots of research and found a pretty good template.

Is that outline above copyrighted, or could I put it in the Wiki as an outline for other people?

The Wiki content is licensed under the GNU Free Documentation License (compatible with Wikipedia's license).

It was free outline on a Canadian Business Website so it was free to all users (therefore, assuming it does not have a copy right?)

I added two business plan outlines to the Business Plan Wiki Page .

Still need to combine the two outlines into one outline and fill it with some generic information that could be expanded on by individual hostels.

Anyone is welcome to jump in and help editing that Wiki page. :)

I have translated into English (more or less, please feel free to correct it) this excell file I made to calculate the minimum rentability level needed.

It's not a business plan, but even if it's probably incomplete, I think it's quite useful to get an idea about up to what point a business project can work or not, etc.

I'll attach it here so you can decide where it belongs...if it does anywhere hehe, and also so you can edit it if needed before placing it somewhere else...hope it works! :)

santa klaus

A few things seem wrong here.

You estimate € 18.000 p.a. for rent & mortgage = € 1500 per month

You speak of 45 beds - that´ll require a house with about 500 square meters. Now I don´t have any idea about real estate prices on Portugal, I have some doubts you´ll find a 500 suare meters building to rent in downtown Porto for that sort of amount.

Mortgage alone: € 1.500 per month will get you a loan for about € 200.000, at 6% interest, maturity 20 years. You will need those € 200.000 alone for renovations and furniture - easily.

€ 1.200 p.a. for external services seems very little to me. Again, no idea about prices in Portugal, but we have to pay € 6.000 alone for the yearly balance sheets and tax statements.

€ 2.400 for "other", such as repairs. A broken elevator alone can set you back € 2.400. Please forget the elevator idea, at least. Admittedly, our hostels are a lot bigger, but I am calculating with twice this amount - per month!

Re: your "average price per bed" figure: € 18 per bed seems to be a fair price, but you´ll have to pay VAT. So, let´s say you sell a bed for € 18 on Hostelworld - the guest will hand over to you € 16.20. VAT in Portugal is 19%, so you´ll end up with only € 13,62.

A few things seem wrong here

Yes, I changed most of the figures from my original sheet, the idea is to give a sample, not to give my real numbers and I thought posting the sheet empty of numbers wouldn't be as clear.

Also regarding VAT, suposedly both the costs and income should be put without taxes, I forgot to mention that, thank you :)

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How Do I Develop a Hostel Business Plan?

Developing a comprehensive and profitable hostel business plan needs a full range of knowledge about hostel business and needs different skills to build a good hostel business plan.

A hostel business is very profitable and you can start it with low investment by acquiring a small building for rent.  But before acquiring a building for rent, you need to conduct a short survey to determine the potential of the area and how many educational institutions are around the location.

There are mainly two options to start a hostel business. 1 acquires a building for hostel business or 2 construction of the new building with own investment or loans from other financial institutions. Awesome Hostel Life Quotes

What To Do Before Starting a Hostel Business?

Indeed, initially, you need to conduct a business potential survey to determine the business potential in the said area.  If there are many educational institutions that exist or students from surrounding areas are getting admissions to these institutions, then there is a huge hostel business potential.

Points should be Kept in Mind before starting a hostel business:  

Students flow: student flow from other areas is very essential for hostel business; you need to attract them to choose your hostel.   However, it is not an easy job initially time, you need to be consistent and think for a long period of time.

Your hostel services, management behavior, safety and security, health, and hygiene standard foods, good playground, attractive rooms with all necessary requirements, and all affordable charges are basic tools to attract students.

Existing Hostel Businesses: thoroughly visit and determine what types of facilities they provide to the students and how much they charge them.

In the initial period, provides maximum facilities with low charges and attracts students through different marketing tools i.e. shared room facility, car parking facility, clean environment, space for sports activities, and more.

Hostel Business Marketing Strategies: Adopt the newest marketing strategies to attract students to get registered with your business. Outreach your business through the local newspaper, social media, print media, social contacts, interactive sessions, pamphlets, brochures, leaflets, and more. Hostel Choosing Tips

Hostel Room Charges with Facilities: Cheap room charges with good facilities are the best marketing strategy to enhance business in the initial days.  No, losing no profit in the 1-year  business is best and gradually increases the room charges with getting the business in a suitable position.

But you need to conduct a room charges comparison survey to determine the actual facts and figures from other hostels, then decide on the room charges and try to keep the charges below other hostels.

Existing Hostels Environment: Try to provide a good hostel environment and do not compromise with the standards of acceptance i.e. best and most attractive rooms, quality and healthy foods allocate separate physical exercise areas for students.

Free WI-FI facilities, neat and clean relaxation area,  sports ground, safe and secure car parking area, motivated hostel management, quick assistance support, and first aid medical facilities for the students.

K ey Points of Hostel Business Plan:

Developing a hostel business plan involves careful consideration of various aspects of your business, including market analysis, target audience, marketing strategies, financial projections, and operational details. Following are key steps while you develop a comprehensive hostel business plan:

Executive Summary:

Provide an overview of your hostel business concept.

Summarize the key points of your business plan.

Co mpany Description:

Describe your hostel and its unique selling proposition (USP).

Explain your location and the reasons for choosing it.

Discuss the legal structure of your business (sole proprietorship, partnership, etc.).

Market Analysis:

Identify your target market (backpackers, students, budget travelers, etc.).

Analyze the local and global hostel market, including competitors.

Highlight any emerging trends or opportunities in the industry.

Marketing and Sales Strategies:

Define your branding, logo, and hostel name.

Outline your marketing and advertising strategies.

Detail your online presence, including your website, social media, and booking platforms.

Explain how you plan to attract and retain customers.

Services and Amenities:

Describe the types of accommodations you offer (dormitories, private rooms, etc.).

Highlight the amenities and facilities you will provide (kitchen, common areas, Wi-Fi, etc.).

Discuss any additional services you plan to offer (tours, laundry, bike rentals, etc.).

Operational Plan:

Explain the day-to-day operations of your hostel.

Outline your staffing requirements and organizational structure.

Describe the management team and their roles.

Discuss the necessary licenses, permits, and regulations.

Financial Projections:

Create a detailed budget, including start-up costs and ongoing expenses.

Estimate your revenue projections based on occupancy rates, pricing, and seasonality.

Prepare a cash flow statement and profit and loss statement.

Outline your funding sources, such as personal savings, loans, or investors.

Risk Analysis:

Identify potential risks and challenges in the hostel industry.

Discuss strategies for mitigating these risks (insurance, contingency plans, etc.).

Analyze the financial implications of various risk scenarios.

Implementation Plan:

Create a timeline with key milestones and deadlines.

Outline the steps required to launch your hostel.

Assign responsibilities to team members.

Include a plan for ongoing monitoring and evaluation.

Appendices:

Include any supporting documents, such as market research, permits, or legal agreements.

Attach your résumé and the résumés of key team members.

Frequently Ask Questions:

Is Hostel Business Profitable?

Hostel business is time taking process to cross the break-even time, you need to be consistent and try to deliver the best services to the coming students with low charges in the initial period of time. 

If you do this, the students will play a marketing ambassador role about your hostel and services and that can turn over your business into a profit.  1st-year hostel business will definitely go to lose or break even, but you need to focus for a long period of time.   If your services are satisfactory, 2 nd- the one  year your hostel business crosses the break-even and comes into profitable.

How To Train Hostel Staff?

Appointment of hostel train staff is a difficult task and you need to offer the best salary and benefits to training staff. This will motivate train staff from other hostels to apply for the announced position. 

Attract with different methodologies thoroughly good salary package, best accommodation facilities, introduce employee safety nets and benefits, provide job security, and use motivational tools to attract train staff to be part of your business.

Develop comprehensive training and development plan for the staff and allocate some sort of annual budget for capacity-building opportunities. 

Organize indoor events to celebrate the best performers and give them appreciation tokens to keep them motivated. Hostel Room Organizing Tips

Arrange an outdoor travel plan once a year to get fresh and contribute their best to make your hostel business successful. Minimize the communication gap between management and support staff for better performance to get quick actions if needed.

How To Keep Student Records Properly?

Indeed, keeping the student's proper records in a hostel is the key task of hostel management, try to introduce a software system and get all personal information of newly admitted students and provide all data to the concerned sections, so they all can update student’s records with just one click. 

Collect scan copies of identity cards and school admission letters including recent photos with full face identification.

Develop a Weekly Food Menu?

With consultation of hostel management and kitchen staff, introduce a healthy and tasty food menu and display it on the general notice board for information of students. Keep a cushion for special day celebrations menu as well. 

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