business plan on hostels

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!

Signup now and receive an email once I publish new content.

Once signed up, you will receive a weekly newsletter with helpful tips. You can unsubscribe at any time.

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.

Recent Posts

7 Tips To Choose Your Hostel Name - The Ultimate Guide

More than 90% of hostel owners underestimate the value of a good name. Are you one of them? 349

Top 10 Must-Have Board Games For Hostels

Board games are an excellent way to break the ice between hostel travelers. They can also greatly increase your online ratings. But… which ones should you have in your hostel? Here’s a list of...

• Business Plan for Investors
• Bank/SBA Business Plan
• Operational/Strategic Planning Services
• L1 Visa Business Plan
• E1 Treaty Trader Visa Business Plan
• E2 Treaty Investor Visa Business Plan
• EB-1 Business Plan
• EB-2 NIW Business Plan
• EB-5 Business Plan
• Innovator Founder Visa Business Plan
• Start-Up Visa Business Plan
• Expansion Worker Visa Business Plan
• Manitoba MPNP Visa Business Plan
• Nova Scotia NSNP Visa Business Plan
• British Columbia BC PNP Visa Business Plan
• Self-Employed Visa Business Plan
• OINP Entrepreneur Stream Business Plan
• LMIA Owner Operator Business Plan
• ICT Work Permit Business Plan
• LMIA Mobility Program – C11 Entrepreneur Business Plan
• USMCA (ex-NAFTA) Business Plan
• Franchise Business Plan
• Landlord business plan
• Nonprofit Start-Up Business Plan
• USDA Business Plan
• Cannabis business plan
• Ecommerce business plan
• Online boutique business plan
• Mobile application business plan
• Daycare business plan
• Restaurant business plan
• Food delivery business plan
• Real estate business plan
• Business Continuity Plan
• Pitch Deck Consulting Services
• Financial Due Diligence Services
• ICO whitepaper
• ICO consulting services
• Confidential Information Memorandum
• Private Placement Memorandum
• Feasibility study
• Fractional CFO
• How it works
• Business Plan Examples

How To Write A Hostel Business Plan

MAY.08, 2023

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 
• 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.

Add comment

E-mail is already registered on the site. Please use the Login form or enter another .

You entered an incorrect username or password

Comments (0)

mentioned in the press:

Search the site:

OGScapital website is not supported for your current browser. Please use:

How to Start a Hostel: Key Tips for Success

Main Sections In This Post Steps To Starting A Hostel Business Points to Consider Knowledge Is Power Featured Video

In this post, you’ll find a step-by-step guide on how to start a hostel business.

In addition, we will give you an overview of what you can expect from operating a hostel business and help you make better decisions and gain clarity.

You can access the latest resources in our “Knowledge Is Power” section. Which can be used during the startup phase and once your hostel business is fully operational.

There is an abundance of information available to explore. If you like this post, consider sharing it with others and bookmarking it for future reference.

Let’s get started with the steps.

The Steps to Take To Start Your Hostel Business

Below are the steps to starting a hostel business.

Each step is linked to a specific section, allowing you to jump to your desired section or scroll to follow the steps in order.

• An Overview of What You’re Getting Into
• Hostel Business Overview
• Researching Your Hostel Business
• Looking at Financials
• Creating Your Mission Statement
• Creating A Unique Selling Proposition (USP)
• Choose a Hostel Business Name
• Register Your Company
• Create Your Corporate Identity
• Writing a Business Plan
• Banking Considerations
• Getting the Funds for Your Operation
• Software Setup
• Business Insurance Considerations
• Supplier and Service Provider Considerations
• Setting Your Prices
• Physical Setup
• Creating a Website
• Create an External Support Team
• Hiring Employees
• Getting Customers Through the Door

1. An Overview of What You’re Getting Into

a. ) Owning and Operating Your Own Business

Owning and running a business, such as a home hostel, contrasts with traditional employment. It comes with increased responsibilities and a departure from the typical nine-to-five schedule.

As a business owner, you might work long hours, tackle various challenges, and make critical decisions.

Before venturing into a home hostel business, assessing if entrepreneurship aligns with your preferences and capabilities is essential.

Consider your tolerance for risk, adaptability to irregular hours, and ability to manage the diverse aspects of running a business.

Self-assessment is crucial to ensure that the transition from a job to business ownership is the right path for you.

It’s a significant commitment that demands dedication, perseverance, and a thorough understanding of the responsibilities that come with entrepreneurship.

See Considerations Before You Start Your Business to identify points for a new business owner.

b.) Pros and Cons of Owning a Business

In the realm of business ownership, there exist both advantages and drawbacks. While the potential benefits are alluring, some aspiring entrepreneurs fixate solely on the rewards, often overlooking the accompanying challenges.

It’s imperative to examine both sides of the coin meticulously. Acknowledging the potential hurdles gives you a realistic perspective of the obstacles that may arise.

This awareness enables you to prepare for and mitigate these challenges proactively.

A comprehensive understanding of the issues you might encounter minimizes unexpected setbacks, allowing you to develop contingency plans and navigate the complexities of entrepreneurship with greater resilience.

Ultimately, this balanced approach fosters a higher likelihood of success in your business endeavors, as it arms you with the knowledge and foresight needed to address difficulties effectively.

For more, see Pros and Cons of Starting a Small Business.

c.) Passion a Key Ingredient For Success

Passion: The Vital Ingredient

Working in a field you’re passionate about is a rare privilege, and it can be the cornerstone of your success as an entrepreneur. Passion is the driving force that propels you forward, especially when you encounter challenges.

Passion Fuels Problem-Solving

Passion compels you to seek solutions when problems arise in your hostel business. The unwavering commitment keeps you on course, even in turbulent times. Without it, difficulties may become insurmountable obstacles.

Passion Determines Your Response to Challenges

The passion you bring to your hostel business significantly impacts your chances of success. Consider this hypothetical scenario: you have boundless wealth and freedom to pursue any endeavor.

If you still choose to run a hostel business for free, it’s a clear indicator of your passion for it.

Assessing Your Passion

Conversely, if you wouldn’t choose this path, it’s essential to question your motivations. What other pursuits captivate you more? It might be prudent to explore those alternatives.

In Conclusion

Passion is the bedrock of success when owning and operating a hostel business. It not only fuels your determination but also shapes your response to challenges.

Assessing your passion helps you align your aspirations with your true calling, increasing your chances of a fulfilling and prosperous entrepreneurial journey.

For More, See How Passion Affects Your Business .

2. Gaining an Overview of Owning a Hostel Business

Next, let’s spend some time on key issues to give you an overview of what to expect from owning and running a hostel business.

Note:  This section contains an abundance of information that you will want to review. It will give you an overview of what to expect, and it’s worth reading this section.

a.) A Quick Overview of Owning a Hostel Business

A hostel business is an accommodation establishment that provides budget-friendly lodging options for travelers, typically with shared facilities such as dormitory-style rooms and communal spaces.

It caters to a diverse clientele, including backpackers, students, and budget-conscious tourists, offering them a place to stay at affordable rates.

Day-to-Day Operations

1. Guest Check-In and Check-Out

• Greeting guests, verifying reservations, and managing check-in procedures.
• Ensuring a smooth check-out process, settling payments, and addressing any guest inquiries or concerns.

2. Housekeeping and Maintenance

• Maintaining cleanliness and tidiness throughout the hostel, including dorms, bathrooms, and common areas.
• Performing regular maintenance tasks to ensure facilities are in good condition.

3. Reservations and Bookings

• Managing reservations through a booking system or in-person.
• Confirming bookings, handling cancellations, and coordinating room assignments.

4. Guest Services

• Providing information about local attractions, transportation, and services to enhance the guest experience.
• Addressing guest requests, concerns, and ensuring their comfort and safety.

5. Administrative Tasks

• Handling financial transactions, managing invoices, and recording expenses.
• Keeping records of guest information, reservations, and financial transactions for accounting purposes.

6. Marketing and Promotion

• Utilizing various marketing channels to attract guests, including online platforms, social media, and partnerships with travel agencies.
• Creating promotions, discounts, or loyalty programs to encourage repeat business.

7. Safety and Security

• Ensuring the safety and security of guests and their belongings through measures like surveillance, access control, and staff training.
• Responding to emergencies or security incidents promptly.

8. Staff Management

• Hiring , training, and supervising hostel staff, including front desk personnel, housekeepers, and maintenance workers.
• Scheduling shifts to ensure adequate coverage for 24/7 operations.

9. Budgeting and Financial Management

• Developing and adhering to a budget that covers expenses, utilities, and maintenance.
• Monitoring financial performance and adjusting strategies as needed to optimize profitability.

Running a hostel business demands a multifaceted approach, focusing on customer service, cleanliness, and efficient operations to create a positive experience for guests while maintaining profitability.

b.) Hostel Business Models

• Dormitory-style rooms with shared facilities.
• Low-cost accommodation.
• Target audience: Budget-conscious travelers, backpackers.
• Revenue sources: Bed bookings, on-site services (e.g., food and laundry).
• Upscale and stylish design.
• Smaller, more intimate atmosphere.
• Target audience: Travelers seeking unique experiences.
• Revenue sources: Premium bed rates, events, and specialized services.
• Vibrant social scene with events and activities.
• Catering to young, party-oriented travelers.
• Revenue sources: Bed bookings, bar/club services, event fees.
• Compact sleeping pods with privacy features.
• Ideal for solo travelers seeking privacy.
• Revenue sources: Bed bookings, premium rates for private capsules.
• Private sleeping pods with shared amenities.
• Blending privacy with a social environment.
• Revenue sources: Bed bookings, premium for private pods, communal services.
• Sustainable practices and eco-conscious design.
• Attracting environmentally conscious travelers.
• Revenue sources: Bed bookings, eco-friendly initiatives (e.g., recycling programs).
• Combining accommodation with workspace facilities.
• Attracting digital nomads and remote workers.
• Revenue sources: Bed bookings, coworking memberships, event hosting.

Selecting Your Business Model

Choosing an appropriate business model is critical for a successful hostel venture. Each model comes with its unique challenges and opportunities.

Focusing on a niche allows you to tailor your services to a specific audience, becoming a specialist rather than a generalist. This specialization can lead to a more loyal customer base and higher profitability.

Identifying a suitable business model for your hostel from the outset is vital, as switching models later can be complex and costly.

Conducting market research, understanding your target audience, and assessing your resources and capabilities is essential.

By aligning your business model with your goals and values, you can navigate the startup phase more effectively and increase your chances of long-term success in the competitive hostel industry.

c.) Challenges You Could Face When Starting and Operating a Hostel Business

Challenges During the Startup Phase of a Hostel Business

• Financial Hurdles : Securing initial funding for property acquisition, renovation, permits, and operational expenses can be daunting. Accessing loans or attracting investors may be challenging for a new business without a proven track record.
• Property Selection : Finding the right location and property that suits your budget and target audience can be time-consuming. Location significantly impacts the hostel’s success.
• Regulatory Compliance : Navigating the legal requirements, permits, and licenses for a hospitality business can be complex and time-consuming. Failure to meet regulatory standards can lead to delays and fines.
• Market Saturation : In tourist-heavy areas, competition among hostels can be intense. Differentiating your hostel from others and attracting guests can be a significant challenge.
• Staffing : Recruiting and training reliable staff who align with your hostel’s vision and values can be a hurdle. High staff turnover in the hospitality industry adds to this challenge.
• Marketing and Branding : Establishing a brand presence and marketing strategy to attract guests in a competitive market is a constant challenge. Effective digital marketing and building an online presence are critical.
• Cash Flow Management : Balancing income and expenses, especially during the initial months when occupancy may be low, can be stressful. Maintaining cash flow to cover operating costs is essential.
• Guest Attraction : Building a guest base from scratch can take time. Hostel owners often face the challenge of filling beds and attracting repeat customers.

Challenges When the Hostel Business is Operational

• Maintaining Occupancy : Even after startup, ensuring a consistent flow of guests year-round can be challenging. Seasonal fluctuations and competition can impact occupancy rates.
• Guest Satisfaction : Sustaining high guest satisfaction and positive reviews is an ongoing challenge. Meeting guest expectations and resolving issues promptly is crucial for reputation management.
• Maintenance and Upkeep : Over time, hostels require maintenance and renovations to remain attractive to guests. Managing these costs while staying operational can be a financial challenge.
• Staff Retention : Retaining skilled and experienced staff is an ongoing challenge. Staff turnover can disrupt operations and impact guest experiences.
• Marketing Evolution : The marketing landscape constantly evolves. Staying current with digital marketing trends and adapting strategies is essential to maintain a competitive edge.
• Competitive Pricing : Finding the right balance between competitive pricing and profitability can be challenging. Discounting too heavily can erode profits while overpricing can deter budget-conscious travelers.
• Guest Security : Ensuring the safety and security of guests in shared accommodations is a continuous concern. Implementing security measures and maintaining a safe environment is crucial.
• Community Management : Managing the dynamics and behavior of diverse guests in communal spaces can be challenging. Establishing clear rules and addressing conflicts is essential for a harmonious hostel environment.

Running a hostel business presents challenges, from initial startup hurdles to ongoing operational complexities.

Adapting to changing market conditions, meeting guest expectations, and maintaining financial stability are continuous challenges that hostel owners must navigate to achieve long-term success.

d.) Questions You Need to Consider for Your Hostel Business

• Clarifying your business model sets the foundation for your operations and target market.
• Assess your skills in hospitality management, customer service, and financial planning .
• Determine your staffing strategy and responsibilities.
• Decide whether you will be actively involved in daily operations or delegate management.
• Define your marketing and customer acquisition strategies.
• Research and identify your competitors to understand the competitive landscape.
• Develop customer retention strategies to foster loyalty.
• Consider whether you’ll seek partnerships or investment to support growth.
• Explore funding options and create a financial plan.
• Set realistic expectations for your hostel’s profitability timeline.
• Plan your personal finances to sustain yourself during the initial phase.
• Define the range of services and amenities you’ll provide to guests.
• Conduct market research to validate the demand for your hostel’s services.
• Identify unique selling points and differentiators to attract guests.
• Determine your hostel’s positioning in the market and pricing strategy.

As you answer these questions, you’ll gain valuable insights into your hostel business’s feasibility and be better prepared to address potential challenges.

Thorough planning and consideration of these factors will contribute to a more prosperous and sustainable hostel venture.

3. Research

Inside information hostel business research.

Conducting In-Depth Research

Understanding the Landscape

Before embarking on your hostel business journey, comprehensive research is paramount. It equips you with the knowledge to make informed decisions and avoid unexpected pitfalls.

Seeking Guidance

Experienced Insights

Experienced hostel owners can provide invaluable insights and a realistic perspective. Their wisdom, gained through years in the industry, can be priceless.

Connecting with Experts

Finding the Right Mentors

Identifying and approaching the right individuals for guidance is essential. Beyond this post, there are strategies to discover and engage with knowledgeable mentors.

Read Further

In-Depth Article

For a detailed guide on connecting with industry experts and gaining an inside look into the hostel business, explore the article linked below:

An Inside Look Into the Business You Want To Start

This resource will offer comprehensive insights into approaching experienced hostel owners and understanding the intricacies of the business.

Supply, Demand, and Your Location

Assessing Supply and Demand Dynamics

Understanding Market Demand

Determining the demand for your hostel business is paramount. Quality and pricing alone won’t be enough. Adequate market demand is essential for a sustainable venture.

Mitigating the Risk of Oversaturation

Analyzing Market Saturation

Consider whether the market is already saturated with similar offers. If so, gaining a foothold can be challenging unless your hostel offers unique value that competitors can’t easily replicate.

Staying Ahead of the Competition

Strategic Competition Analysis

When assessing competition, focus on what sets you apart. Identify your unique selling points and evaluate whether potential customers value and are willing to pay for these distinctions.

Choosing the Ideal Location

Striking the Right Balance

Selecting the right location is a delicate balance. It should offer sufficient demand without overwhelming competition. Affordability matters, too, as expenses should not outweigh revenue.

Considering Population Density

Population vs. Exposure

A densely populated area can provide exposure but also has higher operational costs. Carefully evaluate whether the potential increased revenue justifies these expenses.

Affordability and Sustainability

Balancing Cost and Revenue

Opting for a cheaper location may seem financially prudent, but it must still attract enough customers to sustain your business. Assess whether the location can generate adequate sales to support your venture.

By meticulously examining supply, demand, market saturation, and competition dynamics in your chosen location, you can make informed decisions that increase the likelihood of your hostel business’s success.

For more, see the Demand for Your Products and Services and Choosing The Best Location for Your Business.

Target Audience

Understanding your target audience yields several advantages.

It allows you to tailor your products and services precisely to their preferences, enhancing customer satisfaction.

This focused approach eliminates the need to offer an extensive range of options and ensures you provide what your customers truly desire.

Target Market Ideas:

• Budget-conscious travelers
• Backpackers
• Solo travelers
• Students on a tight budget
• Digital nomads seeking affordable lodging
• Tourists exploring on a limited budget
• Adventure seekers
• Cultural enthusiasts
• Eco-conscious travelers
• Groups of friends traveling together
• Individuals attending events or festivals
• Business travelers looking for economical stays
• Long-term travelers
• Travelers seeking a communal and social environment

For more, see How To Understand Your Target Market.

4. Looking at Financials:

Understanding the numbers and making good decisions is a crucial factor in succeeding.

You will struggle to manage a successful operation without putting in the time and effort to understand and monitor the financials of your hostel business.

Let’s look at startup costs, operating costs and profits.

Start-Up Costs:

Startup Cost Estimation

Critical Financial Planning

Accurately estimating startup costs is pivotal for a smooth transition from planning to execution. Underestimation can lead to financial constraints, potentially delaying your opening, while overestimation can deter potential investors.

Factors Affecting Costs

Size, Location, and Setup

Your startup cost hinges on multiple factors: the size and scale of your hostel, chosen location, equipment (new or used), hiring staff, and the operational model (online, brick-and-mortar, home-based).

Comprehensive Cost Analysis

Creating an Estimate

To estimate effectively, create a comprehensive list of requirements and gather price quotes. Throughout your research, unforeseen expenses may emerge, so maintaining flexibility in your estimate is crucial.

Business Model Considerations

Tailoring Your Estimate

No two hostel setups are identical, making it impossible to provide an exact cost. It all begins with defining your unique business model. Online operations tend to be more cost-effective than brick-and-mortar setups.

Varied Variables

Complex Cost Determinants

Numerous variables come into play, making accurate startup cost estimation challenging. Research and accurate estimates are your best allies in determining the viability of starting your hostel business.

Thorough financial planning is critical to embarking on your entrepreneurial journey with confidence.

Sample Startup Cost For a Hostel Business 

The purpose of the list below is to focus on the items in the list more than the numbers because these are general samples, and your figures will be different.

Sample List of Estimated Startup Costs for a Mid-Sized Hostel Business in the USA

• Down payment and closing costs
• Property inspection and appraisal fees
• Legal and real estate agent fees
• Lower Estimate: $200,000
• Upper Estimate: $400,000
• Structural improvements
• Room and common area furnishings
• Interior decor and design
• Lower Estimate: $50,000
• Upper Estimate: $100,000
• Business registration and permits
• Legal consultation and fees
• Insurance (startup coverage)
• Lower Estimate: $10,000
• Upper Estimate: $20,000
• Hiring and onboarding staff
• Training programs and materials
• Salaries for initial months
• Lower Estimate: $20,000
• Upper Estimate: $40,000
• Beds, mattresses, and linens
• Kitchen appliances and utensils
• Common area furniture
• Lower Estimate: $30,000
• Upper Estimate: $60,000
• Website development and hosting
• Marketing materials and signage
• Initial advertising campaigns
• Lower Estimate: $5,000
• Upper Estimate: $10,000
• Utility deposits and setup fees
• Internet and communication installation
• Security system installation
• Lower Estimate: $7,000
• Upper Estimate: $15,000
• Food and beverages for guests
• Toiletries and cleaning supplies
• Small initial inventory for convenience store
• Unforeseen expenses and emergencies

Total Estimated Startup Costs (Lower): $327,000 Total Estimated Startup Costs (Upper): $665,000

These estimates provide a rough range for starting a mid-sized hostel business in the USA.

Remember that costs vary significantly based on location, property condition, and specific business choices.

Thorough research and detailed financial planning are crucial for a successful hostel startup.

For more, refer to my article on Estimating Startup Costs.

Monthly Operating Costs:

Managing Monthly Expenses

Variable Factors

Your monthly expenses echo the factors we discussed in startup costs. However, several variables continue to shape these ongoing financial commitments.

Staffing Decisions

Independent vs. Fully Staffed

Whether running your hostel independently or with a full staff significantly influences monthly expenses.

Location Impact

High-Traffic vs. Low-Traffic Areas

Operating in a high-traffic area may increase monthly costs compared to a location with fewer potential customers.

Other Influences

Loan Payments, Marketing, Repairs, and More

Monthly expenses encompass various elements such as loan payments, marketing campaigns, ongoing repairs, and more. These factors significantly impact your bottom line.

Balancing Act

Optimal Business Operations

To ensure your hostel operates efficiently and can weather revenue fluctuations, managing expenses judiciously is crucial.

Prioritize cost-cutting in areas that won’t compromise quality, service, or productivity, thereby maintaining optimal business performance .

Sample list of estimated monthly expenses for a MID-sized hostel business

Again, the purpose of the list below is to focus on the item in the list more than the numbers. The numbers are a general idea, and your numbers and list will differ. 

Sample List of Estimated Monthly Expenses for a Mid-Sized Hostel Business in the USA

• Mortgage or property loan
• Business operating loan
• Monthly Interest and Principal Payments
• Estimated Range: $4,000 – $6,000
• Salaries and wages for front desk staff
• Housekeeping and maintenance staff
• Management salaries
• Estimated Range: $8,000 – $12,000
• Electricity, water, and gas
• Internet and phone services
• Security system monitoring
• Estimated Range: $1,500 – $2,500
• Routine maintenance and repairs
• Replacement of furnishings and fixtures
• Estimated Range: $1,000 – $2,000
• Digital marketing campaigns
• Print materials and promotions
• Website hosting and maintenance
• Estimated Range: $2,000 – $4,000
• Property insurance
• Liability insurance
• Estimated Range: $500 – $1,000
• Toiletries, linens, and cleaning supplies
• Breakfast and kitchen supplies
• Property taxes and licenses

Total Estimated Monthly Expenses (Lower): $20,000 Total Estimated Monthly Expenses (Upper): $32,000

These estimates provide a rough range for monthly expenses for a mid-sized hostel business in the USA. Actual costs may vary depending on location, business decisions, and specific financial arrangements.

Maintaining a financial cushion to handle unexpected expenses and ensure smooth hostel operations is crucial.

Considerations for Profits 

Profit Determinants

Beyond Margins

Profit isn’t solely about margins; it’s also about efficient operations. High overhead can erode profits even with substantial sales.

Custom Profit Assessment

Your Unique Business

Estimating hostel business profits isn’t one-size-fits-all due to multifaceted variables. Your business model, setup, and decisions shape profitability.

Positioning Matters

High-End vs. Discount

Your business positioning as high-end, high-quality, or discount directly influences profit margins.

Estimating Profit

Calculations and Sales Focus

To estimate profit, calculate cost per sale, monthly sales volume, and subtract overhead. Balancing high profit per sale with sufficient sales volume is key to a healthy bottom line.

While no one can predict your hostel business profit, your strategic decisions, cost analysis, and sales focus allow you to estimate and optimize your potential earnings.

For More, See Estimating Profitability and Revenue.

Final Thoughts on Financials 

Managing Financial Vital Signs

Crucial Business Components

Financials stand as a cornerstone of effective hostel business management. Detailed tracking, recording, and reporting of financial transactions serve essential tax and legal purposes.

Beyond Compliance

Analyzing Profits and Expenses

Taking a step further, actively studying your financial data offers insights into your business’s health. Regularly monitoring profits and expenses, supported by informative reports, unveils trends and ensures vigilant oversight.

Proactive Issue Resolution

Detecting Market Changes

Suppose a sudden drop in sales occurs. In this scenario, financial data analysis can uncover root causes—market shifts, product or service issues, new competitors, or other variables. This insight enables timely corrective actions.

Preventing Hidden Pitfalls

Timely Awareness and Action

By consistently monitoring your hostel business’s financials, you gain awareness of issues before they escalate. This proactive approach helps you address challenges promptly, safeguarding your business’s long-term stability.

5. Create Your Mission Statement

Defining Purpose with a Mission Statement

A Guiding Beacon

A mission statement serves as the compass for your hostel business. It encapsulates your purpose, reminding you of your core value to customers and the community.

This succinct statement helps you stay on course, ensuring your actions and decisions align with your business’s central mission.

Sample Mission Statements for a Hostel Business:

• “Our mission is to create a welcoming haven for travelers, fostering connections and cultural exchange in a comfortable and budget-friendly environment.”
• “We are dedicated to providing affordable, eco-conscious lodging options, promoting responsible tourism, and supporting local communities.”
• “At our hostel, our mission is to offer a home away from home, where every guest experiences warmth, affordability, and a taste of local culture.”
• “Our commitment is to be the preferred choice for budget-conscious travelers, offering safe, comfortable, and socially vibrant accommodations.”
• “We strive to be a catalyst for unforgettable adventures, crafting unique experiences for travelers while contributing positively to the places we call home.”

These mission statements exemplify how a hostel business can define its purpose, emphasizing affordability, community engagement, sustainability, and cultural enrichment.

For more, see How To Create a Mission Statement.

6. Creating A Unique Selling Proposition (USP)

Crafting Uniqueness with a USP

Strategic Differentiation

A Unique Selling Proposition (USP) is the distinctive element that sets your hostel business apart from competitors.

It’s your “wow” factor that travelers choose you over others. Identifying and creating a compelling USP is pivotal in a crowded hospitality industry.

Examples of USPs for a Hostel Business:

• “Exclusive Local Experiences” : Offer curated, off-the-beaten-path excursions or partnerships with local artisans, providing guests unique cultural encounters.
• “Eco-Friendly Oasis” : Embrace sustainable practices, such as eco-friendly architecture, waste reduction, and green initiatives, to attract environmentally-conscious travelers.
• “Budget Luxury” : Elevate the hostel experience with premium bedding, private pods, or upscale amenities at affordable rates.
• “Cultural Exchange Hub” : Organize regular events, workshops, or language exchanges, fostering an environment where travelers can immerse themselves in local culture.
• “Community Engagement” : Collaborate with local charities or in community projects, emphasizing your commitment to social responsibility.
• “Adventure Basecamp” : Focus on outdoor enthusiasts, providing storage and services catering to hikers, bikers, and adventurers.

A USP can be a powerful magnet, drawing in travelers who resonate with your unique offering. It defines your niche and creates a lasting impression, fostering customer loyalty and word-of-mouth recommendations.

7. Choose a Business Name

Selecting the Perfect Hostel Business Name

Memorable and Relevant

Choosing a hostel business name requires careful consideration. It should strike the right balance between catchiness and industry relevance. Remember, your business name is a long-term commitment, so take your time.

Online Presence Matters

Having a matching domain name is essential for your online identity. Ensure your chosen business name can be seamlessly translated into a website domain.

Avoid Duplication

Before finalizing your business name, thoroughly search to ensure another company has not already registered it. Legal conflicts can be costly and disruptive.

Sample Hostel Business Names:

• Traveler’s Haven Hostel
• Urban Explorer Lodgings
• Wanderlust Bunkhouse
• Heritage Backpackers
• Horizon Hostel Retreat
• EcoNest Hostel
• Cityscape Oasis Inn
• Nomad’s Nook
• Cultural Crossing Hostel
• Hidden Gem Hostel
• Harbor View Backpackers
• Cozy Corner Hostel
• Adventure Base Bunkhouse
• Harmony Hostel Hub
• Serenity Sleeps
• The Hostel Haven
• Backpacker’s Bliss Inn
• Globe Trotter’s Lodge
• Oasis of Hospitality
• Uptown Backpackers
• Unity Hostel
• Sunrise Overlook Lodge
• Budget Explorer Inn
• Central Connect Hostel
• Wanderers’ Waystay
• Moonlit Meadow Hostel
• CultureQuest Inn
• Tranquil Trekker’s Rest
• The Roaming Nest
• Passport Paradise Hostel

This list provides a starting point for crafting your hostel business name. Let it inspire your creativity and lead you to a unique and memorable choice that reflects your brand identity.

For more, see the following articles:

• How To Register a Business Name
• Registering a Domain Name For Your Business

8. Register Your Company

Legal Compliance for Your Hostel Business

Ensuring Legality

Running a legal hostel business is paramount for long-term success. Proper legal structure safeguards your operations and can offer tax advantages and mitigate liabilities.

Professional Guidance

Consulting with a legal or financial professional is advisable. They can assist in selecting the most suitable business structure, ensuring legal compliance, and optimizing tax benefits.

Common Registrations:

• Business Structure Registration : Depending on your country, this may include registering as a sole proprietorship, partnership, limited liability company (LLC), or corporation.
• Business Name Registration : Ensure your chosen business name is registered and unique within your jurisdiction.

Permits and Licenses (Non-exhaustive):

• Business License : Typically required to operate legally within a municipality.
• Health Department Permit : Ensures compliance with health and safety standards.
• Alcohol License : If serving alcohol.
• Fire Department Permit : Ensures fire safety .
• Zoning Permits : Compliance with zoning laws.
• Food Service Permit : For providing meals.
• Signage Permit : For exterior signs.
• Short-Term Rental Permit : Required in some areas for hosting guests.
• Music License : If playing copyrighted music.
• Employment Permits : If hiring employees.

Bondable Business Benefits

Consider becoming a bondable business, enhancing customer confidence.

This demonstrates that your employees have undergone background checks and can be trusted, which can set you apart in the competitive hospitality industry.

Bonding can build trust and improve your business’s reputation.

Registration:

• How to Register Your Business
• How To Register a DBA
• How to Register a Trademark
• How to Get a Business License

Business Structures:

• How to Choose a Business Structure
• Pros & Cons of a Sole Proprietorship
• How To Form an LLC
• How To Register a Business Partnership
• How To Form a Corporation
• How To Choose a Business Registration Service

9. Create Your Corporate Identity

Crafting a Professional Corporate Identity

A Visual Representation

A Corporate Identity (ID) is the visual embodiment of your business. It encompasses your logo, business cards, website, signage, stationery, and promotional materials.

Consistency Matters

Maintaining a consistent, professional design across these components is essential. It leaves a lasting impression on prospective and established customers, fostering trust and recognition in the competitive business landscape.

You can see our pages for an overview of your logo , business cards , website , and business sign , or see A Complete Introduction to Corporate Identity Packages.

10. Writing a Business Plan

The Necessity of a Business Plan

A Blueprint for Success

A business plan is vital, particularly when seeking financing or investors. It plays a dual role, guiding your path during the startup phase and throughout your business’s operational journey.

The Investment of Time and Effort

Creating an effective business plan demands dedicated time and effort.

It involves envisioning your business fully operational, meticulously detailing every aspect.

This investment is worthwhile, as it grants you a comprehensive understanding of the startup requirements and a clear operational roadmap.

Diverse Creation Options

When crafting your business plan, you have multiple approaches at your disposal. You can start from scratch, enlist professional assistance, employ pre-designed templates, or leverage business plan software.

Regardless of your chosen method, active involvement is crucial, especially when hiring a professional, to accurately represent your business’s nature and management strategy.

Adaptability and Optimization

A business plan is not a static document. It can evolve and optimize as you gain experience or respond to operational or market changes.

Periodically reviewing and amending the plan is prudent, allowing it to align with your business’s dynamic needs and aspirations. Flexibility and adaptability are key to long-term success.

Business Plan Template for a Hostel Business

Note: This template is designed to provide a comprehensive structure for your hostel business plan. Customize each section to suit your goals, vision, and business needs.

I. Executive Summary

Provide a concise overview of your hostel business plan, highlighting key points, including your business concept, mission, target market, and financial projections.

II. Business Description

A. Business Concept

• Describe your hostel’s unique selling proposition (USP).
• Explain the type of hostel (e.g., budget, boutique, eco-friendly) and its distinguishing features.

B. Vision and Mission

• Articulate your long-term vision for the business.
• Define your mission statement and its significance for the community.

C. Market Opportunity

• Analyze the market demand for your hostel services.
• Identify gaps and opportunities within the hostel industry.

III. Market Research and Analysis

A. Industry Overview

• Present an overview of the hostel industry, including trends and growth projections.
• Highlight the competitive landscape and key players.

B. Target Market

• Define your ideal customer personas (e.g., backpackers, solo travelers, eco-conscious tourists).
• Provide demographic and psychographic insights into your target market.

C. Competitor Analysis

• Assess your direct and indirect competitors.
• Identify their strengths, weaknesses, and market positioning.

D. SWOT Analysis

• Conduct a SWOT analysis for your hostel business, outlining strengths, weaknesses, opportunities, and threats.

IV. Marketing Strategy

A. Branding and Positioning

• Outline your branding strategy and how it aligns with your USP.
• Define your brand personality and values.

B. Marketing Plan

• Describe your marketing channels (online, offline, social media).
• Explain your content strategy and customer engagement tactics.

C. Pricing Strategy

• Determine your pricing model (e.g., per bed, per room, packages).
• Explain how your pricing strategy aligns with your market positioning.

V. Operations and Management

A. Business Structure

• Specify your business structure (e.g., sole proprietorship, LLC, corporation).
• Highlight key management roles and responsibilities.

B. Location and Facilities

• Detail your hostel’s physical location and facilities.
• Include information on capacity, room types, and amenities.

C. Suppliers and Partnerships

• List your key suppliers (e.g., bed suppliers, cleaning services).
• Discuss any partnerships that enhance your hostel’s operations.

VI. Financial Projections

A. Startup Costs

• Itemize all startup expenses, including permits, renovations, and initial inventory.

B. Revenue Model

• Outline your revenue streams (e.g., bed bookings, food services, tours).
• Provide pricing details for each offering.

C. Financial Forecast

• Prepare a 3-5 year financial forecast, including income statements, balance sheets, and cash flow projections.

VII. Funding and Financing

A. Funding Requirements

• Specify the amount of funding needed to launch and operate your hostel.
• Explain how you intend to secure this funding (e.g., personal savings, loans, investors).

B. Use of Funds

• Detail how you plan to allocate the funds, including startup costs, marketing, and working capital.

C. Investor Proposition

• If seeking investors, provide a compelling proposition highlighting potential returns and benefits.

VIII. Risk Analysis

A. Risk Assessment

• Identify potential risks and challenges in the hostel industry.
• Develop risk mitigation strategies for each identified risk.

IX. Appendix

A. Supporting Documents

• Include any additional documents, such as market research data, legal contracts, or resumes of key team members.

B. Milestones and Timeline

• Create a timeline of key milestones and objectives, including launch dates and expansion plans.

Use this business plan template as a roadmap to successfully launch and manage your hostel business. Customize each section to align with your specific business goals and strategies.

See How to Write a Business Plan for information on creating your business plan.

11. Banking Considerations

Banking for Your Hostel Business

Local, Convenient, and Professional

Consider selecting a nearby bank with a strong focus on small businesses.

A dedicated business account separates personal and business transactions, simplifying expense tracking and tax reporting. Building a professional rapport with your banker can yield valuable financial guidance and streamline financial services.

Additionally, having a merchant account or online service for card payments enhances sales and customer convenience, a crucial step for your hostel business.

For more, see How to Open a Business Bank Account. You may also want to look at What Is a Merchant Account and How to Get One.

12. Getting the Funds for Your Operation

Securing Financing for Your Hostel Business

Exploring Funding Options

If you require financial support to initiate your hostel business, consider these approaches:

1. Traditional Lenders: Approach banks or credit unions for business loans.

2. Private Loans: Explore loans from individuals or private lenders.

3. Investors: Seek investment from angel investors or venture capitalists.

4. Asset Sale: Consider selling personal assets to generate startup capital.

5. Government Grants: Research available government grants for hostel startups.

Meeting with a Loan Officer

Key Considerations

When meeting with a loan officer:

• Clearly outline your business plan and financial needs.
• Be prepared to discuss your credit history and collateral.
• Ask about interest rates, repayment terms, and any fees.

Sample List of Documents for Loan Application

To apply for a new business loan, prepare:

• Business plan with financial projections.
• Personal and business credit reports.
• Tax returns for the past three years.
• Bank statements and financial statements.
• Collateral information, if applicable.
• Legal documents (e.g., business licenses, contracts).
• Personal identification and references.

For more, see the following:

• Getting a Small Business Loan
• SBA Small Business Grants
• Search: Hostel Business Start-up Loans
• Search: Grants For a Hostel Business

13. Software Setup

Selecting Software for Hostel Operations

Smart Choices for Efficiency

Choosing the right software for your hostel business is crucial for smooth operations. Consider these key factors:

1. Research and Implementation

• Opt for software that suits your needs from the start.
• Switching systems after data migration can be challenging.

2. Company Reliability

• Select a reputable company with a track record.
• Dependable support and updates are essential for long-term use.

3. Try Before You Buy

• Explore software with available demos.
• Test functionality to ensure it aligns with your requirements.

4. User Insights

• Read software reviews and participate in relevant forums.
• Learn from others’ experiences to make informed choices.

5. Financial Management

• Research accounting software for expense tracking and tax preparation.
• Consult with your bookkeeper or accountant for expert advice.

Types of Software for Hostel Management and Operations

Hostel business owners might use various software types, including:

• Reservation and Booking Software: Manage room reservations and guest bookings efficiently.
• Property Management Systems (PMS): Oversee daily operations, guest check-ins, and billing.
• Accounting Software: Handle financial transactions, track expenses, and prepare tax documents.
• Website and Online Booking Tools: Facilitate online bookings through your website.
• Customer Relationship Management (CRM): Manage guest information and improve customer service.
• Employee Scheduling and Payroll Software: Streamline staff management and payroll processes.
• Point of Sale (POS) Systems: Handle transactions in on-site amenities like restaurants or bars.

Choose software that aligns with your hostel’s specific needs and operations for optimal efficiency.

Check out Google’s latest search results for software packages for a hostel business.

14. Get The Right Business Insurance

Securing Insurance for Your Hostel Business

Protecting Your Investment

Business insurance is a critical aspect of running a hostel business.

Here are key considerations:

1. Comprehensive Coverage

• Prepare for unforeseen incidents by securing the right insurance.
• Protect customers, employees, property, and yourself from potential risks.

2. Professional Liability Insurance

• Consider professional liability insurance to shield against legal claims.
• It safeguards your business in case of lawsuits or disputes.

3. Interruption Insurance

• Interruption insurance can be a lifeline during involuntary shutdowns.
• It helps cover operating expenses and prevents financial strain.

4. Expert Guidance

• Consult a knowledgeable insurance broker for guidance.
• Ensure you have adequate coverage tailored to your specific needs.

Don’t overlook the importance of insurance in safeguarding your hostel business. Prioritize comprehensive coverage to protect your assets, reputation, and financial stability in case of unexpected events.

For more, see What to Know About Business Insurance . You can also browse the latest Google search results for hostel business insurance .

15. Suppliers and Service Providers

Choosing Suppliers and Service Providers

Building Essential Partnerships

Selecting the right suppliers and service providers is critical to hostel business management. Consider the following items and services you might need from them:

1. Bed Linens and Amenities

• High-quality bed linens, towels, and toiletries for guest comfort.

2. Cleaning Services

• Professional cleaning services to maintain cleanliness and hygiene.

3. Food and Beverage Suppliers

• Food and beverage suppliers for on-site dining options.

4. Furniture and Furnishings

• Furniture suppliers for common areas and guest rooms.

5. Maintenance and Repairs

• Providers for building maintenance and repairs.

6. Marketing and Advertising

• Marketing agencies or printing services for promotional materials.

7. IT and Technology

• IT services for website maintenance and tech support.

8. Security Services

• Security providers to ensure guest safety.

9. Energy and Utilities

• Suppliers for electricity, water, and other utilities.

10. Landscaping and Exterior Maintenance

• Landscaping and exterior maintenance services for curb appeal.

Fostering Strong Relationships

Building a strong rapport with suppliers and service providers is vital. A reliable supplier can offer competitive prices, enhance your business’s efficiency, and contribute to your success.

Mutual respect and ensuring a mutually beneficial financial arrangement can solidify these partnerships, leading to a thriving and well-supported hostel business.

For More, See How To Choose a Supplier.

16. Setting Prices

Setting Competitive Pricing Strategies

Strategic Pricing for Hostel Success

Researching pricing is a crucial step in launching your hostel business.

Consider these key factors:

1. Finding the Sweet Spot

• Striking the right balance is essential to align with your target market.
• Your pricing should reflect the value and experience you offer.

2. Avoiding Overpricing

• Excessive prices can deter potential customers and lead to lost sales.
• Finding a competitive rate is vital to remain appealing.

3. Preventing Underpricing

• While low prices may attract more customers, they can impact profitability.
• Ensure your rates cover expenses and generate a reasonable profit.

4. Emphasizing Value

• Highlight the unique value your hostel provides to justify pricing.
• Showcase amenities, services, and experiences to set you apart.

5. Competitive Research

• Study competitors’ pricing strategies to remain competitive.
• Ensure your prices are in line with industry standards.

Balancing pricing to match market expectations while showcasing your value is critical for hostel business success .

Careful research and strategic pricing can help you attract customers, generate revenue, and establish a thriving business.

See the following for more:

• Setting the Price of Your Products and Services
• Search Results for Pricing Strategies for a Hostel Business.

17. Physical Setup

Optimizing Room Layout and Essential Spaces

Creating an Efficient Hostel Layout

Ensuring an efficient layout for your hostel, particularly arranging rooms and essential areas, is crucial for a successful business. Here’s what you need to consider:

1. Room Layout

• Carefully plan the arrangement of sleeping quarters.
• Optimize space to provide comfortable and functional dormitories or private rooms.

2. Common Areas

• Design common spaces strategically.
• Lounge areas, dining spaces, and kitchen facilities should be easily accessible and well-maintained.

3. Bathroom Facilities

• Arrange bathrooms for guest convenience.
• Ensure an adequate number of clean and well-equipped bathrooms and showers.

4. Signage Strategy

• Implement effective signage within the hostel.
• Use signs to guide guests to their rooms, common areas, and amenities.

5. Office Efficiency

• Maintain an organized front desk or office space.
• This area should be centrally located for efficient guest check-ins and inquiries.

6. Accessibility

• Ensure ease of access to all essential spaces.
• Guests should navigate your hostel with ease, enhancing their overall experience.

Efficient room layout and organization of common areas are critical factors in creating a comfortable and inviting hostel environment.

Prioritize guest comfort, convenience, and satisfaction while considering the flow and accessibility of different spaces within your hostel.

See Here are Considerations for The Setup of Your Office for tips and ideas to make your office work for you. Also, have a look at our article About Company Signs.

18. Creating a Website

Essential Hostel Website

Your Digital Presence

Having a dedicated website is essential for your hostel business. Here’s why:

1. Centralized Information

• Your website serves as the primary point of contact for potential guests.
• It lets you showcase crucial hostel information, including pricing, amenities, and location.

2. Ownership and Control

• Unlike social media profiles, your website is a digital asset you own and control.
• Registering a domain name ensures you have full authority over your online presence.

3. Marketing Hub

• Utilize your website as a powerful marketing tool.
• Engage with your audience through a blog, sharing industry insights, tips, and valuable content that builds trust and positions you as an expert in the hostel business.

A well-maintained website provides information and establishes your online identity and credibility, making it a vital tool for attracting and retaining guests.

For more, see How to Build a Website for Your Business .

19. Create an External Support Team

Building Your External Support Team

Expertise on Demand

In the world of hostel business, having a reliable external support team is invaluable. Here’s why:

1. Diverse Skill Set

• Your support team consists of professionals with specialized skills.
• They cover various areas, from legal matters to marketing strategies, financial advice, and technical expertise.

2. On-Demand Services

• These individuals are not on your payroll, allowing you to utilize their services as needed.
• Whether on a project basis, hourly, or retainer, you can access their expertise when required.

3. Ongoing Relationship Building

• Building a strong support team takes time and effort.
• While you may not have all the members in place from day one, continuously working on these professional relationships is essential.

4. Essential Team Members

• Your team may include an accountant, lawyer, financial advisor, marketing specialist, technical advisor, consultant, and more.
• These experts provide guidance, insights, and solutions, enhancing the overall operation of your hostel business.

An external support team ensures you have access to expert advice and services, bolstering your business’s capabilities when necessary.

For more, see Building a Team of Professional Advisors for Your Business.

20. Hiring Employees

Managing Your Hostel Business Single-Handedly

Cost-Efficiency in the Early Stages

During the initial phases of your hostel business, managing it independently can be a cost-effective approach. Here’s why:

• Cost Control: Keeping expenses low is crucial at the start, and payroll is a significant cost.
• Simplified Operations: Running the show alone simplifies operations and decision-making.

However, as your business expands, the workload might become overwhelming. Hiring the right personnel is critical.

Growing Your Team:

When the time comes to expand your team, ensure you select qualified individuals with strong work ethics . Each hire should be a good fit for their role.

Key Positions for Your Growing Hostel Business:

The following are job positions or outsourced services you may want to consider as your hostel business grows:

• Front Desk Staff
• Housekeeping
• Maintenance
• Marketing Manager
• Financial Controller
• Event Coordinator
• Security Personnel
• Legal Counsel
• Cleaning Services (outsourced)
• IT Support (outsourced)
• Human Resources (outsourced)
• Accounting Services (outsourced)

Building the right team is essential for the continued success and growth of your hostel business.

For more, see How and When to Hire a New Employee.

21. Getting Customers Through the Door

When you have reached this step, your business is set up and ready to go, with one more final step, which is important: getting customers through the door.

There are numerous ways to do this, like advertising, having a grand opening , word of mouth, etc.

Let’s dig a little deeper into the following sections.

a.) Marketing Considerations

Attracting the Right Customers to Your Hostel Business

Essential for Success

Without a steady stream of customers, a hostel business cannot thrive. To succeed, attracting the right customers is paramount. Here’s why:

• Initial Challenges: Starting, it’s more challenging as your business is new, and awareness is limited.
• Building Reputation: As you build a solid reputation, attracting customers becomes easier, and you gain valuable marketing experience.
• Ongoing Effort: Marketing your hostel business is not a one-time task but a continuous process.

Effective Marketing Techniques:

Effective marketing doesn’t always require a professional agency. Consider these simple methods to spread the word:

• Online Presence: Create a professional website and maintain active social media profiles.
• Online Listings: List your hostel on travel and accommodation websites.
• Guest Reviews: Encourage satisfied guests to leave positive reviews online.
• Local Partnerships: Collaborate with local businesses for cross-promotion.
• Special Offers: Offer discounts for longer stays or group bookings.
• Events and Workshops: Host local events or workshops to attract a diverse crowd.
• Engage in Community: Become involved in local community activities and sponsorships.
• Referral Programs: Implement referral programs for repeat guests.

Remember, marketing is about raising awareness, and every opportunity to do so counts toward your hostel’s success.

See How To Get Customers Through the Door and our marketing section to provide ideas to help you bring awareness to your business.

b.) The Market Can Guide You:

Listening to Customer Demand: A Business Imperative

In running a hostel business, an invaluable advice is to heed your customers’ desires closely. Here’s why it’s crucial:

Staying Aligned with Market Trends: While you may have a clear vision for your business, market dynamics can reveal potential variations that align with customer preferences. Ignoring these cues could mean missed opportunities for growth.

Adapting for Success: Resisting change is natural, but if market signals consistently point toward a particular demand, it’s prudent to consider adaptation. Embracing these shifts can lead to a thriving business.

Balancing Vision and Market Trends: Ultimately, it’s your business, and you have the final say. However, balancing your vision and customer demand can be the key to long-term success.

Opportunity Awaits: Remember, when signs persistently emerge, take a step back, evaluate, and be open to exploring opportunities. Your ability to adapt and cater to evolving customer needs can set your hostel business on a path to prosperity.

c.) Sample Ad Ideas:

1. “Experience Comfort & Adventure at Our Hostel!” Discover a cozy haven for travelers. Book your stay today!

2. “Escape to Tranquility: Your Hostel Getaway Awaits!” Unwind in serene surroundings. Reserve your spot now!

3. “Hostel Excellence: Your Home Away From Home!” Experience top-notch hospitality at budget-friendly prices.

4. “Adventure Awaits: Explore, Relax, Repeat!” Start your journey from our doorstep. Book your adventure today!

5. “Make Memories: Stay, Play, and Connect!” Create unforgettable moments in a vibrant hostel community. Book now!

d.) B2B Ideas

Collaborating with other businesses to create referral partnerships can be a win-win situation.

When seeking such partnerships for your hostel business, consider approaching the following types of businesses:

• Local Tour Operators: Partner with local tour companies, offering their services to your guests and receiving referrals. This arrangement can enhance the overall travel experience for your customers.
• Restaurants and Cafes: Establish a partnership with nearby eateries. You can recommend their dining options to your guests, and they can, in turn, recommend your hostel for accommodations.
• Travel Agencies: Partner with travel agencies specializing in backpacking or adventure travel. They can recommend your hostel to clients in need of budget-friendly accommodations.
• Language Schools: If your location attracts international travelers, collaborate with language schools. They can refer students or groups looking for a place to stay while learning the local language.
• Outdoor Gear Shops: If you’re in a destination popular for outdoor activities, contact stores selling outdoor gear . Provide discounts to your guests, and they can refer travelers your way.
• Event Planners: Connect with event planners who organize conferences or workshops. They can recommend your hostel for accommodation options when hosting events in your area.
• Transportation Providers: Partner with taxi services, airport shuttle companies, or bike rental shops. Your guests will appreciate convenient transportation options.
• Online Travel Agencies (OTAs): Collaborate with online travel platforms like Booking.com or Airbnb. They can list your hostel on their platforms, exposing your business to a broader audience.
• Hostel Networks: Join hostel associations or networks that offer referral programs among member hostels. This can provide valuable exposure within the hostel community.
• Local Attractions: Work with nearby attractions such as museums, amusement parks, or theaters. They can recommend your hostel to visitors seeking accommodations after their visit.

Consider offering referral fees, discounts, or cross-promotions to incentivize these businesses to refer customers to your hostel.

Tailor the arrangement to suit both parties’ needs and create a mutually beneficial relationship. Remember to formalize these partnerships with clear agreements to ensure smooth cooperation and mutual success.

Points To Consider

Next, let’s review essential points for more tips, insights, and considerations before starting your hostel business.

We will cover sections, including skills to consider, points to focus on, and equipment. Then you’ll reach the “Knowledge Is Power,” section, where you will want to use the resources for valuable information.

Key Points to Succeed in a Hostel Business

Setup Phase Success Key Points:

• Thorough Research: Conduct comprehensive market research to understand your target audience, competition, and industry trends before diving into the business.
• Business Plan: Develop a detailed business plan that outlines your goals, strategies, and financial projections. A well-thought-out plan will serve as your roadmap.
• Legal Compliance: Ensure your hostel business meets all legal requirements, including permits, licenses, and zoning regulations. Consult with legal experts if needed.
• Financial Planning: Estimate startup costs accurately and secure necessary funding. Create a budget and contingency plan to handle unexpected expenses.
• Location: Choose a strategically accessible location that aligns with your target market. Consider factors like safety, proximity to attractions, and transportation options.
• Property Setup: Invest in quality furnishings, beds, and amenities to create a comfortable and appealing environment. Focus on cleanliness and maintenance.
• Marketing Strategy: Develop a strong online presence through a professional website and active social media profiles. Utilize both digital and traditional marketing tactics to create awareness.
• Pricing Strategy: Set competitive pricing that reflects the value you offer. Consider seasonal variations and discounts for extended stays.
• Customer Service: Train your staff in exceptional customer service. First impressions are crucial in the hospitality industry.
• Guest Experience: Prioritize guest satisfaction by providing a safe, clean, and welcoming atmosphere. Encourage positive reviews and referrals.

Operation Phase Success Key Points:

• Staff Management: Hire, train, and retain competent staff. Continuously assess their performance and provide growth opportunities.
• Quality Control: Maintain high standards of cleanliness and service. Regularly inspect rooms and common areas to ensure they meet guest expectations.
• Customer Feedback: Actively seek feedback from guests and use it to make improvements. Address complaints promptly and professionally.
• Marketing Continuation: Continue marketing efforts to attract new guests. Engage with online reviews and respond to inquiries promptly.
• Financial Management: Monitor your finances closely, keeping track of revenue and expenses. Adjust your budget as needed to maintain profitability.
• Regular Maintenance: Implement a maintenance schedule to address wear and tear, ensuring that your property remains in top condition.
• Safety and Security: Prioritize guest safety and security. Install security systems and provide clear safety guidelines for guests.
• Community Engagement: Foster positive relationships within the local community. Participate in events and collaborate with nearby businesses for mutual benefits.
• Technology Integration: Stay updated with technology trends, including online booking systems, mobile apps, and smart room features, to enhance the guest experience.
• Sustainability: Implement eco-friendly practices to reduce your hostel’s environmental impact. This can be an attractive feature for environmentally conscious travelers.

Succeeding in the setup and operation phases requires dedication, adaptability, and a commitment to delivering exceptional guest experiences.

Regularly assess your performance, make necessary adjustments, and strive for continuous improvement.

Making Your Hostel Business Stand Out

• Themed Hostel: Create a unique and memorable experience by adopting a specific theme for your hostel. Retro, eco-friendly, or cultural themes can attract travelers seeking something distinctive.
• Local Experiences: Offer curated local experiences such as guided city tours, cooking classes , or cultural workshops. This enhances guests’ connection to the destination.
• Eco-Friendly Initiatives: Implement sustainable practices like recycling, energy-efficient lighting, and eco-friendly amenities. Highlight your hostel’s commitment to environmental responsibility.
• Community Engagement: Host community events, art exhibitions, or live music nights in common areas. This fosters a sense of community and interaction among guests.
• Social Responsibility: Partner with local charities or social causes, allowing guests to contribute or volunteer during their stay. It showcases your hostel’s commitment to making a positive impact.
• Unique Room Designs: Create one-of-a-kind room designs with artistic or thematic elements. Unique decor and layouts can make your hostel Instagram-worthy.
• Work and Travel Spaces: Cater to digital nomads and remote workers by providing co-working spaces and high-speed internet access.
• Special Accommodations: Offer diverse room types, including private suites, family rooms, and female-only dormitories, to accommodate various traveler preferences.
• Culinary Experiences: Host cooking classes, food tastings, or themed dinners. Food can be a significant draw for travelers looking to explore local cuisine.
• Customized Packages: Develop packages for specific traveler segments, such as adventure seekers, solo travelers, or honeymooners, offering tailored experiences.
• Pet-Friendly Amenities: Allow guests to bring their pets, offering pet-friendly rooms and amenities like pet beds and water bowls.
• Digital Services: Provide services like mobile check-in, keyless entry, and personalized guest apps for convenience.

Ideas for Add-Ons for a Hostel Business:

• Airport Shuttle: Offer airport pick-up and drop-off services to simplify guests’ arrival and departure.
• Bicycle Rentals: Provide bicycles for rent, allowing guests to explore the local area at their own pace.
• Laundry Facilities: Install self-service laundry facilities or offer laundry services for guests’ convenience.
• Luggage Storage: Set up secure luggage storage areas for guests arriving early or departing late.
• Social Events: Organize regular social events like movie nights, barbecues, or game tournaments to encourage guest interaction.
• 24/7 Reception: Extend your reception hours to provide round-the-clock assistance to guests.
• Travel Desk: Establish a travel desk offering tour booking, travel advice, and assistance with transportation arrangements.
• Fitness Center: Include a small fitness center with basic exercise equipment for health-conscious travelers.
• Library or Reading Lounge: Create a quiet space with a collection of books and magazines for guests looking to unwind.
• Discount Cards: Partner with local businesses to offer guests discounts on nearby attractions, restaurants, and shops.
• In-House Cafe or Bar: Open an on-site cafe or bar serving local specialties, coffee, or craft beer.
• Outdoor Lounge: Develop an outdoor lounge area with seating, hammocks, and a barbecue grill for relaxation.
• Art Installations: Showcase local art and create rotating art exhibitions within the hostel.
• Convenience Store: Stock a small convenience store with essentials, snacks, and travel supplies for purchase.
• Fitness Classes: Host fitness classes like yoga , pilates, or dance sessions for guests seeking wellness activities.
• Personal Lockers: Install secure lockers for guests to store valuables and belongings.
• Car Rental Services: Partner with a local car rental company to provide guests with vehicle rental options.
• Guided Tours: Organize in-house guided tours led by knowledgeable staff or local experts.
• Airport Lounge Access: Provide access to a nearby airport lounge for guests with long layovers.
• Children’s Play Area: Create a designated play area for families traveling with children.

Remember that the key to a successful hostel business is understanding your target audience and tailoring your services and add-ons to meet their needs and preferences.

Continuously seek feedback from guests to refine and expand your services.

Hours of Operation:

Hostel Business Hours of Operation:

• Reception Desk: Typically open 24/7 to assist guests with check-in, inquiries, and emergencies.
• Common Areas: Accessible 24/7, allowing guests to socialize, work, or relax.
• Check-In/Check-Out: Usually from 2:00 PM (check-in) to 11:00 AM (check-out).

Tasks Outside Regular Hours:

• Cleaning: Housekeeping staff may work overnight to clean common areas and rooms without disturbing guests.
• Security: Security personnel or monitoring systems ensure safety during non-reception hours.
• Maintenance: Minor maintenance and repairs may occur during off-hours to minimize disruptions.

Equipment and Supplies

A List of Equipment and Supplies to Consider for a Hostel Business:

Reception Area:

• Reception desk
• Computer(s) with reservation software
• Cash register or point-of-sale (POS) system
• Credit card processing equipment
• Office supplies (pens, paper, etc.)
• Keycard or keyless entry system
• Guest registration forms
• Storage for guest luggage
• Lobby seating and furniture
• Information desk or kiosk

Guest Rooms:

• Beds (bunk or single)
• Mattresses and bedding (sheets, pillows, blankets)
• Lockers or storage space
• Reading lights and power outlets for each bed
• Curtains or dividers for privacy
• Personal fans or air conditioning
• Safety deposit boxes
• Towels (for rent or sale)

Common Areas:

• Dining tables and chairs
• Kitchen appliances (refrigerator, microwave, stove, oven)
• Cookware, utensils, and cutlery
• Dishware and glassware
• Coffee maker or kettle
• Vending machines
• Laundry facilities (washing machines, dryers)
• Lounge seating and entertainment (TV, board games, books)
• Computer terminals or workstations
• Wi-Fi access points and internet service

Housekeeping and Maintenance:

• Cleaning supplies (vacuum cleaners, brooms, mops, cleaning agents)
• Linen carts
• Laundry baskets or hampers
• Handcarts or luggage trolleys
• Basic tools for minor repairs
• Fire extinguishers and safety equipment
• Trash bins and recycling containers
• Pest control supplies

Security and Safety:

• Surveillance cameras and monitoring equipment
• Access control systems (keycards, electronic locks)
• Fire alarm system
• Emergency lighting
• First aid kits
• Locks and safes for guest valuables
• Security personnel uniforms and equipment

Administration and Office:

• Computers, printers, and scanners
• Accounting and bookkeeping software
• Marketing materials (brochures, flyers , business cards)
• Filing cabinets and storage
• Office furniture (chairs, desks)

Exterior and Outdoor Amenities:

• Exterior lighting
• Outdoor seating and social areas
• Bicycle racks or storage
• Landscaping and outdoor maintenance equipment
• Signs and directional signage

Remember that the specific equipment you need can vary based on the size and amenities of your hostel, so it’s essential to adapt this list to your business’s unique requirements.

Focusing on your skill set is crucial for running a successful hostel business. Your skills directly impact various aspects, from guest satisfaction to efficient management.

If you lack essential skills, consider learning or hiring experts to fill the gaps.

Skills like customer service, financial management, marketing, and property maintenance play vital roles in hostel operations.

Essential Skills for a Hostel Business Owner:

• Hospitality Management:  Providing a welcoming and comfortable environment.
• Customer Service:  Ensuring guest satisfaction and resolving issues.
• Financial Management:  Budgeting, accounting, and cost control.
• Marketing and Promotion:  Attracting and retaining guests.
• Property Maintenance:  Ensuring cleanliness and safety.
• Adaptability:  Navigating changing market conditions.
• Communication:  Effectively conveying information to guests and staff.
• Organization:  Managing reservations, schedules, and tasks.
• Problem-Solving:  Addressing issues promptly and creatively.
• Networking:  Building relationships with suppliers and partners.
• Leadership:  Guiding and motivating staff.
• Technology Proficiency:  Using reservation systems and online platforms.
• Legal Compliance:  Understanding regulations and licenses.
• Time Management:  Efficiently allocating time for tasks.
• Creativity:  Developing unique guest experiences and promotions.

When honed and applied effectively, these skills contribute to a hostel business’s overall success.

Considering the Future of Your Hostel Business:

Contemplating the future of your hostel business is crucial. While the landscape may change, having a clear vision offers valuable guidance.

By envisioning your hostel’s future, you gain several advantages. It allows you to make informed decisions aligned with your long-term goals. You can anticipate industry trends, adapt to evolving customer preferences, and proactively address challenges.

Moreover, a well-defined vision is a motivational tool, inspiring you and your team to work towards a common goal. It helps maintain focus and consistency in your business strategies.

In an ever-changing hospitality industry, having a vision provides stability and direction, ensuring your hostel evolves in the desired direction and remains competitive in the market.

Find a Hostel Business For Sale

Considering an existing hostel business for sale has its merits and drawbacks compared to starting from scratch.

• Immediate Revenue: You start earning income from day one, avoiding the lengthy startup phase.
• Proven Success: The business is already established, eliminating uncertainties about its viability.
• Financial Clarity: You have access to historical financial data, including revenue, expenses, and profits.
• Existing Customer Base: Acquiring an established business means you inherit a customer base, providing a head start.
• Reputation: The business likely has a reputation in the market, potentially leading to higher trust and patronage.
• Higher Cost: Buying an established business often comes with a premium due to its goodwill and existing customer base.
• Change Challenges: Implementing significant changes to the existing operations can risk customer loss.
• Inherited Reputation: You inherit the positive and negative aspects of the business’s reputation.

While an exact match for a hostel business may not be available, exploring similar businesses for sale in the industry could yield valuable opportunities.

The latest search results for a hostel business for sale and others in the same category.

Franchise Opportunities Related to a Hostel Business

Owning a hostel franchise offers advantages and drawbacks worth considering before starting your business from scratch.

• Proven Business Model: You can follow a well-established plan created by the corporate office, reducing the risk of trial and error.
• Reputation and Marketing: Benefit from the franchise’s existing reputation and marketing efforts, giving your hostel a head start.
• Comprehensive Knowledge: You gain in-depth knowledge about the business from the start.
• Corporate Support: Franchisees receive ongoing support and guidance from the corporate office.
• Expense: Acquiring a franchise can be costly, with initial fees and ongoing royalty payments.
• Limited Autonomy: Significant changes or business deviations require approval from corporate.
• Restricted Product/Services: You’re typically limited to offering approved products and services.
• Operational Restrictions: You must adhere strictly to the franchise agreement’s operational guidelines.
• Franchise Fees: Ongoing fees can impact your profitability.

While a direct hostel franchise may not exist, exploring related franchises in the same industry could unearth unexpected opportunities.

See the latest search results for franchise opportunities related to this industry.

Knowledge Is Power if You Use It!

Knowledge empowers action. Abundant industry insights are available in the following sections, aiding startup and ongoing operations.

Trends and Statistics

Examining industry trends and statistics is vital for a hostel business, offering insights into market dynamics and opportunities for strategic decision-making.

See the latest search results for trends and statistics related to the hostel industry.

Hostel Associations

Trade associations provide benefits like industry news updates and networking opportunities, helping professionals stay informed and connected.

See the search results on hostel associations and the benefits of Joining the Chamber of Commerce.

The best hostels in the world

Analyzing established hostels can inspire new ideas, identify industry gaps for a competitive edge, and reveal overlooked opportunities for improvement.

See the latest search results for the best hostels in the world.

The Future of the Hostel

Researching the industry’s future is essential for aspiring hostel owners to make informed decisions and stay ahead in the competitive market.

See the search results for the future of the hostel industry.

Customer Expectations

Reviewing search results on customer expectations provides valuable insights to meet and surpass their needs in the hostel experience. Uncover overlooked issues and enhance your service comprehensively.

See the search results related to customer expectations for a hostel experience.

Expert Tips

Examining expert tips enhances skills, offering fresh insights to novices and experts.

Novices gain valuable knowledge, while experts may discover more efficient methods or new perspectives.

See the latest search results for hostel management to gain tips and insights.

Hostel Business Insights

Analyzing tips and insights can inspire innovative ideas, help avoid pitfalls, and boost your expertise in the hostel industry.

See the latest search results about insights into running a hostel business.

Hostel Publications

Publications serve as a valuable source of hostel-related tips and insights, offering a wealth of information to benefit your knowledge.

See the search results for hostel publications.

Hostel Forums

Engaging in hostel forums fosters connections and insights. These platforms provide a window into customer perspectives, enhancing your understanding of your clientele.

See the latest search results related to hostel forums.

Online or local courses enhance your skills and knowledge, benefiting your hostel business through valuable education and training.

See the latest courses that could benefit a hostel business owner . Also, see our management articles for tips and insights for managing your business.

Hostel Blogs

Subscribing to leading hostel blogs keeps you informed and inspired. Unsubscribe to outdated or unhelpful ones for a valuable, ever-evolving resource on hostel industry insights.

Look at the latest search results for top hostel blogs to follow.

Hospitality-Based Business Tips

Examining advice and industry insights aids hostel management, fostering long-term success in the competitive hospitality sector.

Look at the latest search results for hospitality tips and insights to follow.

Hostel News

News is a valuable channel to stay updated on hostel-related media stories, keeping you informed and in the know.

See the latest results for hostel business news.

Watching YouTube videos about hostels provides additional insights to enhance your understanding.

YouTube videos related to a hostel business.

Privacy Overview

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

Eva Lacalle

Link copied

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.

Hospitality hot takes straight to your inbox

Sign up to our monthly newsletter for industry insights, product news, partner updates and more.

The New Era of Hospitality Metrics for Revenue Managers

Download now

Similar articles

Make it remarkable.

Ready to take the first step towards a more efficient, flexible, guest-centric approach to hospitality?

Cookie management

Here you can manage your preferences regarding cookies:

Essential cookies

Essential cookies enable core functionalities of the website such as marking your data inputs, network management and accessibility.

Functionality cookies

These cookies allow a website to remember choices you have made in the past, like what language and currency you prefer, remember your name and email and automatically fill forms.

Analytical cookies

Analytical cookies help us improve our website by collecting and reporting information on how you use it.

Advertising cookies

Advertising cookies for delivering tailored and customized advertising.

• REQUEST A PLAYGROUND
• SCHEDULE A MEETING

Improve Your Property's Management, Operation & Revenue With Booking Ninjas Property Management System

Tips On How To Write A Great Hostel Business Plan

How to start a student hostel business, what is a business plan, why create a business plan for your hostel, what information is needed to write a business plan for a hostel, free hostel business plan sample template.

A common mistake that some hostel business owners make is to dive headfirst into the hostel industry without having a proper business plan. A hostel is a business and like any other business can not succeed without a business plan.

There are a few steps that are required when writing a business plan and we will go through all the steps in detail in this article so keep reading.

Read more: Understanding the Hostel Business Model

There are several things to take note of and into consideration when starting a student hostel business. Factors like location should be given extra consideration because it affects your budget, strategy, customers, and much more.

There are so many ways to start a student hostel business but we have narrowed it down to 4 important steps to guide you.

Find a Location

When you are starting a student hostel business you need to ensure that you pick a location and ensure that the location you pick is close to a university or a student populated area.

Conduct market research and identify your unique value proposition

Market research helps you recognize opportunities in your chosen area which enables you to find a gap in the market. This is where you step in with your unique value proposition. It enables you to identify what you can offer because you’ll be able to see clearly what is available and what is missing.

Define your resources

Identifying your resources like human resources and equipment will help you understand your operating costs and make a financial plan for your student hostel.

Create a business and marketing plan

A business plan contains a cost analysis and projected costs while a marketing plan will help identify your target market and what marketing strategy best suits them.

Read more: How To Starting Your Hostel Business: Complete Guide

Every new business or startup in search of funds is most likely to turn to a bank for a loan or to an investor and typically they will ask to look through your business plan to help them understand your plan and decide for/against investing or lending you money.

A business plan at its core is a formal document that includes the framework, strategies, and goals of a business. It explains and details how your business will work/works and why it will be profitable and successful to potential investors and funders.

This is achieved by analyzing your industry, competitors, and customers and also making detailed marketing and operations plan and most importantly a financial plan.

A business plan can be written in 2 forms:

• A business plan to obtain funding
• A business plan for personal planning

As an entrepreneur writing a business plan is the first step to take when looking to start a new business or company.

This is because it allows you to determine the profitability of your business and is also pivotal in presenting your business to prospective funders and investors to get them interested in your business and hopefully provide the funding you need.

A business plan is not just important for your potential investors and funders, it is also important to you. It enables you to determine your business strategy for running a successful hostel.

A good business plan helps you identify the potential risks involved in operating your hostel and it also serves as a progress tracker.

There’s certain critical information you need before writing a hostel business plan firstly you need to conduct market research which includes analyzing the hostel market to confirm if there’s room in the local market for your hostel in your desired area.

A market analysis helps you understand the current demand for hostel accommodation and also gives you insight into the hostels that have already made their name on the market. After your market research, you need to determine the equipment and staff needed to operate your hostel.

You'll need to draft a list of the staff needed to operate the hostel on the daily basis and also research and offer a reasonably competitive salary to give you an advantage in the hiring market

After all this research is done you are ready to write your business plan.

Executive Summary

An executive summary is a compelling and concise summary of your business plan. Its aim is to present your business by telling your story that is who you are, what product you are selling/service you are providing, your base of operation, and more importantly, how the investor can help you bring it to life.

This is the most important component of your business plan because although a few people read the entire business plan, the executive summary is read by everyone.

Industry Analysis

An industry analysis gives you a brief overview of the hostel industry. It reviews trends and growth patterns that have existed within the industry and the anticipated growth forecast for the industry.

An industry analysis gives you more insight into your competitors and supply and demand within your industry, It also helps you determine your business's potential for growth.

Market Analysis

A market analysis is an assessment of the local market within the hostel industry. It allows you to determine how suitable the market is for your business.

It is made up of a competition analysis (analyzing the strengths and weaknesses of your competition) and your competitive advantage (your unique selling proposition).

Target Market

A target market essentially refers to a select group of people with similar characteristics that you have identified as potential customers for your hostel business. Your target market is a subsection of the total market for the hostel industry.

Sales & Marketing Plan

Your sales plan should detail the strategies your hostel business will use to sell its services and increase its revenue, this includes the prices you'll set.

The sales plan often forms part of the marketing strategy. Your marketing plan will help you to identify your business's target market and create strategies for attracting those customers and building customer loyalty.

Advertising & Promotion

The advertising and promotion plan is aimed at informing potential customers about your hostel business and disseminating information about your hostel business. This details how you will increase your hostel business’ visibility.

By definition pricing is the process of setting the price at which a business will sell its services and goods, it may sometimes be part of the business's marketing plan. This is basically how you will set the prices for your services and rooms.

Operations Plan & Human Resources

The operations plan and human resources section are where you provide an insight into how you are going to run your hostel on the daily basis and if you will be hiring any staff to aid in the running of your hostel and what roles they will have.

Some of these daily operations include tax management, insurance, reservations, payment processing, maintenance, and other administrative tasks.

Organizational Structure

Your organizational structure will outline how certain activities like task allocation, coordination, and supervision are carried out in order to achieve your hostel business goals. It provides the base on which regular operating procedures and routines in your hostel rest.

Financial Plan

The financial plan is the main part of your business plan. It is an overview of your current business financials and projections for its growth. In this section, you will illustrate your calculations and assumptions.

It is advisable to work with an accountant when creating your financial plan for your hostel business.

These are some basic information that must be included in your financial plan

The projected profit and loss statement

This table helps you to evaluate the expected growth and profitability of your hostel for the first three years of operating it.

The projected balance sheet

The balance sheet is made up of two components; the assets which include cash, stock, equipment, and everything that your hostel owns, and the liabilities, which are how much your hostel owes at the end of the fiscal year.

The projected cash flow statement

This table enables you to determine how much cash the hostel spends and how much revenue it generates in a fiscal year. This statement enables you to determine if the hostel has enough money to meet up with its financial commitments (like loan repayment).

Start-up capital

This is also known as the sources and uses table. It provides an extensive view of the start-up capital needed to set up your hostel and how it will be funded.

Need a comprehensive business plan template to help you in creating your ideal business plan? Click here to download our free hostel business plan sample template.

Congratulations on making it to the end of the article, now that you’re done reading the article you should be properly equipped to write your own business plan and start your hostel business.

You should also consider investing into a Hostel Management System to streamline your operation, increase management efficiency and most importantly, optimize your revenue.

Interested to know more about how you can benefit from this system? Schedule a call with us today to learn more!

Trending posts

WhatsApp Us

How to open a hostel business

Update: January 2, 2024

By: Tom Macken

The hostel industry is projected to reach a value of nearly $8 billion by 2028, driven by the rising trend of budget travel and the growing population of young, adventurous travelers across the globe. Discover comprehensive information on launching a successful hostel business.

What is a hostel business?

A hostel business refers to a type of lodging that caters to budget-conscious travelers, especially backpackers and individuals with limited financial resources. Hostels typically offer shared dormitory-style accommodations with communal facilities like bathrooms, kitchens, and common areas, along with private rooms suitable for couples or small groups.

In contrast to hotels, hostels prioritize providing essential amenities and communal spaces over luxury and privacy. These establishments often cultivate a distinct ambiance that fosters social interaction among guests, organizing events and activities such as pub crawls, city tours, and communal meals.

Certain hostels may also provide additional services like laundry facilities, luggage storage, and travel arrangements. Many hostel businesses embrace technology to enhance guest experiences, employing online booking systems and mobile applications, among other innovations.

8 tips for starting a  hostel business

1. form your legal business.

When setting up a  hostel business, you’ll need to think about what business structure will work best, including registering your company with the appropriate authorities, both locally and nationally. 

Many would-be company owners struggle to make sense of the differences among an LLC, a sole proprietorship, a partnership, and other business structures, much alone settling on one. 

A company incorporation service can help you determine the best business structure for your  hostel company based on factors like the level of liability protection you require, the laws of the state in which your company will operate, tax filings requirements and the type of license you will need to legally sell your service and products. 

In the case of  hostel businesses, we advise you to choose one of these legal forms:

• An LLC might have a single owner or several owners.
• If your company is not incorporated, you are considered a sole owner.

In the U.S, limited liability companies (LLCs) are favored over sole proprietorships because their owners are shielded from personal liability for corporate debts and obligations.

Naming your hostel business

The process of naming your hostel enterprise may be a lot of fun. Create a list of terms that best describe your company’s values and goals. Then, put those words to use in creating new, meaningful two-word and three-word combinations. 

Try mixing and matching words that signify the same thing to hear what you come up with. Last but not least, check online to see whether the company name you want to use has already been taken.

2. Setup your Business Bank Account 

Depending on your needs and the amount of money you want to deposit, there are different kinds of business accounts you can setup for your  hostel business including:

• Checking Accounts: The most typical form of business bank account. Opening a company checking account is simple and provides a number of advantages. Having a bank account means you may quickly and simply add or remove funds as your needs change. You may use your checking account to pay bills and vendors by writing checks.
• Savings account: With the return you may receive on your savings, it’s a terrific way to build up a rainy-day fund for your  hostel company. Savings accounts, on the other hand, may have withdrawal restrictions and provide lower interest rates than checking accounts.

Before deciding on a bank account, it’s a good idea to do a comparison of different business banks for features and fees, including FinTech banks with very competitive benefits of no monthly fees, no minimum balances and an unlimited number of transactions compared to traditional high street bank offerings. 

3. Organize Your Accounting, Taxes & Credit Card reader

Accounting & taxes.

Setting up a reliable accounting system will allow  hostel business owners to keep tabs on all kinds of financial transactions from sales (income & invoicing), purchases (expenditure), liabilities (bank loan funding) to taxes due to the IRS or similar. 

The books for your  hostel business can be organized in a few ways:

• Online accounting software , including QuickBooks and FreshBooks , are available.
• Get a professional accountant to assist you

If you choose to handle things on your own, pick a system that is intuitive and simple to use. When your accounting system is ready, you can begin recording your earnings and spending. If you want to save money, you can now see exactly where it’s being spent meaning future budgeting is simplified as a result.

 hostel business owners should be careful to maintain a consistent schedule of accounting maintenance. This calls for putting time in your calendar on a regular basis to check your books and make any necessary changes. While this may appear to be a lot of extra effort, it will ultimately save you time and energy.

Credit card readers

Hostels will of course need to take payment for the services and products they provide. Having access to a low-cost credit card machine is essential to ensure your business can take payment from your customers in a quick and easy manner. 

A card reader such as the Payanywhere Smart Terminal offers a simple pricing model, next day funds in your bank account, integrates with your Quickbooks accounting software and can also provide valuable data insights into sales trends, inventory management and customer behavior.

4. Launch your hostel website & social media

A stunning site for your fresh hostel company can be created very easily via:

• DIY building the business website yourself using a Page Builder or
• Hiring a qualified web designer to build effective landing pages that can drive new leads for your business using high-quality photos, videos, and other visual components that are in keeping with your brand’s aesthetic.

Having a slick, mobile-optimized website has numerous benefits for any business including: 

• Attracting new customers 24/7, showcasing your services and products at any time 
• Credibility , making it easier to attract and retain customers 
• Online presence for Google searches actively looking for  hostel services in your area
• Customer engagement by helping to engage with customers regarding business info, photos, videos, feedback forms as well as contact forms
• Branding A website can help businesses establish and reinforce their brand identity, by incorporating their logo, color scheme, and other branding elements into the design.

Marketing & Social Media

Social media including Instagram, TikTok, Facebook and Twitter are powerful tools for a  hostel business as they can increase your business visibility, ability to engage with customers, establish and reinforce brand identity, and gather valuable data insights to improve marketing strategies.

Platforms such as Instagram and Facebook alone have billions of active users, providing a  hostel business with an opportunity to increase its visibility and reach a wider audience.

Direct Marketing can also be used in the form of Facebook and Google online ads on these platforms to market services and products to potential customers. Hostel businesses can use targeted ads to reach specific demographics and interests and use the campaign data to make informed decisions about your next marketing campaigns to drive more leads.

5. Create a Brand Identity for your hostel business 

To differentiate your company from your competitors, you’ll need to take some time to prepare and concentrate on how you want your consumers to feel & develop a unique personality for your hostel business. From the logo’s design to the brand’s color scheme, there is a lot to think about. 

A unique and memorable logo for your business can be professionally created by a talented Graphic Designer from a Logo Design service. 

Hiring a logo design service can save a business time and money by eliminating the need to spend hours researching and creating a logo and a high-quality logo can be designed quickly and efficiently.

The steps to think about include: 

• 1). Establish the vision and values that guide your hostel company. What are you hoping to accomplish with your company? When people consider your hostel brand, what do you want them to feel? 
• 2). Go with a color palette that conveys who you are as a business. Colors say a lot regarding a product or service. If you’re stuck for inspiration, research competing products in your field to discover what colors they’re using.
• 3). Create a distinctive logo for your hostel line. This is the first thing that customers will associate with your brand, therefore it has to be striking. Get in touch with an expert designer to develop a logo that captures the essence of your company while also looking great.
• 4). Make sure your branding is the same across all platforms. This should include your website banners to your business cards, your logo and color palette are always consistent with your brand. As a result, your brand’s identity will be strengthened and your company’s name recognition will increase.

Making a name for your hostel company is unlikely to be as difficult as you would think. Creating a brand that sticks with consumers requires zeroing down on the company’s raison d’etre and core principles. A distinct identity for your hostel business may be developed with some forethought and imagination. 

6. Develop a Business Plan for your hostel

A well-developed business plan is a crucial tool for any entrepreneur looking to start a successful business. The plan should include your hostel company’s mission and vision, target audience, product offerings, marketing and sales strategies, and financial projections. The business plan should be regularly reviewed and updated to ensure that the business is on track to meet its goals.

A business strategy should cover the following:

• Market Analysis: An in-depth look at how the market for bricklayers is doing now and how it could grow.
• Business Summary: A description of your new  hostel business, including its purpose, goods or services, and target market.
• Business Strategy: A thorough plan that explains how the business is going to reach its goals.
• Financial Strategy: How much money you expect to make, spend, and need for cash.
• Marketing Plan: How the business will sell itself and what strategies and methods will be used.
• Operations: This is an account of the business’s working methods and practices.

7. Get Financing for your hostel business

For your hostel business, you can use personal savings or decide to use financing solutions for your new venture and you’ll have different options to consider which may work best: A bank loan, crowdfunding, investors or something different. 

A clear, detailed, and comprehensive business and financial strategy is usually expected by banks or other partners from whom you seek for funding. To launch a firm, you could require funding from a bank, credit union, or the Small firm Administration (SBA). 

On average, starting a hostel business can require an initial investment of anywhere between $50,000 to $500,000. The exact amount will depend on several factors, such as the location of the hostel, the size of the property, the level of renovations required, and the amenities provided.

Typically, the largest expense for a hostel startup is the property itself, including the purchase or lease of the building and any necessary renovations. Other expenses may include furniture, bedding, linens, kitchen equipment, and staff salaries. Additionally, there may be costs associated with obtaining licenses and permits, marketing the hostel, and setting up a reservation and payment system.

It is important for anyone considering starting a hostel business to conduct thorough market research and create a comprehensive business plan that includes projected revenue and expenses. This will help determine the amount of initial investment required and ensure the business is financially viable in the long term.

8. Business setup essentials

There are a number of different considerations which  hostel businesses should keep in mind when setting up including: 

Property and Facilities

When it comes to the essential aspects of property and facilities for a hostel business, it is crucial to locate a suitable property in a desirable traveler-friendly area. The location plays a vital role in the success of a hostel, and it should be easily accessible, appealing to tourists, and have a reasonable cost of living.

Furthermore, the property should be spacious enough to accommodate the desired number of guests while providing ample space and privacy.

Once a property is secured, necessary renovations and furnishing should be carried out to create a comfortable and inviting atmosphere for guests. This may involve incorporating private rooms, dormitory-style bunk beds, communal areas like lounges and kitchens, as well as amenities like laundry facilities and storage lockers.

Meeting safety and health standards, including fire safety regulations, and ensuring the availability of essential utilities such as plumbing, electricity, and Wi-Fi are important considerations for the property.

In addition to physical enhancements, the property can be decorated to establish a unique and appealing atmosphere that resonates with travelers. This may involve selecting appropriate colors, furniture, and decor that reflect the local culture or create a specific theme.

The staffing requirements for a hostel business are significant to ensure guests receive exceptional customer service and have a positive experience throughout their stay. This involves recruiting and training competent and personable staff members to manage the hostel and provide excellent customer service.

During the recruitment process, it is important to identify individuals with strong communication and interpersonal skills as they will regularly interact with guests. Staff members should also possess a good understanding of the local area and be able to offer recommendations for nearby restaurants, attractions, and activities.

Once staff members are hired, comprehensive training should be provided to ensure they understand their roles, responsibilities, and are prepared to handle various situations that may arise. This training may encompass customer service, reservation and payment handling, housekeeping and maintenance management, as well as emergency response procedures.

Establishing clear job descriptions, defining responsibilities, and determining compensation for each staff member is crucial to ensure everyone is aligned and understands their role in the hostel’s operations. Implementing a system to manage staff schedules, time off, and payroll is also essential for smooth operations and fair compensation.

Marketing and Bookings

Effective marketing and efficient booking systems are critical for the success of a hostel business. Collaborating with online booking platforms is imperative to simplify the reservation and payment process for guests. By partnering with these platforms, hostels can reach a broader audience and enhance the convenience of booking.

These platforms also contribute to increased visibility, resulting in more bookings and higher occupancy rates. To manage reservations, room assignments, and payments effectively, hostels should implement a reliable and efficient system.

This can include a booking software that enables guests to book and pay for their stay online, as well as a property management system that assists staff in handling reservations, assigning rooms, and processing payments. Integration of this system with the hostel’s website and other online booking platforms ensures consistency and reduces the risk of overbooking.

Developing a pricing strategy that reflects market demand, covers costs, and remains competitive is crucial for the success of a hostel business. Conducting market research to understand competitors’ pricing strategies and identifying optimal pricing for the target audience is essential. It is also important to factor in operational expenses such as rent, utilities, and staffing to ensure long-term sustainability.

Hostels should prioritize a seamless booking process for guests while implementing efficient systems for managing reservations and payments. Additionally, a competitive pricing strategy is vital to attract guests while maintaining profitability.

Insurance is a vital component of any hostel business as it provides financial protection against potential risks and liabilities. Hostels face various risks, including property damage, theft, guest injuries, and legal disputes. Without adequate insurance coverage, these risks can result in significant financial losses and damage the hostel’s reputation.

To ensure sufficient coverage, hostel owners should consider obtaining insurance policies tailored to their specific needs. This may include property insurance, which safeguards against damage to the physical property of the hostel, as well as liability insurance, which protects against legal claims arising from injuries or damages caused by the hostel or its staff.

In addition to standard insurance policies, hostel owners should also explore specialized coverage options for specific risks. For instance, cyber liability insurance can provide protection against data breaches or technology-related incidents. It’s crucial to review and update insurance policies regularly to ensure they adequately cover the current size and scope of the business.

By obtaining appropriate insurance coverage, hostel owners can mitigate potential financial risks and safeguard their business from unforeseen circumstances and it not only offers peace of mind but also demonstrates a commitment to guest safety and satisfaction.

Training needed to open a hostel business?

Opening a hostel business necessitates thorough planning, meticulous preparation, and a considerable investment. A crucial element of this process involves acquiring the required knowledge and skills to effectively manage the business.

The specific training needed to establish a hostel business can vary depending on an individual’s background, prior experience, and the regulations specific to their local jurisdiction.

Aspiring hostel owners may find it beneficial to seek training in key areas such as business management, marketing, customer service, hospitality management, and bookkeeping. Depending on the scale and complexity of the hostel, additional training in areas like food service, housekeeping, and maintenance might also be necessary.

Aside from formal training programs, there are numerous resources available to individuals looking to establish a hostel business. These resources encompass online courses, informative books and guides, participation in industry associations and trade shows, as well as networking opportunities with fellow hostel owners and professionals in the field.

Regulations for opening a hostel business?

When establishing a hostel business, it is crucial to adhere to various regulations that may vary depending on the business’s location. Aspiring hostel owners must familiarize themselves with these regulations to ensure full compliance and avoid potential legal and financial consequences.

Common regulations pertaining to the opening of a hostel business include zoning and land use regulations, building and fire codes, health and safety guidelines, business licensing and registration prerequisites, as well as tax obligations. Hostel owners should also be mindful of any specific regulations specific to the operation of hostels, such as occupancy limitations, noise restrictions, and other measures aimed at ensuring guest safety and well-being.

To guarantee compliance with these regulations, hostel owners should undertake comprehensive research into the relevant laws and regulations applicable to their particular location and business type. It is also advisable to establish close cooperation with local authorities and agencies to acquire the necessary permits and approvals, including building permits and business licenses.

How much does it cost to open a hostel?

On average, the initial investment required for opening a hostel ranges from $50,000 to $500,000 or even higher. The expenses associated with starting a hostel can differ significantly based on the chosen location, the size of the establishment, and the range of amenities provided.

How do you run a successful hostel?

To ensure the smooth operation of a thriving hostel, it is crucial to prioritize delivering an exceptional guest experience, upholding cleanliness and comfort, offering competitive pricing, implementing effective marketing strategies, and adhering to relevant regulations and industry norms.

How profitable is owning a hostel?

Some well-managed hostels may achieve profit margins in the range of 10% to 20%, while others may experience higher or lower margins depending on their setup.

Editorial Manager

Tom is the founder of Gottagrow.io. He reads the offers, deciphers the details including features, pricing, included services and more to find you the best products and services.

You might also like

Start your flooring business 101

How to start a crystal business

Starting up a crochet business how-to

Legal & company formations

Business banks

Accounting software

Rocket Lawyer

ZenBusiness

Northwest Registered Agent

We try to provide transparent information on the different products & services for entrepreneurs, the self-employed, freelancers and professionals.

We monitor multiple business sectors & issue opinions on various products and services that we view are worthwhile for any business to thrive and grow.

Our articles are written independently and the opinions expressed are our own. They are in no way reviewed by the various brands before we publish them.

How to Start a Hostel Business: A Step-by-Step Guide

By henry sheykin, resources on hostel.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan

Introduction

Setting up a hostel business is more than just setting up a room. It's a profitable venture that can have a great return on investment. According to the Hostel Business Network, the global hostel industry is growing at an impressive rate and has already reached a whopping $25.2 billion worth of annual revenues in 2019. Upcoming trends such as tourism and eco-friendly practices, combined with innovative and creative services, are all driving this growth.

But how does one go about the starting a hostel business? There are several steps one must undertake in order to successfully open a hostel business, ranging from conducting research and obtaining the necessary finance to finding and hiring employees and introducing loyalty and sales. In this blog post, we provide a 12-step checklist to help you get started.

Conduct A Thorough Research For The Market And Obtain Necessary Competitive Intelligence

Before you start a hostel business, it is essential to conduct a thorough market research and obtain competitive intelligence. This type of research helps you to develop an understanding of the hostel industry and the competitive landscape. By understanding the competitive landscape, you can identify gaps in the market and develop a competitive advantage.

To conduct a market analysis, it is essential to gather information about the hostel industry and the competitive landscape. Here are a few tips and tricks to help you get started:

• Gather information about the size of the hostel industry, its growth, demand, trends, and market segments.
• Identify the key players in the market and analyze their pricing, services, and strategies.
• Understand the customer needs and preferences in the hostel industry.
• Analyze the potential competitors in the hostel industry.
• Evaluate the potential opportunities and threats in the hostel industry.

By conducting a thorough research for the market and obtaining necessary competitive intelligence, you can get a better understanding of the hostel industry and the competitive landscape. This helps you to develop a business plan and pricing strategy, and find the right location for your hostel.

$169.00 $99.00 Get Template

Develop A Business Plan And Financial Model

A business plan is a road map that outlines your vision, objectives, strategies and tactics. It is the foundation upon which you will build your hostel business and it helps you to stay organized and focused. A financial model is also essential to forecast your startup costs, cash flow, and profitability. Here are some tips to help you develop a business plan and financial model for your hostel business:

• Research: Before you start writing your business plan, research the current hostel market, competitors’ offerings, and the best practices for starting a hostel business.
• Outline: Outline your vision, objectives, strategies and tactics. Also, include a market analysis, description of your target customers, description of your hostel’s amenities and services, pricing strategy, and a financial model.
• Writing: Once you have outlined your plan, start writing it. Keep in mind that the style, structure, and content of the plan should be tailored to your specific audience.
• Financial Model: A financial model should include your estimated costs, cash flow, and profitability. Make sure to include assumptions, such as occupancy rates and pricing, to ensure that your model is accurate and reliable.
• Consulting: It is always a good idea to consult a professional, such as a business consultant or an accountant , to ensure that your plan and financial model are accurate and complete.

Source The Funding For The Startup Hostel

When starting a Hostel business, sourcing the necessary funds is one of the biggest and most important challenges. Here are some tips and tricks to help you find the right funding sources :

• Research all the available funding sources and understand the eligibility criteria, such as whether the funding source requires a business plan or a certain credit score.
• Explore the possibility of getting a bank loan or a line of credit from a financial institution.
• Look into government grants and programs, as well as private grants and programs.
• Consider crowdfunding, such as through a Kickstarter campaign.
• Look into angel investors and venture capitalists.
• Start a dialogue with potential investors and create a convincing investment presentation.
• Network and attend events related to the startup and funding space.

Sourcing the right funding for your Hostel business is a critical step and requires a lot of research and effort. With the right approach and strategy, you can find the right funding sources to get your Hostel business off the ground.

Select The Exact Location For The Hostel

When selecting the location for your hostel, be sure to take into account the factors listed below:

• Accessibility: The location should be accessible by public transport and be easy to find. Parking should also be available for those travelling by car.
• Safety: The area should be safe and secure. Check the crime rate of the area and make sure it is not prone to criminal activities.
• Competition: It is also important to research the competition in the area. Make sure that your hostel stands out from the other hostels in the area.
• Cost: Consider the cost of renting the premises. Make sure that it fits into your budget and does not eat into your profits.

Once you have identified the perfect location for your hostel, you can start the process of renting the premises and getting the necessary permits and licenses.

Determine The Concept And Design The Interior Of The Hostel

Designing the interior of a hostel is a crucial part of setting up the business. It is important to determine the concept of the hostel and the target demographic. This will help to guide the design decisions. Here are some tips and tricks to consider when designing the interior of your hostel:

• Research the local area and the target demographic to ensure that the design meets their needs.
• Consider the size and layout of each room in the hostel and how to optimise this space to create a comfortable environment
• Look into budget friendly furniture, décor, and other design elements that fit the concept of the hostel.
• Ensure that the design is aesthetically pleasing and that the colour scheme is inviting and inviting.
• Include amenities in the design, such as storage spaces, laundry facilities, and common areas for the guests.
• Make sure that the design is comfortable and practical for the staff as well.
• Ensure that all areas of the hostel are well-lit and properly ventilated.
• Choose materials and furnishings that are durable and easy to maintain.
• Include artwork, books, and other objects that will enhance the atmosphere of the hostel.
• Ensure that the design is in line with the local building and safety codes and regulations.

Designing the interior of a hostel is an important step in setting up the business. It requires careful consideration of the concept, target demographic, size and layout, budget, and other factors. By following these tips and tricks, you can ensure that the interior of your hostel is designed to create a comfortable and inviting atmosphere for your guests.

Get All The Necessary Permits Tariffs And Licenses

When starting a hostel business, it is important to ensure that you have all the necessary permits , tariffs, and licenses in place. To do this, you must understand the local regulations and laws that apply to businesses in your area. Depending on the location, there may be a wide variety of permits, tariffs, and licenses you will need.

Here are some tips and tricks to help you get all the necessary permits, tariffs, and licenses for your hostel business:

• Research the regulations and laws of your area and determine which permits, tariffs, and licenses you will need.
• Check if there is an online permit system in place, which may make the process of getting all the necessary permits easier.
• Contact the local government or municipality to find out what documents you need to apply for permits, tariffs, and licenses.
• Gather all the necessary documents, such as business plan, financials, articles of incorporation , and more.
• Submit your application for the required permits, tariffs, and licenses.
• Check with the local government or municipality for updates on the status of your application.
• Pay the required fees for the permits, tariffs, and licenses.
• Keep copies of all your permits, tariffs, and licenses and update them when necessary.

Getting all the necessary permits, tariffs, and licenses is an important step in launching your hostel business. It is important to understand the regulations and laws of your area and to gather all the required documents before submitting your application. Following these tips and tricks will help you get all the necessary permits, tariffs, and licenses for your hostel business.

Prepare And Assemble The Necessary Furniture And Equipment

When starting a hostel business, it is important to invest in quality furniture and equipment that will make the stay comfortable and enjoyable for guests. Here are some tips and tricks to help you prepare and assemble the necessary furniture and equipment:

• Research the type of furniture and equipment that is necessary for a successful hostel. Visit different hostels and analyze the type of furniture and equipment they have. Consider the size of the hostel, the number of guests, and the level of comfort you want to provide.
• Purchase the necessary furniture and equipment for the hostel. Invest in quality products that will last for a longer period of time. Consider the budget and look for the best deals.
• Ensure that the furniture and equipment are easy to assemble. If you do not have the necessary skills to assemble the furniture, it is recommended to hire a professional to do the job.
• Organize the furniture and equipment in a way that will make the hostel look attractive and comfortable. Place the furniture in strategic locations to maximize the space and provide comfort for the guests.
• Make sure that the furniture and equipment are regularly maintained and replaced when necessary. Regular maintenance will ensure that the furniture is in good condition and will last for a longer period of time.

Find And Hire The Employees

Finding and hiring the right employees for your hostel business is a crucial step that should not be taken lightly. With the help of the right staff, your hostel can provide a comfortable and enjoyable experience for your guests. Here are some tips and tricks for finding and hiring the perfect employees for your hostel:

• Post job openings on job boards and social media. Job boards and social media sites are great places to find potential employees who are looking for work. Posting job openings on these sites will allow you to reach a wide range of applicants and make it easier to find the right people for the job.
• Interview multiple candidates. Once you have a shortlist of potential employees, it is important to conduct interviews with each of them. During the interview, ask questions that are related to the job and evaluate their skills and experience. This will help you determine the best candidate for the job.
• Provide clear job descriptions. Before you start the hiring process, make sure to provide clear job descriptions for all the positions you are looking to fill. This will help potential employees understand exactly what they are expected to do and ensure that they are qualified for the job.
• Offer competitive salaries and benefits packages. To attract the best employees, it is important to offer competitive salaries and benefits packages. This will help you attract the right people and make sure that they are happy and motivated to work.

Invest In Advertisement Campaign

Advertising is a powerful tool to get the word out about your hostel business and help you attract more customers. Whether you’re just starting out or want to expand, you need to implement an effective advertisement campaign.

Here are some tips and tricks to consider when investing in an advertising campaign for your hostel business:

• Define your target audience. It’s important to understand who your potential customers are and what their preferences are. This will help you create an effective ad campaign that will target the right people.
• Choose the right advertising platform. Depending on your target audience, you should select the advertising platform that is the most effective for reaching them. Some platforms that are suitable for hostel businesses include Google Ads, Facebook Ads, and travel-related websites.
• Create an effective ad copy. The ad copy should be clear, concise, and catchy. Make sure to include information about the unique services and amenities that your hostel business offers.
• Set a budget. Determine what you can afford and allocate a portion of it to your advertising campaign. This will help you keep track of your expenses and ensure that you don’t go over budget.
• Analyze the results. Make sure to track the performance of your ads and analyze the results. This will help you adjust your strategy and optimize your campaign for better results.

Develop A Pricing Strategy

When opening a hostel, it is important to consider the pricing strategy carefully. Without a pricing strategy in place, it can be difficult to maximize profits and attract new customers. Here are some tips and tricks to help you develop a successful pricing strategy for your hostel business:

• Conduct market research to understand the pricing of similar hostels in the area. This will help you determine the ideal pricing level.
• Calculate the cost of running your hostel. Consider not only the cost of rent, but also the cost of staff, utilities, and other overhead expenses. This will help you determine the base price for your hostels.
• Set different prices for different types of rooms. Consider offering discounts for long-term stays or for specific customer segments.
• Introduce loyalty programs to reward your repeat guests. This will help you attract more loyal customers.
• Set seasonal prices to take advantage of the peak tourism season. You can also offer discounts during the off-season to attract more customers.
• Monitor your competitors’ pricing and adjust your prices accordingly. This will help you stay competitive.
• Keep in mind that pricing your hostel too low can damage your brand and drive away potential customers. On the other hand, pricing it too high could also discourage potential customers.

Monitor The Hostel Operations And Ensure High Quality Of Services

One of the most important aspects to ensure success of a hostel business is to monitor operations and ensure high quality of services. Below are some tips and tricks to help you with this task:

• Develop a clear set of operational guidelines and ensure that all the staff members are aware of them.
• Set a system to monitor customer feedback and use it to make improvements in services if necessary.
• Ensure that the staff members are well-trained and motivated to provide excellent customer service.
• Keep track of the quality of services and make sure that they meet the standards.
• Inspect the hostel regularly and look for any areas that need improvement.
• Analyze the customer feedback and use it to improve the services.
• Introduce new policies to ensure that the quality of services is maintained.
• Make sure that the hostel is clean and tidy at all times.
• Develop a system to resolve customer complaints quickly and efficiently.

Introduce Sales And Loyalty To Attract Loyal And New Customers

Sales and loyalty programs are a great way to attract new and loyal customers to your hostel. They can help you increase customer loyalty, build customer relationships and increase customer retention. Here are some tips and tricks to help you get started with your sales and loyalty programs:

• Develop loyalty programs: Develop loyalty programs that give customers rewards for their loyalty. Consider offering discounts, free nights, free upgrades or other incentives for customers that stay with your hostel for a certain number of nights or for a certain amount of time. You can also offer rewards for customers that refer others to your hostel.
• Develop a rewards system: Develop a rewards system that allows customers to earn points for every stay, which can be used for discounts or free nights. You can also offer rewards for customers who refer others to your hostel.
• Create promotional offers: Create promotional offers that give customers an incentive to book at your hostel. Consider offering discounted rates, special packages, or other offers to encourage customers to book at your hostel. You can also offer discounts or other incentives for customers that refer others to your hostel.
• Develop a customer loyalty program: Develop a customer loyalty program that rewards customers for their loyalty. Consider offering discounts, free upgrades, or other incentives for customers that stay with your hostel for a certain number of nights or for a certain amount of time.
• Connect with customers online: Connect with customers online through social media. Use social media to share special offers, promotions, and rewards. You can also use social media to stay in touch with customers and build relationships.
• Partner with other businesses: Partner with other businesses in your area to offer discounts and incentives to customers. This can help you reach new customers and increase sales.

By implementing these tips and tricks, you can effectively introduce sales and loyalty programs to attract both loyal and new customers to your hostel.

Starting a hostel business may seem like a daunting task, but with the right direction it can be an exciting and rewarding venture. Following the 12-step checklist outlined in this blog post will help ensure you have all the necessary steps covered and can set up your business for success.

With the right strategy, location, and dedication, you can ensure your hostel business stands out from the competition and delivers the best possible services to its customers.

Related Blogs

• KPI Metrics
• Running Expenses
• Startup Costs
• Pitch Deck Example
• Increasing Profitability
• Sales Strategy
• Rising Capital
• Valuing a Business
• Writing Business Plan
• Buy a Business
• How Much Makes
• Sell a Business
• Business Idea
• How To Avoid Mistakes

Leave a comment

Your email address will not be published. Required fields are marked *

Please note, comments must be approved before they are published

Private Hostel Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Real Estate Sector

Do you want to start a private hostel and need to write a plan? If YES, here is a sample private hostel business plan template & FREE feasibility report.

If you are an investor or an aspiring entrepreneur with a real estate background and you are looking towards owning an investment portfolio in the real estate industry, we will recommend that you consider investing in building private hostels in strategic locations.

If you decide to build a private hostel in a college or a tourist community, you are sure of making huge returns from your investment. This is because there are loads of college students, campers and travelers who usually prefer lodging in hostel facilities as against hotels because of the affordability.

If you want to partake in this thriving industry, then you need to obtain all the necessary licenses and permits. The truth is that the market is still pretty much open for new investors to come in.

Although there are competitions at various levels in the industry, but if you are able to come up with a good business strategy, then you are sure of getting your own fair share of the market in the industry. Below is a sample private hostel company business plan template that will help you write yours with little or no stress.

A Sample Private Hostel Business Plan Template

1. industry overview.

A hostel whether private or public owned is a type of low-cost, short-term shared sociable lodging where guests can rent a bed, usually a bunk bed in a hall of residence, with shared facilities such as lounge, laundry and sometimes a kitchen.

Rooms in hostels can be mixed or single-sex and they have private or shared bathrooms. Private rooms may also be available, but the property must offer dormitories to be considered a hostel. Aside from campus and campground, hostels are popular forms of lodging for travelers, cycle tourists, and gap year travelers.

They are part of the sharing economy. Usually people prefer lodging or living in hostels because it is cheap especially compared to hotels and of course because of the opportunities to meet people from all over the world, find travel partners, and share travel ideas.

Interestingly, loads of hostels in the united states are locally owned and operated, and are often cheaper for both the operator and occupants than hotels. Hostels may offer long-term lodging to guests for free or at a discount in exchange for work as a receptionist or in housekeeping.

Statistics shows that there are approximately 10,000 hostels in Europe and approximately 300 hostels in the United States. The typical guest is between 16 and 34 years old.

Apart from shared kitchen facilities, some hostels have a restaurant and/or bar. Washing machines and clothes dryers are often provided for an additional fee. Hostels sometimes have entryways for storing gear. Most hostels offer lockers for safely storing valuables.

Some offer yoga studios, cinemas, rooftop clubs, and surf camps. Some bare-bones hostels do not provide linens. Some hostels may have a curfew and daytime lockouts, and some, albeit few, require occupants to do chores apart from washing and drying up after food preparation.

Private hostel business is part of the real estate industry and the Bureau of Labor Statistics (United States of America) projects 11.1 percent job growth for the real estate industry between 2012 and 2022, which is about as fast as average.

During that time, an additional 38,000 jobs will open up in the industry. Hence any private hostel construction company that is well equipped and positioned will sure rake in huge revenues from this industry within this period and of course the future is bright.

Some of the factors that encourage entrepreneurs to start their own private hostel business could be that the business is highly thriving and profitable business and an aspiring entrepreneur can successfully launch the business if they have a pool of cash.

Lastly, if you are going into the construction and management of private hostels, it is very important to be creative and to be able to use your ideas to meet the rapidly changing needs of the society when it comes to low-cost, short-term shared sociable lodging facilities.

2. Executive Summary

Golden Generation© Private Hostels, Inc. is a real estate development company that will major in the construction of private hostels for the college students, campers and travelers in and around Ohio State University, Columbus which happens to be the largest university in the US in terms of student enrollment.

Golden Generation© Private Hostels, Inc. is going to be a self-administered and a self-managed real estate investment trust (REIT).

We will engage in the construction of private hostels that will meet the needs of a wide range of clients. We will work towards becoming one of the largest private hostel construction companies in the United States of America with active presence in major cities.

As part of our plans to make our customers our number one priority and to become one of the leading private hostel construction companies in the United States of America, we have perfected plans to adopt international best practices. Golden Generation© Private Hostels, Inc. have overtime perfected plans that will help us to become a specialist in our area of business.

Golden Generation© Private Hostels, Inc. 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.

Golden Generation© Private Hostels, Inc. is owned by Eric Moore. Mr. Moore has a Degree in Civil Engineering. He is a property guru that has worked with top Real Estate Companies in the United States of America for many years prior to starting his own business.

Other investors with same investment ideology whose name cannot be mentioned here for obvious reasons are going to be part of the business.

3. Our Products and Services

Golden Generation© Private Hostels, Inc. is going to build different types of private hostels in and around campus communities in the United States. Our intention of starting our private hostel construction company is to favorably compete with leading players in the industry.

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

• Construction of private hostel for a wide range of clients
• Renting, selling and leasing private hostels
• Real estate consultancy and advisory services

4. Our Mission and Vision Statement

• Our vision is to become the ideal picture of private hostels in and around Columbus – Ohio and of course the United States.
• Our mission of starting a private hostel construction business is to make available highly conducive low-cost, short-term shared sociable lodging facilities for college students, campers and travelers, and to become a national and international brand by building private hostels all across key cities in the United States

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 all our employees and also, 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 private hostel construction 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 stakeholders.

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.

Golden Generation© Private Hostels, Inc. is fully aware of the modus operandi in the real estate industry, hence adequate provision and competitive packages have been prepared for independent real estate brokers. Our marketing department will be responsible for managing this aspect of our business structure. Below is the business structure we will build Golden Generation© Private Hostels, Inc. on;

• Chief Executive Officer

Facility Manager

Real Estate Agents

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
• Creating, communicating, and implementing the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Responsible for signing checks and documents on behalf of the company
• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Evaluates the success of the organization
• Reports to the board
• Supervising multi-disciplinary teams of staff including cleaning, maintenance, grounds and security
• Ensuring that basic facilities, such as water and heating, are well-maintained
• Managing budgets and ensuring cost-effectiveness
• Allocating and managing space between buildings
• Ensuring that facilities meet government regulations and environmental, health and security standards
• Advising businesses on increasing energy efficiency and cost-effectiveness
• Overseeing building projects, renovations or refurbishments
• Helping businesses to relocate to new offices and to make decisions about leasing
• In charge of leasing and renting out hostel rooms under our ‘to let list’
• Responsible for handling, reporting on and evaluating the component systems of a building (electrical, fire, roofing and plumbing)
• Keeps daily logs, including photographs taken during inspection
• Document all customer contact and information
• Represent the company in strategic meetings
• Help 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
• Responsible for administering payrolls
• Ensuring compliance with taxation legislation
• Handles all financial transactions for the company
• Serves as internal auditor for the company

6. SWOT Analysis

The fact that private hostel construction business is very rewarding does not mean that there are no challenges in the industry. Starting a private hostel construction business in the United States of America comes with its own fair share of challenges, you would have to abide by the law and also compete with loads of other investors in the real estate business.

In order to compete favorably in the real estate industry as a private hostel construction company we have been able to hire the services of tested and trusted business and HR consultant to help us conduct critical SWOT analysis for us.

We intend maximizing our strengths, explore all opportunities we will come across, properly manage our weakness and confront our threats. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Golden Generation© Private Hostels, Inc.;

Some of the strength that we will be bringing to the table in the real estate industry is our robust relations with property investment moguls in the United States of America. Our access to pool of college students, campers and travelers most especially bikers and cyclists who are willing to stay longer in private hostel facilities and also, we have a team of experts who have cut their teeth in the real estate industry.

Our commission structure and relationship with freelance real estate agents in Columbus – Ohio and other state in the US will also count towards our advantage.

As a newbie in the private hostel business, we might have some challenges competing with big time realtors and other private hostel construction 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 private hostel construction company is massive considering the number of families that would want to own their own private hostel. 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 private hostel construction company are unfavorable government 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.

7. MARKET ANALYSIS

• Market Trends

Lodging for people who are out of station is a response to an extremely complex set of economic, social, and psychological impulses.

For example, some college students, campers and travelers most especially bikers and cyclists may choose to spend more on housing because they feel they can afford to, while others may not have a choice but to stick to low – cost private hostel as against expensive hotels.

Market forces, policy decisions, and demographic changes have converged, making it more difficult to increase private hostel for renters. In essence, most private hostel construction companies are targeting college students, campers and travelers most especially bikers and cyclists who are likely going to need such properties.

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

The trend in this industry if you intend being ahead of your competitors is to have a restaurant and/or bar within your private hostel facility.

Washing machines and clothes dryers are often provided for an additional fee. Hostels sometimes have entryways for storing gear. Most hostels offer lockers for safely storing valuables. Some offer yoga studios, cinemas, rooftop clubs, and surf camps.

8. Our Target Market

As a private hostel construction company, our target market cuts across different classes of people. We are coming into the real estate industry with a business concept that will enable us work with a wide range of clients. We have put plans in place to recruit freelance agents (brokers) nationally to represent our business interest wherever we are located in the United States of America. Below are our target markets;

• Short-gap travelers most especially bikers and cyclists et al

Our Competitive Advantage

The availability of competent and reliable real estate professionals under our payroll, our business process 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, ensure that our private hostel designs are top notch and we have all the needed facilities that will appeal to our target market.

We have standard shared kitchen facilities, a restaurant and/or bar within our private hostel facility. Washing machines and clothes dryers will be available for an additional fee. We will also be offering lockers for safely storing valuables, yoga studios, cinemas, rooftop clubs, and surf camps.

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 real estate brokers/agents on a commission level to help us market our services.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Golden Generation© Private Hostels, Inc. is established with the aim of maximizing profits in the private hostel industry. Although we are a private hostel construction company, but part of our work force are also licensed real estate agents hence we intend generating additional income from diverse means in the real estate agency.

We have successfully built a vibrant real estate network that covers the whole of the United States of America so as to help us build a profitable business. Below are the sources we intend exploring to generate income for Golden Generation© Private Hostels, Inc.;

• Construction of private hostel for a wide range of clients (college students, campers and travelers most especially bikers and cyclists)
• Renting, selling and leasing private hostel

10. Sales Forecast

It is a known fact that as long as there are college students, campers and travelers in the United States of America, there will always be need to for private hostel construction companies.

We are well positioned to take on the challenges that are synonymous to private hostel construction businesses in the United States, and we are quite optimistic that we will meet out set target of generating enough income/profits from the first month of operation and grow the business beyond Columbus – Ohio to other states in the United States of America within record time.

Below are the sales projections for Golden Generation© Private Hostels, Inc. it is based on the location of our business and the services we will be offering;

• First Fiscal Year (FY1): $1.2 million
• Second Fiscal Year (FY2): $3 million
• Third Fiscal Year (FY3): $4.6 million

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 where we have a 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 stiff competitions in the private hostel cum real estate market in the United States of America, hence we have been able to hire some of the best business developers to handle our sales and marketing department.

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 so as to be well equipped 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 the United States of America.

Our goal is to become one of the leading private hostel construction companies in the United States of America 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. Golden Generation© Private Hostels, Inc. is set to make use of the following marketing and sales strategies;

• Introduce our private hostel construction company by sending introductory letters alongside your brochure to college students, campers and short-gap travelers throughout the city where our private hostel construction company is located.
• Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get our message across
• Create a basic website for our business so as to give the business an online presence
• Directly market our services
• Join local private hostel construction business associations for industry trends and tips
• Join local chambers of commerce and industry with the aim of marketing our services
• Advertise our business in community based newspapers, local TV and radio stations
• List our business on yellow pages’ ads (local directories)
• Encourage the use of Word of mouth marketing (referrals)

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 private hostel cum real estate 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 our private hostel construction business;

• Place adverts on both print and electronic media platforms targeted towards college students and short – gap travelers
• Sponsor relevant TV shows so as to be able to communicate our brand and what we do
• 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 hostels for rent.
• Install our Billboards in strategic campus locations in and around Columbus – Ohio
• Distribute our fliers and handbills in targeted campus and tourist areas from time to time
• Attend landlord and residents 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 well branded with our company’s logo et al.

12. Our Pricing Strategy

Part of our business strategy is to ensure that we work with the budget of our clients to help them meet their expectations.

Since we are not directly in control of the pricing system in the real estate industry, we can only abide by what is obtainable in the industry. But one thing is certain, our private hostel facilities will always be safe and preferred by lodgers.

• Payment Options

At Golden Generation© Private Hostels, Inc. 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.

Here are the payment options that Golden Generation© Private Hostels, Inc. 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 same platforms.

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 and highly competitive private hostel construction company in Columbus – Ohio and here are the key areas where we will spend our startup capital;

• The total fee for incorporating the business in The United States of America – $750.
• The budget for permits and license – $2,000
• The cost for hiring business consultant – $2,500.
• The cost for computer software apps (Accounting Software, Payroll Software, CRM Software, real estate software, and QuickBooks Pro et al) – $7,000
• The budget for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $5,400.
• The cost for the construction of the first hostel facility in Columbus – Ohio – $1.5 million.
• The cost for equipping our office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $150,000
• Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
• Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
• The cost of launching our official Website – $600
• Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $5,000

Going by the report from the market research and feasibility studies conducted, we will need approximately 2.5 million dollars to successfully setup a small scale but standard private hostel construction company in the United States of America.

Generating Funds/Startup Capital for Golden Generation© Private Hostels, Inc.

Golden Generation© Private Hostels, Inc. is owned and managed by Eric Moore and other business partners. They are the 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.

• 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 (loan facility).

N.B: We have been able to generate about $1 million (Personal savings $800,000 and soft loan from family members $200,000) and we are at the final stages of obtaining a loan facility of $1.5 million 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 business structure. If all these factors are missing from a company, then it won’t be too long before the business closes shop.

One of our major goals of starting Golden Generation© Private Hostels, Inc. 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/lease our private hostel facilities a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.

Golden Generation© Private Hostels, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare 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: 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
• Construction of the first private hostel facility in Columbus – Ohio: In Progress
• Conducting Feasibility Studies: Completed
• Generating capital from the CEO / President 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 hostel furniture, office equipment, electronic appliances and kitchen and laundry equipment and gadgets: 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
• Establishing business relationship with key players in the industry (networking and membership of relevant real estate bodies): In Progress

Related Posts:

• Landscaping Business Plan [Sample Template]
• Serviced Apartment Complex Business Plan [Sample Template]
• Property Maintenance and Renovation Business Plan [Sample Template]
• Home Inspection Business Plan [Sample Template]
• Shopping Mall Business Plan [Sample Template]

• Privacy Policy

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. 

You May Also Like

No comments:, popular posts.

Hostel business plan template

Download this hostel business plan template in PDF or Word format, or tailor it to your project directly in our business plan software.

Discover our hostel business plan template

Not accustomed to writing business plans? Our hostel business template will turn a typically challenging process into a total breeze.

Modelled on a complete business plan of a hostel in Normandy, our template features both the financial forecast and the written part that presents the project, its team, the local market and the business strategy implemented by the management.

Cast your eyes on this template to achieve a better understanding of what your bank and investors would like to see, so that you can create a business plan that meets their expectations.

Template only available to paying subscribers of our online business planning software . Get a 7-day trial for free.

Edit the hostel business plan template online, or download it

Available in pdf.

Just after a little inspiration? Download the business plan template in PDF to print and have a read over it.

Download in Word format

Want to edit your plan on Word? Simply export the hostel business plan template to MS Word (.dox) format.

Tailor it to your own project

Adapt this template to your personal project by changing the written part or the financial forecast in our online business plan software .

hostel business plan template content

This template includes a complete business plan, with a financial forecast and the following sections:

• Executive summary: The executive summary gives the reader a clear and concise overview of your business idea
• Company: This section lays out the structure of your business, including its location, management team and legal form
• Products and services: Here, you'll give an overview of the services or products offered by the company
• Market analysis: The market analysis is where you’ll demonstrate that there is a strong demand for your products and services through a thorough assessment of the industry and local market (customer profile, hot trends, regulation, competition, etc.)
• Strategy: This section highlights the company's game plan when it comes to pricing, marketing and mitigating risks along the way
• Operations: This step lays out the company's operational organisation, including the recruitment plan
• Financial plan: The financial plan includes a table of sources & uses (initial funding plan), and complete financial statements (P&L, balance sheet and cash flow statements).
• Appendices: This part provides the opportunity to include multiple financial appendices generated by our software (debt maturity profile, monthly financial statements, financial analysis, etc.).

Template only available to paying subscribers of our online software. Get a 7-day trial for free

Hostel business plan template extract

Executive summary, business overview.

Liverpool Lively Hostel will be a new hostel located on Lark Lane in Liverpool.Liverpool Lively Hostel has been created with the intent of welcoming tourists and groups of friends looking for cheap accommodation in Liverpool city.

Our goal is to create a hostel with a vibrant, friendly and fun-loving vibe - we would like to welcome anyone looking to immerse themselves into Liverpool’s unique culture, whether they be a single traveller or group of friends.

Our hostel, located in a three-storey building on 1 Lark Lane, will have a total capacity of 52 beds in 5 mixed dormitories.

The neighbourhood has strong public transport links, making access to the hostel easy for guests. St Michael’s train station is 8 minutes away on foot, as well as several bus lines - with the number 82 offering a direct trip to Liverpool City Centre in just 20 minutes. Guests can also hire city bikes, with the closest station situated just 2 minutes from the hostel on foot.

Liverpool Lively Hostel is a limited company with a capital of £20,000 and will be managed by Rachel K and Katrina R. Rachel and Katrina share a passion for travel and valuable experience in the hostel industry, having both worked in similar businesses for several years.

Global market

Hostelworld estimates that the hostel industry is currently valued at $5.2 billion in bed revenue and is projected to grow 7-8 per cent year-over-year.

Using data from Hostelworld and several travel agencies across the globe, the founder of HostelHelper believed there to be approximately 15,643 hostels operating worldwide in 2019.

England is said to be the 7th highest European country with the most hostels, boasting 226 hostels.

Phocuswright has also projected that the revenue of the hostel industry will increase by 5.5% per year from now until 2025.

Local market

According to the Global Trends Report 2014, the UK hostel market was estimated to reach £216m by 2018, with a total of 653 hostel outlets by the end of the same year.

Liverpool is a vibrant city with a population of 497,784. Its history, architecture, coastline and welcoming locals make it a place well worth visiting - with VisitBritain recording that the city’s visitor economy is now worth over £4.9 billion.

In 2019, Liverpool welcomed 67.3 million visitors. The demand for use of serviced accommodation within Liverpool has increased by 6% in the last year, with 2.8 million visitors opting to check into hotels and hostels during their stay.

Liverpool hotels saw a 5% rise in weekday occupancy during 2018, bringing its average occupancy up to 81.8%. With average occupancy rates in cities outside of London remaining stagnant at around 76%, Liverpool is significantly above the national standard.

The vast majority of hostel visitors are backpackers. With millennials now accounting for 70% of all hostel travellers, the typical age range of hostel goers is from 18 to 35 years old.

Opting for experiences over luxury, Hostelworld has found that 49% of backpackers consider cheap prices to be a major factor when picking hostel beds to lay their head - especially because only 20% of future travellers will be employed, down 2% from previous years.

Only 13% of backpackers now book rooms via last-minute walk-ins, as the electronic revolution has meant they prefer to book via computer (47%) and mobile apps (55%). This means that online reviews are more important than ever before, with 28% more travellers relying on reviews when seeking out new accommodation than the generations before.

A backpackers budget varies depending on the location and time of the year. The fewer the beds in the room, the more expensive a room. Hostels in London fall around the £15,00 – £25,00 per night mark. In Europe, many travellers pay anywhere between €19 – €44 per night in peak season.

Target Market

We have decided to target two main types of customers:

• Backpackers and solo travellers: we will accommodate backpackers looking for adventure and fun by offering walking and museum tours, a Beatles tour, pub quiz, social events within our communal lounge (including movie nights), and group dinners.
• Groups of friends: groups of friends (predominantly millennials) like the idea of visiting new cities on the cheap, and therefore prefer to stay in hostels, where they can meet other young people, but also save money for eating out and checking out what the nightlife has to offer.

Competition

We have identified three main competitors near our hostel, all of which are situated close together in Liverpool city centre.

We believe our location, beside the iconic Sefton Park, not only appeals to a different type of clientele looking to explore the lesser known sights of Liverpool, but it will also enable us to avoid frontal confrontation with those players.

Financial Hihglights

The projected sales for year 1 are expected to be £214,690 and we anticipate them to grow to £222,390 in year 2 and £227,803 in year 3.

Based on the current plan the EBITDA should grow from £23,604 in year 1 (with 10.99% of margin) to £27,834 (with 12.52% of margin) in year 2 and should reach £30,559 in year 3 (with 13.41% of margin).

The improvement in EBITDA over the plan is mainly related to the improvement in the occupancy rate, resulting in better absorption of fixed costsin years 2 and 3.

The net operating cash flow is expected to remain positive throughout the plan - reaching £26,761 in year 3.

In total, our initial funding requirement amounts to £150,000. The partners will contribute to £65,000 (43% of the total), and we would like to secure a loan to cover the remaining £85,000.

Template only available to paying subscribers of our online software. Get a 7-day trial for free.

Other business plan templates and resources to discover

Bakery business plan template

Get inspiration from our bakery business plan template.

Creperie business plan template

Discover our creperie business plan template.

Campsite business plan template

Check our campsite business plan template out.

Pizzeria business plan template

Open your own pizzeria by having a look at our business plan template.

How to open a hostel

If you would like to open your own hostel, have a look at our guide.

How to do a business plan for a hostel

Follow our advice if you're interested to create a business plan for your hostel.

How to do a financial forecast for a hostel

Want to do a financial forecast for a hostel? Check out our article to find out what to do.

Guides to start a pizzeria

Not 100% sure on how to proceed? Read our guides to start your own pizzeria.

• Revenue Management Consulting
• Resort Revenue Management
• Revenue Management Outsourcing
• Revenue Manager for Hire
• Hotel Operator Company
• Boutique Hotel Management
• Resort Management
• Hotel Pre-Opening Services
• Hotel Turnaround Management
• Hotel Franchise
• Independent Hotel Chain
• Hotel Representation
• Hotel Owner Representative
• Hotel Concept Development
• Hotel Asset management
•    LinkedIn
• NL +31 205 320 433
• UK +44 203 966 5658
• BE +32 258 890 25
• ES +34 931 641 801
• FR +33 973 038 902
• US +1 202 870 5081

Hotel Business Plan

OK, so you have decided to realize your dream and open your own hotel . You have thought out an amazing concept delivering unparalleled guest service. The next step would be to write a hotel business plan. It’s like a road map to the opening. However, as a seasoned hotel management company , we have seen that this is where most entrepreneurs get stuck.

Why? Many do not have the time and don’t know what to write or how to do the financials. But until you finish your business plan, you will not be able to get the financing either. So you end up with ideas sitting in your head not realizing your dream.

Really it is not that difficult to make a good hotel business plan. It is merely a structured summary of your idea. Most people try to include everything about their hotel concept in the plan. This leads to an indigestible super novel-like bookwork, aka a mess.

The key is, knowing what to include, and what not to include in your hotel business plan. Create a clear road map for success. Excite investors rather than bore them to death like most business plans full of redundant information do. And you need to lead readers down the exact path you want.

One of the main challenges for example is that after reading the first page most businesses often don’t fully understand what the hotel is all about. For investors and lenders, it is crucial they can quickly comprehend your plan, without reading the whole document.

Hotels 101: The Basics of Business Planning

We have put together a hotel business plan template to help you on your way. Check out our approach based on 10 critical points, being:

• Executive Summary
• Company Analysis
• Industry Analysis
• Customer Analysis
• Competitive Analysis
• Strategic Plan
• Operations Plan
• Management Team
• Financial Plan
• Key Milestones

Steps of your Hotel Business Plan

Let’s dive into the step-by-step checklist of what your hotel business plan should look like.

Infographic by Xotels

1. Executive Summary

This first part should consist of two main parts, being:

• Mission Statement (Introduction): a 1 line company description only the essence of your hotel (not 2 lines or a paragraph). It explains why you are in business or which huge need you are solving, that currently is not being met. For example in the case of Qbic Hotels “Moving modular hotels into under-utilized real-estate to reduce build-out cost and time.” 
• Objectives : What do you hope to accomplish (i.e. “Reach an annual occupancy of 90%”).

 2. Company Analysis

More detailed information on the USPs (unique selling points) of your hotel concept.

3. Industry Analysis

Information on the current industry trends and the current state of the market and how this will impact your hotel. This is needed as investors want to be sure you really understand the hotel industry. This acts as the foundation on which decisions such as trends and developments to follow will be based.  

Streamline Your Hotel Operations

We guide hotels and resorts toward unparalleled success, positioning them as market leaders.

4. Customer Analysis

In-depth information on your target market, including geographic, demographic, socioeconomic, psychographic, and behavioural segmentation details. It can also help you to keep up to date with the latest hotel marketing trends to understand which are the types of guests who will be staying at your hotel. Explain which features will be meeting the needs and wants of these main segments when thinking of:

Basically, how will consumers answer this question ‘Why my hotel?’

Aim to break it up to the point value can be easily communicated (do not make it too overcomplicated). Think of the following examples:

• Psychographics: interests, lifestyles, personality, values, opinions, and attitudes
• Behavioural segmentation: purchasing behaviour, level of engagement, customer loyalty
• Demographics: gender, age, marital status and education
• Geographics: location (country, state, region, city)
• Socio-economics

Any of the above examples of hotel segmentation can, if described well, be of great value to your business plan. An example of this could be a hotel located in a beach town, where you should be able to describe how demographics and psychographics differ from summer to winter time. Especially, since this example is typically known for lower demand in winter which you could be compensating for with the right hotel marketing strategies on hand.

5. Competitive Analysis

A study of your local competition or global concept competitors, with each of their strengths, weaknesses, occupancy rates and market share ( SWOT analysis ). And don’t forget the most important part; what differentiates you from them. What makes you stand out?

Ask yourself: “can I add value to a specific area”, especially when it comes to hotel-dense areas like city centres or major destinations.

6. Strategic Plan

This exists of 3 parts:

• Marketing : How exactly will you attract customers/guests? How will you position yourself? What will your message be to the different segments of your business mix? How will your direct marketing work? What will be the plan for your hotel website, SEO, SEM and SMM? Will you do offline promotion? In short, your hotel marketing strategy should cover everything there is to know about how to market your hotel.
• Distribution : Which 3rd party channels will you use and how will you manage availability? What technology will you need?
• Revenue management : What pricing and yield techniques will you use? What will your payment and cancellation policies be? Which room types will you be selling, and how will they be individually marketed? How many revenue scenarios will I create? Where can I compensate income/demand streams when necessary?

Make sure you have the capabilities to plan out a strong marketing, distribution and revenue management strategy. 

Things get complicated rather fast, and choosing to outsource hotel and revenue management is likely to give you a strategic advantage, during the planning phase, and the execution of your business plans.

7. Operations Plan

How will you run your hotel? Think of the following elements:

• How many staff and supervisors will you need? 
• What are their job descriptions/responsibilities? 
• What background and experience should they have? 
• When should they start? 
• What are your service standards?
• Will you develop manuals?
• Which supplier will you use?
• How will you manage inventory?

8. Management Team

Include the bios of your team. Focus on what uniquely qualifies you to make your hotel such a success. Having a great team is the key to success , and stakeholders will be impressed with a thorough explanation of the added value everyone brings to the table.

9. Financial Plan

Provide the start-up costs of the hotel (capital investment), the ongoing business costs, operational expenses and revenue projections for the next five years. These figures should be always based on your Hotel Feasibility Study . The KPIs to look at include expected occupancy, ADR (Average Daily Rate) and RevPAR (Revenue per Available Room).

If you are raising money , outline how much funding will be needed and when. Explain how you will generate a return on investment for investors, or when lenders will be paid back.

10. Key Milestones

These are the most important achievements which once they have been completed, will make your hotel more likely to succeed. Think off:

• Location selection
• Permits & Licenses
• Build-out / Construction of the Hotel
• Staffing and Training
• GOP Break-even
• NOI Break-even

Each time one of the key milestones is achieved, the risk of lenders or investors decreases . And once your last key milestone is reached, the chance of success is more or less guaranteed.

11. Appendix

Provide any other relevant information here. Don’t clutter the main sections of your hotel business plan with too many details. Rather support them with attachments in this part.

Putting Your Plan into Action

Many people have great business ideas. But that really doesn’t matter. The difference between dreamers and entrepreneurs is the action mindset. Are you ready to ship your idea to the market? 

The first step is to put your ideas on paper. I hope this free sample will help you write a persuasive hotel business plan. Because no investor or lender will be interested if you cannot present a clear plan.

Follow your dreams and go for it!

Maximize Your Hotel Revenue

Uncover the hidden revenue potential of your hotel or resort.

Need help to Develop and Manage your Hotel Concept?

Our hotel consultants at XOTELS have helped hundreds of hotels to develop and optimize their businesses. 

With cost-effective implementations and best practices developed over years of experience, successful business as a boutique hotel , resort, B&B, aparthotel, hostel, or any other lodging concept for that matter, is guaranteed.

Hope this template has helped you get inspired to start your own hotel business .

Best of luck in your endeavours!

Patrick Landman

PS. Get in touch with us if you need help developing and managing your hotel concept.

Subscribe Latest Articles

Share This Story, Choose Your Platform!

About the author:.

Related Posts

What is hotel management, what does a hotel management company do, 10 smart hotel cost control ideas to save money, hotel marketing plan for 2024.

• Property Management System
• Channel Manager
• Booking Engine
• Marketplace
• Revenue Management
• Cloudbeds Payments
• Cloudbeds Amplify New!
• Whistle for Cloudbeds New!
• B&Bs and Inns
• Hotel Groups
• Vacation Rentals
• Channel Connections
• Ambassador Partner Program
• Cloudbeds Horizon
• Become a Partner
• Case Studies
• Resource Center
• Guides & Reports
• Calculators
• What to Expect
• Customer Success
• Knowledge Base
• Product Updates
• Cloudbeds University
• Government Compliance
• Company News
• Meet the Team
• Careers We're Hiring!
• Become an Ambassador
• Event Schedule
• Cloudbeds Amplify
• Whistle for Cloudbeds

From idea to execution: 10 sections to include in your hotel business plan

Stay up to date with the latest trends, insights and technology for hoteliers.

• First name *
• Last name *
• Property Name *
• Property Type * Property type* Hotel Bed and Breakfast Hostel Apartment Groups Vacation Homes Alternative Accommodations
• How many listings do you have?
• How many Addresses does your business have?
• * English Spanish Portuguese Franch Vietnamese Japanese Thai Italian

By Lana Cook

Do you love connecting with people from all over the world who share your passion for travel? Don’t want to work a typical 9-5 job and instead want to build a business where every day is different, and you own your schedule?

Starting a hotel business is a dream many entrepreneurs have, but it can be a daunting venture to start. A hotel business plan is a critical first step for business owners to turn their dreams into reality. A strategic plan allows one to study the hotel industry, identify their hotel’s unique point of view, and outline how exactly they will reach their goals.

Read on to learn more about the ten sections to include in your hotel business plan, tips for creating an effective plan, and key things you need to start your new hotel business.

Ready to get started creating your plan? Download our hotel business plan template.

What is a hotel business plan?

A hotel business plan is a detailed document that identifies your business’s goals, objectives, and strategies for success. It includes market research and a roadmap for building and operating your business.

Why do you need a hotel business plan?

Studies show that entrepreneurs who finished their business plan were twice as likely to succeed in growing their business than those with no plan. A hotel business plan:

• Helps you identify whether you have a viable business idea
• Provides a detailed roadmap on what you need to accomplish and why
• Gives potential investors insight into your business idea and confidence that you can be successful
• Keeps you on track as you start to execute the different tactics outlined in your plan
• Identifies critical milestones for you and your team to reach

Your plan does not have to be static and should change over time as your business grows and evolves. Your first draft is a starting point to help guide your strategy and instill confidence in potential investors.

10 sections to include in your hotel business plan

Whether you’re starting a small boutique hotel, a cozy B&B, or a 5-star resort, you will need to address the following sections in your hotel business plan.

1. Executive summary

An executive summary is the most essential part of your business plan. It should concisely explain the purpose of your business and why it will be a success.

Include your mission statement explaining why your hotel exists and its overall goal. For example, Capella Hotels & Resorts ’ mission is to combine tradition, discovery, individuality, and twist of the unexpected to create the perfect stay for each guest.

You should also include your vision statement that clearly describes your hotel’s purpose for being in a single sentence. For Capella Hotels, its vision is to embody excellence in the craft of hospitality.

We recommend writing your executive summary as the final stage, as it should summarize the goals and objectives laid out in your plan.

2. Company analysis

Your company analysis is where you can dive into your hotel’s competitive advantage. Ask yourself what makes your hotel unique . Why would guests want to stay with you instead of your competitors?

In this section, identify your brand’s identity and the goals and objectives you want to accomplish. Outline how many rooms and room categories your property will have. For example, will you offer a hybrid hospitality model with dorms, single rooms, and suites? Explain what ancillary revenue sources you’ll offer, like in-room food and beverage options, welcome drinks, or airport shuttles.

Use storytelling to communicate your excitement and passion and make it clear what your hotel will bring to the hospitality industry that hasn’t been done before.

3. Industry analysis

As a business owner, you must be prepared for forces outside your control. You will need to conduct a market analysis that looks at the hospitality industry to identify micro and macro trends that may impact your business. Look at:

• Economic trends
• Environmental trends
• Political trends
• Global health trends
• Technology trends

For each trend, identify how it will impact your business and ways to mitigate risk or take advantage of opportunities.

For example, digital check-in technology has increased across the hotel industry with the rise of tech-savvy guests, new innovative software providers, and labor challenges. Therefore, consider what guest experience solution you’ll include at your hotel.

In addition to trends, look at the history of the hospitality industry, its current size, and how it’s expected to grow in the short and long term. This research will impact the rest of your plan, especially your marketing and financials.

4. Customer analysis

What type of hotel guests do you want to attract? It’s impossible to please every kind of guest, which is why it’s important to identify your target market . Once you know who you want to stay at your property, you can develop amenities, services, and marketing materials to attract these guests and deliver exceptional experiences .

Ask yourself:

• What type of guests do I want? Business or leisure travelers? Retirees or Gen-Z?
• What demographics? Age, gender, marital status, etc.
• What are my target market’s interests? Water sports, hiking, relaxation, museums, etc.
• What does my target market value? Sustainability, contactless technology, personalized service, localized experiences, etc.

This section will help you formulate the guest experience to ensure that expectations meet reality .

5. Competitive analysis

The competition you face will vary depending on where your hotel is located. In this section, you should conduct in-depth competitor research to understand how your hotel will compare. Identify your five major competitors — ideally, three direct competitors you will be competing with upon opening and two aspirational competitors you can emulate as you grow your business.

Conduct a SWOT analysis based on your competitors to look at:

• Strengths . Where does your property excel in comparison to competitors? Why would travelers pick you? Price, amenities, location, technology, etc.
• Weaknesses . Where does your property fall short in comparison to competitors? Price, amenities, location, technology, etc.
• Opportunities . What industry trends can you take advantage of? What local events or partnerships can you capitalize on?
• Threats . What are the biggest threats facing your property? War, travel restrictions, recession, etc.

A thorough analysis can help solidify your competitive advantage and develop a contingency plan for how you will deal with your weaknesses and threats.

6. Marketing plan

Without demand, there is no business. A hotel marketing plan outlines the channels you’ll use to reach your target audience to drive bookings. Your marketing strategy should include three key channels:

1) Paid media . Paid advertising to promote your property and drive bookings. This includes online travel agencies (OTAs) , search engine marketing (SEM), retargeting, and metasearch advertising.

2) Owned media. The content  you create, like your hotel website , social media channels, blog posts, and SEO.

3) Earned media. User-generated content created by third parties like media coverage or online reviews.

7. Operations plan

How do you plan to run your day-to-day operations? This section of your plan will outline all of the key tasks and responsibilities of your team and what exactly your hotel will offer. Consider:

• The number of staff and supervisors required
• Job descriptions and responsibilities
• Your service standards (check out our downloadable SOPs for some inspiration)
• How you’ll manage your inventory
• What hotel technology solutions will you need? PMS, channel manager, booking engine, payment terminal, revenue management tools, guest engagement software, etc.
• What services and amenities do you want to offer? Room service, bar, restaurant, pool, spa, wellness center, etc. 

Detail your short and long-term operational plans and the stakeholders involved for each area.

8. Management team

Whether or not you’ve hired your team yet, this is one of the most important sections potential investors will look at. Make sure to outline the key personnel you will require and their roles. 

In general, these are the following roles you’ll want to outline:

• Hotel management (general manager, front office manager, housekeeping manager, maintenance manager, revenue manager)
• Hotel sales team
• Housekeeping staff
• Front office staff
• Maintenance

Depending on the size of your hotel, your team will vary. Identify the team members you need to open and your hiring plans over the next five years.

9. Strategic plan

Hoteliers must be strategic in optimizing occupancy rates across seasons to maintain revenue. As part of your strategic plan, identify how you will manage:

• Pricing – what room types will you offer, and how will the pricing vary?
• How will you maintain consistent occupancy throughout the high and low seasons? Will you adapt your pricing and marketing strategies?
• How will you conduct revenue management ? What type of rules/alerts will you use to adjust rates? Will you use technology to help with revenue management?
• What will your online reputation management strategy be? How will you collect and respond to online reviews?
• What will your distribution mix look like? How will you drive reservations across a variety of channels?

10. Financial plan

Your financial projections are the most challenging but arguably the most crucial part of your hotel business plan. In this section, you should include the following:

• Start-up costs. How much money will you need from lenders to operate your hotel? Consider business licenses, furniture, down payments, etc.
• Operating costs . How much money will you need to keep your business running? Consider staffing costs, guest acquisition costs, mortgage payments, utilities, SaaS payments, etc.
• Income statement . What will your revenue, expenses, and profit be over the first 3-5 years of business?
• Cash flow projections . How will cash flow in and out of your business? Show what capital investment you’ll need to start.
• Balance sheet . Identify your assets, liabilities, and equity.

If you’re looking for a potential investor, your financial plan will be the section they care about most. Here, you must prove how your business will provide a return on investment. Don’t forget to include an Appendix that shows more detailed reporting and financial figures.

8 tips for creating an effective plan

1. Start with the section that excites you the most! Covering all the topics outlined above can feel overwhelming, so don’t feel pressured to go in order.

2. Reach out to a business owner you admire. No matter what type of business you’re starting, getting advice from another business owner is always helpful. Reach out to a successful local business owner to see if they’d be willing to share some insights they learned along the way.

3. Be concise. While there’s a lot to cover, you must be concise in each section of your plan. Include any additional research or documentation in the appendix to keep your business plan clean.

4. Try to avoid industry jargon. Depending on what type of investor is reading your plan, they may find jargon irrelevant and distracting.

5. Ensure you have a clear competitive advantage. You should be able to state in one sentence what makes your property unique. This unique selling point (USP) will be prominent in all of your marketing materials.

6. Set SMART goals. Setting specific, measurable, achievable, relevant, and time-bound goals is important to stay organized and on track to reach milestones.

7. Don’t forget about your plan. You will have spent hours developing your plan, so make sure you use it! Reference your plan as you build and grow your business , and remember that it’s ok if things change.

8. Illustrate your passion. Communicate why you want to be a part of the hospitality industry. Passion is contagious and gives investors more confidence that you will work hard to achieve your dreams.

What do you need to start a hotel business?

Ok, so you’ve read through this article and are now wondering — what’s next? Ensure you have the following items on your radar to start your business.

• A vision. Know exactly what kind of business you want to build (a quaint bed and breakfast is very different from a large-scale resort).
• A business plan. Stay on track with a well-developed business plan.
• A location. Decide if you want to build a new property or renovate an existing hotel.
• Capital. Do you need to raise an upfront capital investment? Remember that new businesses usually aren’t profitable for the first few years and will need cash flow to pay for expenses.
• Business licenses & permits. Depending on the type of property and its services, you’ll need an occupancy permit, alcohol license, food service license, sales tax license, etc.
• Technology. Choose technology to help streamline operations and earn more revenue.
• Furniture & equipment. You must furnish your property with the proper furniture, electronics, appliances, etc.
• Staff. Take time hiring staff you can trust and who understand your hotel’s brand and vision.

Final thoughts

Your business plan provides the foundation for your new business and outlines the next steps in the journey. Ensure you fully understand the market and competitive landscape to enter the industry prepared for the future. Start slow and invest in the right people and technology to support the growth of your business.

Looking to start a hotel? Download the technology guide. Download now

About Lana Cook

Lana Cook is a Content Writer at Cloudbeds where she is able to combine her love of writing and passion for travel. She has spent the last few years writing about all things technology and the ways in which it can be used to help businesses thrive. When she’s not busy writing, you can find her checking out the latest movie or searching for a new TV show to binge.

Hotel business plan

You might also be interested in..., cloudbeds unveils inaugural state of hostels report, an introduction to hotel accounting, the beginner’s guide to hotel contactless check-in.

Distribution Strategy

Cloudbeds News

Cloudbeds Product Updates

Guest Experience

• Property Name
• Property Type Property type* Hotel Bed and Breakfast Hostel Apartment Groups Vacation Homes Alternative Accommodations
• Postal Code
• Language for your demo English Spanish Portuguese Franch Vietnamese Japanese Thai Italian
• Cloudbeds Hospitality Platform
• Cloudbeds Websites
• Ambassador Program
• Terms of Service
• Privacy Policy
• Data Security
• Cookie Policy
• Accessibility

Hotel Business Plan Template

Written by Dave Lavinsky

Hotel Business Plan

You’ve come to the right place to create your hotel business plan.

We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their hotel companies.

Sample Hotel Business Plan Template

Below is a template to help you create each of the key elements of your own hotel business plan:

Executive Summary

Business overview.

Pegasus Hotel is a startup full-service independent luxury hotel in Austin, Texas. Owned by two local businessmen, Frank Girard and Miles Butler, it will serve the new up and coming district of the outskirts of Austin and cater to the locals and travelers who crave a luxurious and relaxing atmosphere. Pegasus Hotel will be a 10-story, 360-room hotel with a five-star restaurant and bar, relaxing pool and spa, 20,00 square feet of meeting and event space, a spacious and fully-equipped fitness center, and a view of scenic Austin. Pegasus Hotel will hold weddings and events, meetings, retreats, and those looking to unwind and be pampered while staying at the hotel. The service and amenities will be first class and the concierge will treat guests with extreme care and ensure guest satisfaction is held at an exceptional standard..

Service Offering

The following are the services and amenities that Pegasus Hotel will provide:

• 354 luxury rooms, two presidential suites, and four parlor suites
• Olympic size pool with adjacent hot tubs and surrounding cabanas
• First-class full-service spa
• First-class restaurant and bar
• Spacious fitness center
• Over 20,000 square feet of attractive meeting space for events
• Concierge and butler service
• Complimentary wifi
• Valet service
• Laundry service
• Business center

Customer Focus

Pegasus Hotel will target the population of Austin, Texas, its surrounding communities, and travelers visiting Austin for work or play. Guests will be mid to high level income, enjoy traveling, enjoy visiting spas and high-end restaurants, and work in the corporate or government sector.

Management Team

Pegasus Hotel will be owned by Frank Girard and Miles Butler. They will act in an Owner capacity, and will not be involved in the day to day operations of the hotel. Frank and Miles will hire the appropriate staff to ensure Pegasus Hotel is a profitable and successful business.

Lorenzo Falucci, General Manager, has over twenty years of experience in the hotel industry. He has most recently managed another independent boutique hotel in New York and was excited to be recruited by Frank and Miles to operate the Pegasus Hotel.

Lorenzo will hire Lisa Montgomery as the Director of Sales and David Jimenez as the Assistant General Manager. Lorenzo, Lisa, and David will be the senior management team of Pegasus Hotel. They will oversee all other department managers – Maintenance, Housekeeping, Front Desk/Guest Relations, and Food and Beverage. Each department manager will oversee various employees in their respective department and role. The Pegasus Hotel will have a large and sophisticated operation as each department is integral in the success of the hotel.

Success Factors

Pegasus Hotel will be able to achieve success by offering the following competitive advantages:

• Friendly, attentive, and highly responsive staff that caters to each guest and will be able to provide the best guest experience possible.
• Luxurious amenities throughout the hotel that will make each guest feel pampered.
• Modern and contemporary designed hotel tucked against a beautiful Texas landscape perfectly suited to host any event.
• Competitive rates and frequent guest discounts.

Financial Highlights

Pegasus Hotel is seeking $10,000,000 in debt financing to begin constructing the hotel and commence operations of the business. The funding will be dedicated towards securing the land lease and the hotel build-out and design. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, furniture, fixtures, and equipment, initial inventory, and working capital. The breakout of the funding is below:

• Secure the land lot, architecture, build-out, and design: $6,000,000
• Hotel furniture, fixtures, and equipment: $2,000,000
• Initial inventory: $750,000
• Three months of overhead expenses (payroll, rent, utilities): $1,000,000
• Marketing & advertising: $150,000
• Working capital: $100,000

The following graph below outlines the pro forma financial projections for Pegasus Hotel.

Company Overview

Who is pegasus hotel.

Pegasus Hotel is a startup full-service independent luxury hotel in Austin, Texas. Owned by two local businessmen, Frank Girard and Miles Butler, it will serve the new up and coming district of the outskirts of Austin and cater to the locals and travelers who crave a luxurious and relaxing atmosphere. Pegasus Hotel will be a 10-story, 360-room hotel with a five-star restaurant and bar, relaxing pool and spa, 20,00 square feet of meeting and event space, and a view of scenic Austin. Pegasus Hotel will hold weddings and events, meetings, retreats, and those looking to unwind and be pampered while staying at the hotel. The mission statement of the hotel is to provide first class service and amenities.

The guests rooms will include luxury beds and bedding with best-in-class furniture and bathroom fixtures. Pegasus Hotel will also have a full-service spa that will be able to provide massages, facials, makeup and/or hair service, steam rooms, and a sauna. The Olympic-sized pool will have adjacent hot tubs with a swim-up bar and surrounding cabanas. Pegasus Hotel will be equipped with state-of-the-art fitness equipment in its spacious gym. The restaurant will be a high-end steakhouse that will feature entrees from a world-renowned chef and a wine list cultivated by the area’s most respected sommelier. There will also be over 20,000 square feet of meeting space that will hold weddings, bat mitzvahs, reunions, galas, and any special event.

Pegasus Hotel will be independently owned and operated and will feature its own reservation system and operational software. Each employee will be expertly trained and vetted to pass luxury industry guest service standards. Pegasus Hotel is committed to providing the best guest experience possible while maintaining a profitable hotel. Pegasus Hotel aims to be a step above the rest and be an unforgettable experience for all who step foot into the hotel.

Pegasus Hotel History

Pegasus Hotel is owned by two local businessmen, Frank Girard and Miles Butler. Frank and Miles have been friends and business associates for over thirty years. They became friends in college while attending The University of Texas at Austin. Frank is a real estate developer specializing in commercial real estate and multi-use land projects. Miles is a software engineer who has built multitudes of software programs for various companies. They have both been extremely successful in their careers and want to divest their investments in a large-scale full-service hotel in Austin, Texas.

Since incorporation, Pegasus Hotel has achieved the following milestones:

• Acquired a 40-acre lot on the outskirts of Austin, Texas.
• Registered Pegasus Hotel, LLC to do business in the State of Texas.
• Hired a consultant to conduct a feasibility study for a full-service hotel in Austin.
• Began developing reservation and operational management software for use at the hotel.
• Began the branding image, logo, website, and social media accounts for the staffing agency.
• Applied for a liquor and mixed beverage permit with the Texas Alcoholic Beverage Commission.
• Hired an architect to begin the design phase of the hotel.

Pegasus Hotel Services

The following will be the services and amenities Pegasus Hotel will provide:

Industry Analysis

The hotel industry is expected to increase to a $133 billion in the next five years. The hospitality industry will benefit from increases in travel spending, corporate profit and general consumer spending.

As consumers earn higher incomes and businesses replenish their budgets, travel spending is projected to increase over the next five years. Inbound trips by non-US residents are anticipated to rise 22% over next the five years, while domestic travel is expected to grow 9% during the same period.

The industry will see particularly strong future growth in extended-stay hotels, boutique hotels, spa and health retreats and resorts segments. As demand for these auxiliary services picks up, industry employment is anticipated to recover and increase over the next five years. Industry players are also expected to continue expanding abroad into emerging economies, such as Asia, Eastern Europe and South America. These foreign markets are expected to somewhat detract from domestic capital investment, as they offer higher growth prospects for industry operators.

Customer Analysis

Demographic profile of target market.

The precise demographics for Austin, Texas are:

Customer Segmentation

Pegasus Hotel will primarily target the following customer profiles:

• Individuals and families who have disposable income (mid to high level)
• Frequent travelers
• Individuals who dine out and visit spas frequently
• White collar workers (corporate or government office)

Competitive Analysis

Direct and indirect competitors.

Pegasus Hotel will face competition from other companies with similar business profiles. A description of our direct competitors is below.

Hotel Ella is a historic boutique hotel located in Austin, Texas. Located in downtown Austin and walking distance to the University of Texas campus, Hotel Ella is a stylish boutique hotel housed in the historic Goodall Wooten House, one of Austin’s original landmark estates. Constructed in 1900, the Greek revival-style mansion underwent an extensive renovation in 2013, and now offers the perfect balance between modernity and a rich history rooted in the fabric of the neighborhood and the university. Hotel Ella has 47 guest rooms, a cabana-lined pool, and a wrap-around veranda overlooking the front lawn. Hotel Ella features beautifully designed outdoor and indoor spaces perfectly suited for a vacation, wedding, or corporate event. The hotel also features a diverse collection of Texas Modernist works around the hotel grounds.

All guests of Hotel Ella are treated to warm southern hospitality and superior personalized service during their stay. The historic property is appointed with a variety of elegant 21st century amenities. Hotel Ella also offers the following amenities and guest services:

• Complimentary 24-hour guest services
• Complimentary high-speed wi-fi access
• Complimentary electric car charging station
• Complimentary morning newspapers available in the historic mansion
• Complimentary coffee stations from 5am – 11am
• Twice-daily housekeeping service
• Cabana-lined outdoor pool
• Fitness center
• Same-day valet laundry services
• In-room dining by Goodall’s
• Business services: photocopying, printing, postal services, and supplies

Hotel Ella also welcomes dogs of all sizes at no additional fee.

Kimber Modern

Kimber Modern is located in the hip SoCo district of Austin and is intended to draw in the independent urban traveler seeking a unique escape. It is architecturally designed with clean lines and abundant light filtered through canopies of oaks in an artfully landscaped Courtyard. The hotel also encompasses absolute comfort and attention to detail while providing technologically sophisticated rooms in their boutique guest rooms. Guests booking at Kimber Modern will receive complimentary beverages, parking, and WiFi.

Kimber Modern offers the following hotel amenities to its guests:

• Off street covered parking
• Electric car charging station
• Keyless entry
• Complimentary WiFi throughout the hotel
• Multi-level courtyard with a 25-foot glass water feature with multiple areas to lounge
• Jura self-serve coffee system featuring a variety of coffee drinks 24/7
• Beverage bar 24/7
• Gourmet teas
• Virtual concierge – computer, printer, and copier
• Meeting space available for groups
• 3pm check-in and noon check-out

Guests are also available to book the entire hotel for their group.

The Cat Noir Hotel

The Cat Noir Hotel is an award-winning 14-room boutique hotel located in the heart of Austin’s east side. The European-styled boutique hotel includes a restaurant and bar partner, Uncle Nicky’s Italian Specialties. Uncle Nicky’s offers a relaxed all-day dining experience that is themed after cafes in northern Italy. The Cat Noir Hotel opened in 2016 and has been ranked #2 by Travel + Leisure’s World’s Best Awards and Top 20 Best Hotels in Texas by Conde Nast Traveler.

The Cat Noir Hotel’s contemporary design maintains a sense of warmth and a unique aesthetic that is felt through the lobby, outdoor spaces, and each of the unique guest rooms. In addition to the design elements, The Cat Noir Hotel boasts the following features:

• Private roof deck for guests to enjoy the stunning views of downtown, the Texas Capitol, and the University of Texas
• Outdoor patio and courtyard areas on all levels
• Artwork from local artists

Each of the guest rooms include Juliet balconies with neighborhood views, fine linens, and Simmons luxury plush mattresses.

Competitive Advantage

Pegasus Hotel will be able to offer the following advantages over their local competition:

Marketing Plan

Brand & value proposition.

Pegasus Hotel will offer the unique value proposition to its target local market:

• Professional and attentive staff dedicated to ensure complete guest satisfaction.
• Various amenities throughout the hotel for any guest to enjoy.
• Modern and contemporary design with beautiful Texas views throughout the entire hotel.
• Competitive rates.

Promotions Strategy

The promotions strategy for Pegasus Hotel is as follows:

Social Media

Pegasus Hotel will invest in advertising the hotel on social media platforms Facebook, Instagram, LinkedIn, and Twitter. By using targeted social media marketing, Pegasus Hotel will be able to reach those who frequent nice restaurants and spas and travel frequently.

Website/SEO Marketing

Pegasus Hotel will invest in a strong SEO presence so that when someone enters “Austin boutique hotel” or “first class hotel near me” in their Google or Bing search bar, Pegasus Hotel is at the top of the list. Their website will feature photos of the guest rooms, meeting areas, pool, spa, fitness center, and restaurant/bar. Future guests will be able to make a reservation to book their future stay on the website and access contact information for either a Director of Sales or General Manager of the property.

Pegasus Hotel will request all requests for news stories regarding the development of the hotel, owner/developer information, opening dates, etc. By accommodating the press’ requests for stories, it will also be free advertising for the public to learn about the new up and coming luxury hotel.

Frank and Miles will invest in a billboard in downtown Austin where the mid to upper class of residents frequent. The hotel will be minimalistic but eye-catching. It will feature an attractive rendering of the hotel along with the website. Curious passersby will be directed to visit the hotel’s website for detailed information.

Third Party Booking Websites

Once the hotel is nearing 60 days towards opening, all of the third-party websites will feature Pegasus Hotel so that travelers visiting Austin will be able to see it listed as an option for Austin hotels.

Bridal Shows and Wedding Industry Events

Pegasus Hotel will have a table at all of Austin’s bridal shows and wedding industry events. It will attract those couples searching for a venue to accommodate their special day.

The pricing of Pegasus Hotel will be moderate and on par with competitors so customers feel they receive value when purchasing its guest rooms and services.

Operations Plan

The following will be the operations plan for Pegasus Hotel.

Operation Functions:

• Frank and Miles will be the owners of the hotel and hire the appropriate staff to manage the hotel. Frank will act as CFO of the hotel and Miles will be in charge of the reservation system and hotel operations software. Miles developed the software and will focus on making sure it’s always functional and efficient.
• General Manager will be hired to oversee the entire staff and hotel operations to include guest satisfaction, oversee vendor contracts, events, and making sure that each department is running effectively and efficiently.
• Assistant General Manager to assist the General Manager with overseeing the staff, with particular attention to guest satisfaction and front desk operations.
• Director of Sales will be hired to sell events, corporate accounts, and group bookings for the hotel.
• Maintenance Engineer will be hired to attend to all mechanical and plumbing issues that may arise.
• Executive Housekeeper will be hired to lead the team of housekeepers to make sure all areas of the hotel are being cleaned to Pegasus Hotel standards and that each guest is receiving all accommodations to their requested schedule.

Milestones:

Pegasus Hotel will have the following milestones completed in the next six months.

8/1/202X – Purchase land lot and break ground on new hotel business.

8/15/202X – Finalize architectural renderings and hire a General Contractor to build the hotel.

9/1/202X – Finalize contract with advertising company for them to design the branding image of the hotel, logo, website, billboard, and social media accounts.

9/15/202X – Begin social media and website advertising campaign. Billboard with a teaser of ‘Coming Soon’ will go up in downtown Austin.

10/5/202X – Hire General Manager and Director of Sales.

10/15/202X – Attend annual Wedding Industry Event with a table to begin advertising Pegasus Hotel.

11/1/202X – Pegasus Hotel will go live on third party booking websites.

11/15/202X – Remainder of staff will be hired to begin training program.

11/30/202X – Final walk-thru of newly constructed Pegasus Hotel.

12/15/202X – Begin furnishing and interior design of the hotel.

1/1/202X – Grand Opening of Pegasus Hotel.

Lorenzo will hire Lisa Montgomery as the Director of Sales and David Jimenez as the Assistant General Manager. After an exhaustive search, Lorenzo believes has found the next two senior management positions to ensure the success of the hotel. Each comes with an impressive resume of prior hotel sales and operational experience.

Lorenzo, Lisa, and David will be the senior management team of Pegasus Hotel. They will oversee all other department managers – Maintenance, Housekeeping, Front Desk/Guest Relations, and Food and Beverage. Each department manager will oversee various employees in their respective department and role. The Pegasus Hotel will have a large and sophisticated operation as each department is integral in the success of the hotel.

Lorenzo, Lisa, and David will meet with Frank and Miles monthly to update them on progress and overall operations and sales efforts of the Pegasus Hotel.

Financial Plan

Key revenue & costs.

The revenue drivers for Pegasus Hotel are the revenues it will collect when guests book a reservation at the hotel. The hotel will also collect revenues from its restaurant and bar, spa, and events it will host.

The cost drivers will be the payroll and overhead costs to staff the hotel. Other costs will involve the land lease, utilities, marketing costs, and technology fees. There will also be costs associated with the maintenance of the hotel, food and beverage inventory, spa inventory, and hotel guest room supplies.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Initial Number of Room Nights Sold per Month: 8,000
• Number of Events per Month: 30
• Land Lease per Year: $1,500,000

Financial Projections

Income statement, balance sheet, cash flow statement, hotel business plan faqs, what is a hotel business plan.

A hotel business plan is a plan to start and/or grow your hotel business. Among other things, it outlines your business concept, identifies your target customers, presents your hotel marketing plan and details your financial projections.

You can  easily complete your hotel business plan using our Hotel Business Plan Template here .

What Are the Main Types of Hotel Companies?

There are many types of hotel companies. Most hotels are affiliated with a hotel franchise company. Other hotel companies distinguish themselves by star level-  4 to 5-star hotels are on the higher end of rate and amenity offerings, whereas 2 to 3-star hotels cater more towards the everyday business travelers and families.

What Are the Main Sources of Revenue and Expenses for a Hotel Business?

The primary source of revenue for a hotel business are the room fees it charges each guest to stay at the hotel. Revenues are also collected for different amenity offerings, such as room service,  restaurant and bar revenue, spa revenues, and guest shop revenue.

The key expenses for a hotel business are the costs for inventory, maintenance, supplies, furniture, fixtures, and equipment, technology, and payroll of the staff. Other expenses will be the rent, utilities, and overhead costs, if applicable.

How Do You Secure Funding For Your Hotel?

Hotel businesses are most likely to receive funding from banks. Typically you will find a local bank and present your business plan to them. Angel investors and other types of capital-raising such as crowdfunding  are other common funding sources. This is true for a business plan for a hotel, a resort or a boutique hotel.

What are the Steps To Start a Hotel Business?

Starting a hotel business can be an exciting endeavor. Having a detailed roadmap of the steps to start a business will help you stay focused on your business goals and get started faster.

• Develop A Hotel Business Plan - The first step in starting a business is to create a comprehensive business plan that outlines all aspects of the venture. This includes market research to identify the potential market size and target audience , the hotel’s services, pricing strategies and a detailed financial forecast.  
• Choose Your Legal Structure - It's important to select an appropriate legal entity for your hotel business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your hotel business is in compliance with local laws.
• Register Your Hotel Business - Once you have chosen a legal structure, the next step is to register your hotel business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 
• Identify Financing Options - It’s likely that you’ll need some capital to start your hotel business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 
• Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 
• Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 
• Acquire Necessary Hotel Equipment & Supplies - In order to start your hotel business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 
• Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your own hotel business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective digital marketing strategy including SEO and paid advertising . You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a new hotel business:

• How to Start a Hotel Business

Where Can I Get an Example Hotel Business Plan PDF?

You can download our example hotel business plan PDF template here . This is a business plan template you can use in PDF format.

Other Helpful Business Plan Templates

Franchise Business Plan Template Resort Business Plan Template Bed and Breakfast Business Plan Template

• Share full article

For more audio journalism and storytelling, download New York Times Audio , a new iOS app available for news subscribers.

The Newest Tech Start-Up Billionaire? Donald Trump.

Trump media, which went public this week, attracted a frenzy of interest on its first day of trading..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From “The New York Times,” I’m Michael Barbaro. This is “The Daily.”

[THEME MUSIC]

Over the past few years, Donald Trump’s social media company Truth Social was dismissed as a money-losing boondoggle. Today, Matthew Goldstein on how over the past few days, it somehow became a publicly traded company worth billions of dollars.

It’s Thursday, March 28.

Matthew, thank you for coming on “The Daily”-

Thank you for having me.

— your debut.

Do you go by Matt?

I go by Matt. I go by Matt.

Matt. You’re a Matthew —

Because my mother likes me using — when I first started out, my mom says, I named you Matthew. You should use Matthew for your by-line. Because I initially did use Matt, and then she —

She caught it?

This is literally the tale of the —

Yeah, right.

The Jewish mother.

Yes, yes, the way all journalism sort of starts. Why did you go into journalism to begin with, though?

Right, you could have been a doctor. Here we are. At least use my name. OK, so, Matt, I wonder if we could start by having you tell us the current market value of this new publicly traded company, Donald Trump’s social media business.

OK, so as we sit here —

11:26 AM on Wednesday.

— on Wednesday, it’s trading right now for around $65 a share. If you work that out, it’s worth about $8 billion.

That’s huge.

That is huge. I think it’s bigger than “The New York Times,” actually.

I think “The New York Times” is like around $7 billion.

It’s bigger than a lot of companies, which is crazy when you think about it.

Yeah. And what is Donald Trump’s personal stake in that, and what is that now worth?

OK, so he owns 79 million shares. So roughly doing the math, and this changes, it somewheres around $5.6 billion. It’s been going up sometimes as high as even $6 billion.

That’s extraordinary.

That is extraordinary. Because if you believe what Forbes had said last fall, he was worth about $2.6 billion. So he’s more than doubled his net worth in basically the last few days with Trump Media.

Wow. And not a moment too soon, right? Because as we’ve talked about on the show, Trump owes about every last cent of cash he has — I think it’s an estimated $500 million or so — to various courts, and this would be very auspicious timing to suddenly have an extra $5 billion in his life.

It’s a critical lifeline for him right now. There of course, are limitations to how he can tap that money, but I think also it should not be understated, it’s a huge bragging point for him, which he likes to go out and talk about being the most successful businessman on the planet.

He can say, look, I built a company that’s worth $7 billion overnight. Where have you done that, Joe Biden?

Or where have you done that pretty much almost anyone other than a very select, rarefied group of tech startups?

Absolutely.

So tell us the story of how this company, which I think a lot of people candidly dismissed from the beginning as Trump’s little kind of renegade corner of the internet somehow became this, a real financial behemoth in a way. What is that story?

So you have to go back to January 2021. Trump is kicked off of what was then Twitter after the January 6 riots at the Capitol.

And not just Twitter, right? Facebook, Instagram.

Yeah, he was kicked off everything, but Twitter was really where he had lived, as we all knew.

Right. Tens of millions of followers.

Tens of millions. So Trump is at this low point. He’s out of the White House. He’s sort of down there at Mar-a-Lago. And all of a sudden, a blast from the past.

[MUSIC PLAYING]

He gets approached by these two guys who had been contestants on his old reality show, “The Apprentice.”

and their names are Andy Litinsky and Wes Moss.

I’m no dummy.

No, I know.

They’re not particularly notable or famous people. I don’t know if the word is “star” is on the show.

To be perfectly honest, I want to see Mr. Trump as much as possible.

Litinsky was a really young guy.

I toast to the men dominating the women.

Wes Moss came out as almost like a frat boy type of character.

Andy, you’re fired. Wes, you’re fired also.

And they weren’t particularly successful, but they go to Trump.

And what exactly is their pitch to him?

Their pitch is basically, forget about Twitter. Forget about all these other platforms. Create your own platform. Create your own social media company. It will be great. You won’t be censored. You can say whatever you want. All your followers will come here. We’ll make a lot of money. We’ll be huge.

What was Trump’s response?

Well, he’s intrigued, but he never really totally commits to anything. At that point, Trump is sort of taking a back seat on it. He’s basically agreeing to lend his name if nothing else.

They sign an agreement that they’re going to go out and pitch the deal. And “The Apprentice” guys know that they’re going to need a lot of money to get this company off the ground. But they’re not going to be able to turn to traditional Wall Street sources because Trump at this point —

Is kind of toxic.

Yeah, he’s a toxic guy. So the solution for “The Apprentice” guys to raise this money was to do something called a SPAC, which is these companies that have come into vogue during the pandemic. They’re basically shell companies that go public, raise hundreds of million from investors. And essentially their sole purpose is to go out and look for another company to buy.

It’s basically money in a bank account that’s just sitting there to be transferred over to the private company that you buy. So for the private company that ends up merging, it’s a great deal because they get tons of cash where they had nothing the day before. And the other advantage of a deal with a SPAC is that beyond the cash, the private company becomes a public company, and that gives it the ability to sell stock to investors and go out and raise more money that way.

And then through that merger, eventually the two companies coming together, the company that Trump is going to be ostensibly heading, that social media company would get everything the SPAC had raised from investors. So all that cash is going to come flooding into the company “The Apprentice” guys envision.

So if I’m understanding this plan correctly, “The Apprentice” guys envision a plan where they go off, they find a SPAC that has raised a bunch of money, and eventually it will merge with the Trump social media company they envision building. And when that marriage is consummated, their work will be over and they will hopefully have a lot of money.

Basically, that’s exactly what their goal was. Yeah. So “The Apprentice” guys are out there in the market looking for a SPAC. But given the lack of really any kind of business plan, they don’t go to the top flight guys out there. They end up at the bottom of the barrel.

And so they end up with essentially a very no name sounding SPAC called Digital World Acquisition Corporation. Digital World has its IPO in September of 2021, raises $300 million. Lo and behold, like a month after, a press release comes out late at night. Donald Trump and Trump Media are merging with Digital World Acquisition Corp

I remember people pinging me, is this a joke? Because most people I’m sure had never heard of Digital World. And even more people had no idea that Trump was even doing a social media company. Because while all this is going on and they’re trying to put a deal together, the social media platform that will become Truth Social hasn’t even launched, and it won’t do so for months later.

But there’s trouble right away. The Securities Exchange Commission comes in and announces it’s opened an investigation into how this deal came together, looking into whether Digital World violated securities laws by engaging in merger talks ahead of time, which technically isn’t kosher in the way SPACs are supposed to work. But this investigation just drags on and on and on, and it’s going to delay everything.

So this is turning out to be a pretty big mess.

Very big mess. It looks like this deal’s never going to happen. And finally, when they launch Truth Social in early 2022, it’s a little bit of a joke. It’s like this sort of very early version of Twitter when it’s sort of clunky.

How clunky? You were on it?

Yeah, I actually think I was one of the first people to get in, which I thought was sort of funny because I said I was from “The New York Times.” They actually verified me.

There was very little traffic. It was almost like you’d post something and you could literally hear the crickets.

Trump never posted for three months.

Trump never posted on Truth Social the site that exists for his —

And I remember writing a story and you couldn’t get an answer from them, why is he not posting?

Perhaps because he has his own doubts.

And also wasn’t a place — no one was there. I mean, they had a few million users. There’s a few million dollars in advertising on Truth Social, a lot of them the equivalent of almost late night TV advertising that you would see. It’s losing tons of money, which is in fairness, it’s not unusual for a startup company to lose money, but it was not clear where it was ever going to make money and where the money was going to come in.

And we’re looking at this thing, is it even going to happen? Your deal is in trouble because of regulators. And also the company is in trouble because there’s just nothing there. So everyone, I think for the most part, sort of counts this thing out. For them it was a desperate situation.

And then last summer, a bunch of things started to go right all of a sudden for Trump Media. And it really started to raise the prospects that this deal actually could happen.

We’ll be right back.

So Matt, how is it that things start to turn around for this real mess of a social media company that Donald Trump has founded?

OK, so the single biggest thing was last summer, the SEC settles its investigation with Digital World, with the SPAC that it was merging with. And that basically at that point clears the gates for them to start to really move forward with the merger.

What kind of settlement was it?

They had to pay $18 million, and they had to rewrite all their disclosures to make it consistent to reveal all the early talks they had had with Trump Media.

The other thing is Elon Musk buys Twitter, now X. And one of the first things he does is he says, Trump, you can come back. Start posting again. We want you. We love you. Everyone thinks Trump’s going to do that. But then he stays.

He continues the post on Truth Social, and it’s clear he’s sticking with his own platform. And if anything, he starts ramping up his postings on Truth Social, and they become increasingly, as we with the way Trump is, bombastic, inflammatory, attacking all the judges and all the cases going on, the prosecutors, political opponents. And he’s been doing it with increasing frequency.

And this is a key ingredient of last summer’s turnaround, because it’s clear at this point Trump is sticking with Truth Social. He’s not going anywhere. He’s leaning into it, and it’s become his platform.

But we shouldn’t lose sight that may be the most important thing is the loyalty of shareholders. And I’m not talking about big hedge funds, big institutions, wealthy people. I’m talking about ordinary Trump supporters, many of them who are posters on Truth Social and happen to be stockholders of this cash-rich SPAC that’s eventually going to merge with Trump Media. And they’re the ones who have kept this thing going to some degree.

As investors.

As investors. Because there were many points where the SPAC deal itself could have just failed. But they really want to make sure this company succeeds. It’s almost like a religious kind of thing for some of them. And I can tell you, one guy has been very vocal is actually sort of a Christian minister.

Good evening, DWAC stock.

He has his own streaming video show on Rumble, which he called DWAC Live, named after the shares.

Lord we ask in the name of Jesus, that you help the executives finish this strong and that you protect them from all the forces that would try to stop the merger and —

They talk about the stock and the merger, and it’s got his own following.

Just all show up at Mar-a-Lago, knock on the door and be like, hey, President Trump, we’d like to come party with you because we all own little bits of your company and we love you. Let’s just check on the price one more time before we head out for the night.

So in some way, Trump really owes a lot to his small shareholders who made this possible. Because if it wasn’t for them, there would be no merger.

And when they talk to you about why they have bought shares in this business, in this SPAC, even when it’s at its least successful and most imperiled, how do they talk about why it’s worth their hard earned money?

First of all, they view they’re building something. And they’ve all believed that, right or wrong, whatever you may think about it, that Truth Social is free from censorship, that it allows Trump and others to say what they want. And they really believe that as the founding principles, they’re the original owners essentially going to be of this company, and they’re helping it flourish and build.

So this has become a real personal thing for a lot of them, more so than I think I’ve ever seen with any other publicly traded company before.

So the folks who are investing in this SPAC, anticipating it will eventually get together with Truth Social, and who, as you have just said, sustained this through its darkest chapter, they aren’t really there because they see this as a highly profitable business. You just said, Matt, that it was losing money.

They’re doing it as a statement and I guess a measure of their fervor for Trump, for the movement he represents. Buying the stock is a way for them to put their money where their mouth is when it comes to MAGA.

Right, right. For them, this is about supporting Trump and supporting this company, which they view as critically important n keeping its message out there alive.

So, Matt, I think that more or less brings us to this week, when this turnaround you’re describing results in this crazy takeoff of the stock price. But just walk us through the mechanics of it.

What happened was there’s the shareholder vote. And the way it works is Digital World shareholders have to vote to approve the merger with Trump Media. It was at this point it was a foregone conclusion. But it’s a vote, so you never know what’s going to happen, though. And they get the vote on Friday. It’s overwhelming. I think it was 29 million shares voted in favor, and 200,000 voted against. I mean, you just don’t see that.

A landslide.

A landslide. Yes, like an electoral landslide. So the deal goes through. On Monday, the deal is actually closed, and we have our first day of trading on Tuesday of this week.

Ticker symbol DJT.

Donald John Donald.

Donald J Trump.

Former President Donald Trump’s newly merged social media company has begun trading, and shares are soaring.

It opens for trading at around $40 something a share.

More than 6.5 million shares in Trump Media had changed hands by 9:50 this morning.

They have to actually halt trading briefly because the volume, the level of trading is off the charts in the stock.

And currently you take a look at where shares are, they’re up about 40 percent.

At one point, it reaches $70 a share.

This is the highest profile SPAC we’ve seen in quite a while.

Really, I’d say ever, Katie. I mean —

And on the end of trading on Tuesday, it closes around $60 or so. And that’s how we get this $7, $8 billion valuation for the company and the paper gain of $5.6 billion —

But for now, quote, unquote, “DJT” is the mother of all meme stocks, with the stock up 32 percent up, as much as 58 percent today, hard to disagree.

I just want to make sure I understand why this company is now valued so highly. And I guess what I’m really getting at is, is there an actual business case for it, given what folks in your calling would describe as the fundamentals of the business? Or is this just a measure of these Trump-supporting investors’ deep affinity for him? Is this basically a bubble, or is there maybe a true financial justification that can be laid out here?

OK, so if we go pure fundamentals, it’s crazy. This company is not a $7 or $8 billion company. It had $3.3 million in revenues for the first nine months of last year. It lost about $49 million.

Yeah, that is not the makings of an $8 billion valuation company.

No, no, no. I mean, the one good thing it got going, it got $300 million in cash from this merger. Not for Trump, for the company. So that’s good. They can use that cash to go out and buy something, bring in more people, hire influencers on Truth Social.

But even then, they have 10 million downloads of Truth Social. I mean, Twitter is what, like hundreds of millions of users? I’m sorry, X has hundreds millions of users. Where’s it going to go for that kind of growth to justify that?

But this is what Wall Street is. I mean, we call them our meme stocks. They’re fantasy stocks. They take on a life of their own. We had this during the pandemic with GameStop and AMC. The shares run up to ridiculous levels, driven largely by retail investors.

And just to remind people, those were stocks where retail investors were buying shares it felt like because they wanted to send a message, largely anti-establishment message, they were mad at a hedge fund that had shorted it in one case, I remember. They wanted to make a point. They wanted to stick it to the man.

Right. And also it becomes a self-fulfilling prophecy. It becomes a mania. Then others see this and get in because you feel like if you keep buying, it’s never going to fall. It’s never going to go down. And that can work for a while, but eventually gravity will always take hold at some part.

I’m not saying that Trump Media is going to collapse. But at some point, something will happen that will trigger the stock to sell off.

Right, it’s fragile.

It’s fragile, right. It’s not sustainable at this level. But when it’s happening, it’s hard for me or anyone to give you a rational reason, and that’s why there’s this old thing, irrational exuberance. It’s not necessarily unusual. It’s just that it’s unusual because you have a very loyal investor base to him personally that is driving a lot of these surges in the stock.

I’m really curious how Trump’s position in this presidential campaign factors into what you just described. Because it feels like this irrational exuberance has to be linked somewhat to the reality that he is the now lead candidate in the polls for re-election. But I’m curious what investors think about that, how they think his chances of becoming president with the financial health and future promise of this company.

It’s definitely, I think, going to be a barometer, actually, of Trump and his political fortunes. I mean just by way of example, the SPAC stock started to soar this year when Trump was on the verge of locking up the nomination. It was around the time DeSantis dropped out in New Hampshire.

The stock surged like 60 percent, 70 percent overnight. It was really because people were like, hey, Trump is going to be the nominee, and we’re going to be going forward.

But can you just explain that? What does one have to do with the other?

In theory, it doesn’t have anything to do with it. But it’s like a proxy for him.

It’s also the idea that as long as Trump is still politically viable, Trump Media is viable. Truth Social is viable.

And presumably a president 2.0 Trump is the best possible situation for this stock price.

If he wins, I think it probably will be a high watermark for the stock. And I would just think given the dynamic with the election right now, it’s hard to see the stock not continuing to rise at least until November.

OK. I want to turn now to Trump’s access to this very valuable stock at a time when, as we all know, he seems to need money. How and when could he tap into this money?

OK. So at the moment, he actually can’t.

He can’t. There’s what’s called a lockup, a restriction. It’s not just for him. It’s for any major shareholders. They can’t sell for six months. It’s actually not unusual in these kind of circumstances.

The logic is you don’t want important people to the company, important shareholders, to bolt as soon as the deal goes through.

But there are other ways you can get around that. One way is for the board. It’s a seven member board. They’re all loyalists, for the most part. They could allow him to sell shares early. I personally think that’s unlikely because it shows a lack of faith. Just like if he had jumped from Truth Social onto Twitter, this would be the same kind of message being sent.

What they could do is allow him to pledge those shares, meaning he can go out and get a loan, use it as collateral. The shares don’t get sold, but you’re giving them to some other like a bank or probably more likely a hedge fund. So that would be a way for him to monetize his stock without actually selling it.

So if Trump really wanted to, he could find a way working through this board of loyalists to tap into this money pretty quickly if he so chose to.

If he asked the board to do it, I think there’s probably a good chance the board would do it. But if he doesn’t really need the money that desperately, I think he probably won’t. And I think the board would be reluctant because it doesn’t really help anyone to have lots of stock coming out into the market. That only will probably depress the price of the shares.

And it doesn’t help to have the face of the company, the man whose initials are on the ticker, selling the stock because that suggests he doesn’t have a tremendous amount of faith in the business. And that might trigger a sell off, which would undermine the value of the rest of his stock. It’s a pretty bad cycle to start.

It’s a bad — right, that’s like the event that starts to send the sell off. And even at that point, even your most loyal shareholders may say, well, I don’t want to be left the last one holding the bag.

Right. I want to step way back for just a minute and think about the larger meaning of what has happened with Truth Social. I mean, I’ve covered a lot of Trump’s businesses through the years, investigated them when he was a candidate in 2016. And it really strikes me that of all the businesses he’s been in, real estate, casinos, Trump University, selling Trump steaks, Trump wine, whatever, those made money.

This, in some ways, feels like the least sound business of all, and yet it has made him the richest by far. That’s a little bit weird to wrap your head around. What does that tell you about the nature of Trump and these investors who believe in this?

It is weird. I’m not a politics reporter, but from a business perspective, this has given me a little bit better insight into his seemingly unending kind of popularity and support. There’s the old adage on Wall Street, never fall in love with a stock. But the reality is a lot of his shareholders here are in love with the stock. They have fallen in love with it, and they’re in love with him to a large extent.

And when you have that sort of mix there, it allows a stock to soar to unreal levels that we’re seeing now. And who knows where it goes from here? But for the moment, it’s clearly working for Mr. Trump.

Well, Matt, thank you very much.

When the stock market closed on Wednesday afternoon, shares of Trump’s new media company reached $66 a share, up 14 percent from the previous day. As of this morning, the company is worth $9.4 billion.

Here’s what else you need to know today. Authorities said that the six missing workers who were on the Francis Scott Key Bridge when it collapsed are now presumed dead. The workers were members of a construction crew who were repairing masonry and potholes when a massive container ship plowed into the bridge on Tuesday morning.

This is no ordinary bridge. This is one of the cathedrals of American infrastructure.

Experts say that rebuilding the bridge, which carried 30,000 vehicles a day, will probably take years and cost hundreds of millions of dollars, a reality acknowledged by the Secretary of Transportation Pete Buttigieg.

So the path to normalcy will not be easy. It will not be quick. It will not be inexpensive. But we will rebuild together.

And the first ever congestion pricing system in the United States crossed a major milestone on Wednesday when New York officially approved tolls for cars driving through the busiest sections of Manhattan. The system, modeled on those in London and Singapore, is designed to significantly reduce traffic and air pollution. The tolls, $15 for most passenger cars and as much as $36 for large trucks, are expected to raise $1 billion a year for mass transportation.

The new system could still be blocked by several lawsuits seeking to derail it. But if those cases fail, the tolls will begin in mid-June.

Today’s episode was produced by Will Reid, Mary Wilson, and Asthaa Chaturvedi. It was edited by Lexie Diao, contains original music by Marion Lozano and Dan Powell, and was engineered by Alyssa Moxley.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for “The Daily.” I’m Michael Barbaro. See you tomorrow.

• April 1, 2024   •   36:14 Ronna McDaniel, TV News and the Trump Problem
• March 29, 2024   •   48:42 Hamas Took Her, and Still Has Her Husband
• March 28, 2024   •   33:40 The Newest Tech Start-Up Billionaire? Donald Trump.
• March 27, 2024   •   28:06 Democrats’ Plan to Save the Republican House Speaker
• March 26, 2024   •   29:13 The United States vs. the iPhone
• March 25, 2024   •   25:59 A Terrorist Attack in Russia
• March 24, 2024   •   21:39 The Sunday Read: ‘My Goldendoodle Spent a Week at Some Luxury Dog ‘Hotels.’ I Tagged Along.’
• March 22, 2024   •   35:30 Chuck Schumer on His Campaign to Oust Israel’s Leader
• March 21, 2024   •   27:18 The Caitlin Clark Phenomenon
• March 20, 2024   •   25:58 The Bombshell Case That Will Transform the Housing Market
• March 19, 2024   •   27:29 Trump’s Plan to Take Away Biden’s Biggest Advantage
• March 18, 2024   •   23:18 Your Car May Be Spying on You

Hosted by Michael Barbaro

Featuring Matthew Goldstein

Produced by Will Reid ,  Mary Wilson and Asthaa Chaturvedi

Edited by Lexie Diao

Original music by Marion Lozano and Dan Powell

Engineered by Alyssa Moxley

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music

Over the past few years, Donald Trump’s social media platform, Truth Social, has been dismissed as a money-losing boondoggle.

This week, that all changed. Matthew Goldstein, a New York Times business reporter, explains how its parent venture, Truth Media, became a publicly traded company worth billions of dollars.

On today’s episode

Matthew Goldstein , a New York Times business reporter.

Background reading

What to know about Trump Media’s high-flying stock debut .

Ethics experts say the publicly traded company could present a new way for foreign actors or others to influence Mr. Trump , if he is elected president.

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Matthew Goldstein covers Wall Street and white-collar crime and housing issues. More about Matthew Goldstein

Advertisement

Southwest red-eye flights still in pipeline, don't bank on overnight travel this year

Recent headlines about Southwest Airlines sent some customers searching for the possibility of overnight flights, and while the carrier has plans to work towards red-eyes, it has yet to reveal when or where those routes could be available to travelers.

The Washington Post first reported information about red-eye flights with Southwest, which is something the airline has previously stated publicly is part of its business plan, but is still a few years out.

During a recent travel conference that spurred interest in the news, Southwest Chief Commercial Officer Ryan Green said that when it does come to fruition, overnight routes will likely only account for a low number of flights in the carrier's schedule, around 50 per day.

A representative for the Dallas-based airline confirmed to ABC News that overnight flying has long been in the Southwest pipeline, but is not yet near an announcement for bookable travel.

Editor’s Picks

Southwest Airlines makes it easier to earn A-List status, plus reminder to book your holiday flights

• Oct 17, 2023

Sleep tourism on the rise: Luxury hotels tap into sleep trends to attract guests

• Mar 14, 2024

United Airlines allows MileagePlus members to pool award miles with friends, family

• Mar 22, 2024

The representative for Southwest also confirmed that Green mentioned leisure markets like Hawaii or Las Vegas as potential red-eye flight destinations with high traveler demand.

Last fall, CEO Bob Jordan stated that Southwest -- the largest low-budget carrier -- saw red-eyes as a "logical evolution" among its competitors.

The Southwest executive added that in order to launch these flights, the airline would need to work out technical and labor details.

Related Topics

Up next in travel—.

Southwest red-eye flights still in pipeline, don't bank on overnight travel this year

Legoland implements dynamic ticket pricing ahead of summer

Shop Editors Picks

Sponsored content by taboola.

Southwest red-eye flights still in pipeline, don't bank on overnight travel this year

Overnight routes will likely only account for a low number of flights each day.

Recent headlines about Southwest Airlines sent some customers searching for the possibility of overnight flights, and while the carrier has plans to work towards red-eyes, it has yet to reveal when or where those routes could be available to travelers.

The Washington Post first reported information about red-eye flights with Southwest, which is something the airline has previously stated publicly is part of its business plan, but is still a few years out.

During a recent travel conference that spurred interest in the news, Southwest Chief Commercial Officer Ryan Green said that when it does come to fruition, overnight routes will likely only account for a low number of flights in the carrier's schedule, around 50 per day.

A representative for the Dallas-based airline confirmed to ABC News that overnight flying has long been in the Southwest pipeline, but is not yet near an announcement for bookable travel.

Editor’s Picks

Southwest Airlines makes it easier to earn A-List status, plus reminder to book your holiday flights

Sleep tourism on the rise: Luxury hotels tap into sleep trends to attract guests

United Airlines allows MileagePlus members to pool award miles with friends, family

The representative for Southwest also confirmed that Green mentioned leisure markets like Hawaii or Las Vegas as potential red-eye flight destinations with high traveler demand.

Last fall, CEO Bob Jordan stated that Southwest -- the largest low-budget carrier -- saw red-eyes as a "logical evolution" among its competitors.

The Southwest executive added that in order to launch these flights, the airline would need to work out technical and labor details.

Related Topics

Top stories.

Trump secures $175 million bond in New York civil fraud case

'Godzilla x Kong: The New Empire" roars to an $80 million box office opening

• Mar 31, 2:12 PM

Bankman-Fried speaks after sentencing: 'I'm haunted, every day, by what was lost'

• Apr 1, 11:38 AM

What to know about the ‘oat-zempic’ weight loss trend

• Apr 1, 11:27 AM

Johnson calls Greene's move to oust him a 'distraction' for Republicans

• Apr 1, 1:29 PM

ABC News Live

24/7 coverage of breaking news and live events

• Find & Reserve
• Special Offers
• Meetings & Events
• Our Credit Cards
• About Marriott Bonvoy
• Careers at Marriott

Travel with confidence during Covid-19

Reservations are not yet available for Moxy Chongqing

Start Planning Your Meetings or Events Here

Tell us about your event, then we'll contact you and plan it together

Please note: all room sizes are approximate.

Room Set-up Examples

Business Services

Unlock your stay with the Marriott Bonvoy™ App

Moxy Chongqing

• How We Play

MOXY CHONGQING

168 Bayi Road, Yuzhong District,

Chongqing, Chongqing, China, 400010

Fax: +86 23-63906655

Top Destinations

Our company.

© 1996 – 2024 Marriott International, Inc. All rights reserved. Marriott Proprietary Information

Please select your preferred language

The americas, asia and oceania.

• Bahasa Indonesia

INTERNATIONAL