Still, whatever it’s, there’s no doubt that the hostel industry is nearing its peak, and you’re perfectly in the right for wanting to fund a hostel business now. But, despite the lucrativeness of the industry, lots of work is required to successfully start a hostel, especially concerning funding. The business is capital intensive, and one major way you can source funds is through loans.

However, getting a loan for your hostel requires more thought than you probably imagined. There are many important steps to consider, and you must ensure you follow them to avoid future regrets. There are many online lending companies and loan facilities, and it’s not uncommon for one to get confused while searching for the perfect one. That’s why many business owners visit loan comparison sites like laina-finance.fi to compare different loan deals and lending institutions to make the best decision for their firms.

There are things you must consider before taking out a loan for your hostel business, and this article will focus on four of them.

Have a Budget, Know How Much You Need

It’s impossible to run a successful business without adequate planning and budgeting. You’ll have to understand what you need and how much they might cost. Before walking into any lending company or visiting any online, you must know the exact amount you want. So when you’re asked that question, your answer shouldn’t be how much they’ll be willing to give you; it should be how much you really need.

If you plan to buy an already existing building for renovations, do your research and find out the costs. The same applies to furniture, maintenance, and other important hostel expenses. Every detail should be planned out as this will make you look trustworthy and increase your chances of getting the credit facility.

For instance, lending companies like Sortter usually have a visible loan amount range, as seen here https://laina-finance.fi/sortter-laina. So, after you must have planned your budget, you can check there to see if what you are looking for is within their lending range.

Decide the Type of Loan that Fits Your Plan

After figuring out the exact amount you need, you’ll need to determine the type of loan that fits that amount and your business. This also comes down to adequate planning.

At times like this, you’ll have to answer questions like, when do I expect to start making profits? How long will it take to complete the loan repayment? The answer to these questions will determine if you’re going for a short or long-term facility.

Once you have the answers to these and the many more questions in your business plan, start searching for lenders that offer credit advances similar to what you need. Generally, most lenders list out their terms publicly. For example, you can view Ferratum loan terms here https://laina-finance.fi/ferratum-laina to see if they are a good fit.

Arrange the Required Documents 

After singling out the credit institution that fits your plans, check to see the documents they require for applications and start preparing them.

Some lenders might be very stringent. They might require you to provide proof of identity and your credit statement.

Also, depending on the length of the facility, you might have to provide financial projections for the hostel. Some other documents include lease statements, hostel licenses, cash flow statements, income statements, business sheets, and hostel tax returns.

Some institutions might even require you to bring collateral. This will make the process easier but ensure you assess the value of your collateral before making any decision. Don’t ever risk what you’re not willing to lose.

Find the Best Loan and Apply

No matter how urgent you need a loan, always take time to search for the ones with the best terms. There are lots of loan comparison sites you can use to compare and make informed decisions.

Some of the things to look out for before you take a credit advance for your hostel business includes:

• Annual percentage rate (APR)
• Penalties and fees
• The loan amount and term
• The speed and ease of disbursing the loan.

Once you’ve confirmed all these, get the documents required, and apply. Remember to crosscheck before any submission because mistakes can delay or deny your application.

The Bottom Line

At a compound annual growth rate (CAGR) of 16.8%, the hostel industry is expected to hit a market valuation of $840 billion by 2026. Solo travel is on the rise, and hostels are in great demand. Sourcing a loan to fund your hostel is a reasonable business decision, but that will solely depend on your approach to taking the advance.

We’ve looked at four important steps you should consider before going ahead with your plan. They include knowing the amount you want, deciding the best terms, preparing the required documents, and applying.

The post Important Steps You Must Take to Secure a Loan Facility for Your New Hostel appeared first on OLD-Minster.

The decision to start Airbnb was a sudden one. And like Brian and Joe, you may be one of those business enthusiasts who make sudden decisions to start hostel businesses. Your reason could be for the extra bucks, because you want to invest in a section of real estate, or because you want another property to your name. Regardless of the reason, you can be sure money is coming your way.

However, like any successful business, it takes hard work, dedication, moving on from costly mistakes, huge capital, and attention to detail to get your hostel on its feet. Many entrepreneurs make mistakes by not giving core considerations to some important tips. In this article these are some of the most important things to know before getting started. 

Your Brand Outlook Says Everything About You

The brand outlook you are selling determines the experience people will have in your hostel. You should decide if you are going for the warm and cozy or if you want the outdoor bonding atmosphere. This decision is what determines your decor, brand’s identity, bed types, and even the sofas.

Tune your decor to make guests feel at home. Walking into a hostel that feels warm and friendly is every traveler’s dream. Draft out a plan that complements your brand outlook. You might think it weird to think about decor before starting your business. It’s not. 

The soul of hostel renting is the decor, which can range from furniture to outdoor swimming pools. Discard the stiff furniture for ones that give a homely feel. For instance, choose a colorful but moderate furniture set. It will also be nice to use complementing colors in the common room instead of stark white. You can also hire an interior decorator to help with the process.

Great Locations Equal Increased Revenues

Most travelers and guests prioritize a good location. A good spot in town should have certain specifics, such as easy routes to the main roads and proximity to the hotspots — restaurants, clubs, hairdressers, malls, and many more within the town. You must find a good location that will appeal to prospective customers. 

Due to the growing competition in this industry, it might be challenging to find a good spot. In this case, you can hire professional agents to secure a great location for your building. While searching, ensure there’s no serious competition in the area, as this could lead to bad business.

Your Financial Plan Is Important

Like every other institution, you must have a sound financial plan for your business. These plans help you create a headway on the necessary steps to take, figure out your needed capital, and decide if you’ll be needing investors or taking out a loan.

You can secure financing means through sponsorships and investments by tendering your plan to potential investors. It also ensures you follow the drawn-out plan without splurging on unnecessary purchases while keeping track of your expected profit and loss.

Permits Are a Pain

Some locations are legally restricted from having a hostel. Check your chosen location’s zoning law to know if you can build your business there. If it is allowed, check the local law to see if there might be clauses that won’t bode well for your business. If it is not, search for areas that allow hostels and get your permits to start building or acquiring.

Permits aren’t as easy as they sound. It takes a long time to get approval from city halls, and when you do, their regular checks are frustrating — they might also ignore your emails if you try to reach out. 

Although they might be hard to attain, applying for every necessary permit and license needed to run your business is important. Get all the permits needed, which might come with a fee, to build a completely legal hostel.

How You Market Your Hostel Determines Who Visits

Market your brand to the right audiences. These include solo travelers, young students taking a gap year, and backpackers. You need to create a good online presence to find these people, and the best way to do that is to draw up a strong marketing plan.

However, while drawing one up, be mindful of your finances and avoid over-expensive marketing strategies — you don’t need them to attract your audiences anyway; what they are looking for is originality and a breath of fresh air.

Final Notes

Building a hostel is a lucrative and interesting business. Besides the cool cash that comes with it, you also get to meet different personalities from different parts of the world.

Remember, the goal is to create an environment that makes people want to drop their bags, grab a can of beer, and mingle. We wish you success with the plan!

The post 5 Things You Must Know Before Starting a Hostel Business appeared first on OLD-Minster.

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.

How To Start A Student Hostel Business

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.

What Is A Business Plan?

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

Why Create A Business Plan For Your Hostel?

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.

What Information Is Needed To Write A Business Plan For A Hostel

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.

Pricing

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.

The post Tips On How To Write A Great Hostel Business Plan appeared first on OLD-Minster.

We are going to break down and clearly explain this model from the executive summary to the financial plan and everything else.

What kind of business is a hostel?

To answer the question of what kind of business is a hostel we must first understand what a hostel is.

Wikipedia defines a hostel as “a form of low-cost, short-term shared sociable lodging where guests can rent a bed, usually a bunk bed in a dormitory, with shared use of a lounge and sometimes a kitchen.

A hostel as a business if put in simple terms is a hospitality and real estate business, it focuses on providing affordable communal accommodation while providing minimal services, thereby leveraging profit and reducing operational costs.

Are hostels a good business model?

Before we answer this question there are so many factors to consider to determine if the hostels are a good business model.

The business model for hostels can be said to be a good one because it typically focuses on maximizing profit while minimizing operational costs.

It does all this while providing shared accommodation/housing at low cost and affordable prices, this proves to not only be an extremely profitable venture but in the proper situation a more successful business than a hotel.

Are hostels a good investment?

The hostel business is an ever-growing industry and even more so over the past 10 years.

Hostels do not require as much investment capital as other real estate ventures, this in its right makes it a low-risk investment.

In this market, its consumers do not require luxury so it makes it cheaper to fund and operate. As a result of the costs of its low investments, profitability is enhanced and the main attraction of real-estate investments is the return.

Hostels are much easier to manage and operate in comparison to other types of properties in the real-estate business because typically hostels are self-serviced. This not only saves investors money but also helps them make more profit.

So to answer the question, yes we believe think that hostels are a good investment because they’re not difficult to maintain and they are profitable.

Hostels vs. hotels business model

When wondering if it is better to run a hostel or a hotel, multiple factors can sway or impact your decision. Factors like your target audience, location, competition, and management experience can all influence the kind of business that would be most profitable to you.

Hostels and hotels differ greatly despite both being in the hospitality business, so it is only natural and plausible that both have different business models.

A hostel offers a low-cost and affordable alternative to housing for a short period of time. Hostels will typically include features like a communal lounge and kitchen area in addition to shared dormitory-style rooms.

The target audience for this aspect of hospitality is usually backpackers and young travelers who are in their late teens up to their mid-thirties. That notwithstanding, in the last 10 years there has been a surge in people of all walks of life preferring to stay at hostels.

Each hostel will typically focus on a niche market, for instance concentrating or working exclusively on social events or private holidays.

It is common knowledge that hostels are a feasible option for travelers, backpackers, and people on a budget who need low-cost accommodation, greater flexibility, ease of convenience, and social encounters with strangers from various walks of life.

On the other hand, hotels provide opulent accommodation with a more exclusive ambiance. Although hotels are more popular and common, Europe and the United States have both seen a significant spike and progressively growing interest in hostels.

As a matter of fact, in the course of the 2007-2008 financial crisis hostels saw notable growth in residency numbers while hotels suffered a drop in residency numbers.

Before venturing into a hotel or hostel business, you should ask yourself if you would rather have the task of filling more expensive beds or moderately priced ones.

Typically hotels offer superior services and are usually more costly to operate, all the while charging lofty room rates. However, on the flip side, hostels are somehow able to keep costs at a minimum by offering their customers a bare-bones experience.

Although a single hotel room will generate more revenue/income, cheaper and affordable hostels are more appealing to a certain kind of traveler. Additionally, with lesser services and amenities, it costs significantly less to operate and maintain a hostel.

Let us not forget that hotels generally hire more staff than hostels and also have more exquisite and pricy furniture and decor.

One of the major differences between a hostel and a hotel is the sharing of accommodation. Hotel room bookings are always on a private basis this ensures that guests can enjoy the company of their friends and companions rather than random strangers.

Although some hostels offer the option of private rooms, shared rooms are invariably an option with this kind of accommodation. This sharing business model enables hostels to maximize the number of paying guests without increasing room inventory.

How do I start a hostel business?

When starting a hostel business, there are a lot of things you must take note of. The first thing to consider when starting a hostel is to consider the location because it affects your budget, your target audience, your strategy, and everything else you need to contemplate.

When starting a hostel business there are so many ways to go about it but we have come up with 5 steps that help guide you.

Pick a location

The first thing to do when starting a hostel business is to decide where you want it to be located, this will aid in your market research and it will help you identify what makes you unique at your chosen location.

Carry out market research and define your unique value proposition

Market research will help you identify available opportunities 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. It helps define what you can offer because you’ll be able to see clearly what is available and what is missing.

Define your resources

You should identify and define the resources; human resources and equipment alike that you will need in order to run your hostel. It helps you understand your operating costs and make a financial forecast for your hostel.

Business and marketing plan

After defining your resources, it’s time to create a business and marketing plan. The business plan includes a cost analysis and projected costs, while a marketing plan helps identify your target audience and what marketing strategy best suits them.

Start operating

When you’re done picking a location, carrying out your market research, and all the other steps, congratulations it is time to start operating.

How To Write A Hostel Business Plan

Before writing a business plan for a hostel, you must first conduct market research, which entails getting acquainted with the hostel market and substantiating if there’s ample room in the local market to open a hostel in your area of choice.

In conducting a market analysis for your business plan, you’ll acquire crucial knowledge of the present demand for hostel accommodation, including the hostels that are already established on the market.

As a result of this data, you will be able to ascertain what your target audience should be, this will in turn ensure that your hostel can take its spot on the market. After the market research is done (but not before you begin writing your business plan) you should determine the equipment and staff needed to operate your hostel.

After you’re done gathering all the aforementioned data, then you can start writing your business plan

Why create a business plan for your hostel?

As an entrepreneur, a business plan is an absolute necessity regardless of what kind of business you are about to venture into. This is the first thing to do when starting a new company.

When starting a hostel business, a business plan helps you determine if your hostel has the possibility of being profitable. A business plan plays a vital role in how your business is presented to prospective investors or lenders.

A business plan is made of 2 major parts:

• A financial forecast that aims to accentuate the predicted/anticipated profitability of the business and the initial financing/funding needed for it.
• A written part that presents your well-detailed project, team, business strategy, and medium-term objectives.

Conclusion

A hostel business model is structured in such a way that conveniently enables minimizing operational costs while maximizing profit.

It has proven to be an extremely profitable venture, especially with the help of modern technology and tools such as hostel management software that helps you generate revenue and attract more guests.

The post Understanding the Hostel Business Model appeared first on OLD-Minster.

Or perhaps you want to provide a space where different people can mix and discover a new city together? Either way, you’ve decided to find out how to open a hostel. 

It’s exciting, but you’re not sure you’re quite ready yet. There are several actions to take to ensure your dream can become a reality, and we’re here to help lead you down the path.

In this nine-step guide, we will review all the questions around how to open a hostel, including how to conduct market research, come up with a concept and create a marketing and business plan – which includes mastering the ever-important art of number-crunching.

1. Researching the market before opening a hostel

The very first step in any business venture, whether it be a corner shop, cafe or hostel, is to verify whether it’s commercially viable to open the business up within your proposed location.

To assess this, you will need to: 

• Get to know your potential customers by reviewing their behaviours, interests and needs
• Familiarise yourself with hot new trends in the hostel market
• Check out the other hostel businesses close by and figure out what you have to offer customers that they don’t

The UK hostel market

The UK hostel market is developing fast. Accounting for 70% of all international travellers – millennials (aged 18 – 35) have officially caught the travel bug.

With 70% of all hostel users falling within this age bracket, it’s hardly surprising that the UK hostel industry has witnessed a boom. In 2018 alone, 305 million young people travelled to the UK to study, work and travel.

The market is therefore growing, driven by a skyrocketing in demand and a low count of just 226 hostels within England.

Despite trumping its population by almost 10 million, England’s ability to offer accommodation to young travellers lags significantly behind Spain, which has over double the amount.

And with more hostel travellers keen to set off the beaten track, it’s not just London they’re chasing – as regions such as Brighton and Cornwall are becoming increasingly coveted.

It’s likely, therefore, that the hostel market will only grow larger. Whether it’s in London or further afield, there’s room for large and smaller, independent hostels alike.

General hostel market: trends and projections

Hostels, once seen as a grungy spot for backpackers, are now disrupting the global travel accommodation market. Keen to monetize off the growing number of travellers prioritising a casual atmosphere over luxury, investment groups have invested massively in hostels.

Generator, a hostel chain with 5,200 beds across 12 locations in Europe, was bought over by Queensgate Investments for $450 million in 2017 with the intention to expand it even further – highlighting the growing demand for hostels amongst today’s travellers.

2. Open your hostel with the right concept

Now that we’ve looked at the market research, the next stage in our how to open a hostel guide is to consider your hostel concept.

The first stage here is to set your target market: does it include young groups of friends looking to soak up the nightlife or travellers wanting to immerse themselves within the local culture?

Sure, the typical youth hostel guest may not be expecting silver-spoon service and luxury spa treatments, but they’re still seeking accommodation that can offer them something that Airbnb can’t – the chance to mingle with like-minded individuals from all over the world.

Consider this when building a concept for your hostel. Your guests will want to experience the local culture, so are you in a position to offer activities such as sending them on a city tour, or even offer them discounts in restaurants to discover the regional food?

If your guests are social, surely a communal area where they can mingle and hosting social events such as pub crawls will be imperative.

Once you’ve settled on your concept, it is then time to look into the type of hostel you would like to open: is it going to be independent or part of an existing chain?

The UK hostel market isn’t a stranger to chains, with brands such as Generator, Safestay and Meineinger growing significantly in popularity amongst young travellers in recent years.

There’s a ton of advantages of being affiliated with a chain. Firstly, the group already has an established reputation and presence on social media and booking platforms – meaning you’re likely to pique consumer interest from the get-go.

As well as this, there will be standard operating procedures and resources to help you hire and train staff, as well as sourcing suppliers.

With increasingly more travellers keen to travel off the beaten track, however, the allure of smaller, independent hostels cannot be understated. In fact, a 2017 study by Expedia found the unique details and personalised service of boutique hotels the main driving force behind why they’ve seen faster revenue growth than their branded counterparts in recent years.

3. Where should you open your hostel?

The location of a hostel is crucial. So the next step in discovering how to open a hostel is deciding where you’d like it to be situated. Its commercial success and occupancy rate depends on it.

Since the target market is predominantly made up of young people who are travelling from place to place, a hostel must be located near public transport links like bus, train and underground stations.

Guests value hostels that can be easily accessible from an airport or a train station, leaving the fuss of an unpleasant journey behind. Make sure you are well connected to the city-centre to meet these criteria.

You also need to pick the right neighbourhood. Whilst being located central and near key sightseeing attractions massively increases the desirability of a hostel, it’s important to steer clear of areas that are too up-market. Not only would the rent be pricey, but the clientele would be put off by the nearby restaurants and bars with prices well above their means.

The area you decide on should be one that offers opportunities for your young customers to have fun in whatever way they choose – whether that means checking out free exhibitions, eating out on a budget or dancing the night away in a club.

4. Understanding the legal structure of a hostel

Now that you’ve decided what and where you want your hostel to be, it’s time to deal with the legal side of things.

Most cities require permits and licences to run a hostel, so you must first check with your local authority and check what regulations there are for opening a hostel. They sometimes vary from one place to another.

Apply for and obtain all the necessary licenses before opening your hostel (and factor the price of these into your start-up costs.)

You also have to consider the legal form of your hostel. The legal form will have an impact on several things including, but not limited to the organisation, the number of partners and the tax regime – so getting them right is important.

Whether you choose to be an unincorporated or incorporated business, your choice will be determined by the specific constraints of your venture and your personal preferences.

5. Identifying the equipment and staff needed for your hostel

Next up in our guide on how to open a hostel is identifying the supplies (and manpower) that will be necessary for the smooth running of your hostel. These items and operational costs will then have to be quantified in the financial forecast for your hostel.

Before opening up the doors of your hostel, you’ll need a lot of help and equipment, including: 

• Dormitory furniture and supplies: beds, bedding, lockers and storage space, etc.
• Washroom supplies: toilets, showers, etc.
• Equipment for common rooms: decoration, plants, leisure equipment (foosball tables, pinball machines, computers with Wi-Fi), bar, etc.
• Kitchen equipment: ovens, fridges, microwaves, utensils, household appliances, etc.
• Equipment for reception area: desk, computer stations, printer, pens and paper, card machine, etc.
• Security-related equipment: door with access control, video surveillance cameras, etc.
• Promotional material: signs, website, flyers, etc.

You will need to recruit staff with experience of the hospitality industry, but also with qualities akin to the daily flow of a hostel (e.g. energetic, upbeat and sociable individuals that are happy to report to for duty at 10 am the day after hosting a pub crawl).

If you decide you want to offer food, you’ll need to factor in kitchen staff, as well as one or two people who are familiar with the administrative and commercial management of a hostel.

When addressing your staffing needs, it would be useful to keep a list of all the factors you need to consider, such as the skills required, the cost of training people up and how many hours they’re needed for every week.

6. …and any additional services needed

You must also consider the ancillary services that are needed to keep your hostel running in tip-top condition.

These will include enlisting an insurer, as well as a chartered accountant to help you keep track of your accounts and the day-to-day management of the hostel (e.g. VAT, payroll management and tax calculations).

You might also want to hire a cleaning company to help with the maintenance of the common areas and rooms, as well as suppliers for food and alcohol.

Whether you’re picking an insurer or a supplier, make sure you ask for quotes and compare prices to obtain the best deal possible.

7. Creating a marketing plan for your hostel

With a whopping 87% of backpackers using electronic means to book their next hostel via the internet and mobile apps, the weight that a strong marketing plan carries is a heavy one.

The backpackers of today have information regarding the price, service and atmosphere of every hostel ready to compare at their fingertips – so having a sufficient online presence is key to attracting new clientele.

Targeted advertising is a good way to introduce yourself as a new player on the market for those interested in what you’re offering. This can be done by appearing on online booking websites such as Booking.com.

It’s important to also create a website that shows everything you have to offer – including photos, customer reviews and information about availability.

You might also want to consider being referenced on Google Maps, as this could help draw in backpackers within the vicinity who are looking for a place to crash at the last minute.

Finally, think about anything that could bring customers your way and potentially turn them into familiar faces – such as offering discounts to nearby bars or a cheap bike rental service.

8. Setting out your hostel’s business plan

A business plan is a document with one goal in mind: to convince its reader to invest money in your business. This document will support you in approaching potential investors or banks when looking for funding.

The business plan of a hostel has two main sections:

• A written section aimed at showing how viable your business idea is and what are its strengths 
• A financial forecast highlighting the need for financing and the expected profitability of your project

The business plan, therefore, weaves together all of the previous steps, including the market research, the concept of your hostel, choice of location, equipment needs and so on.

If you’ve never done a business plan before, don’t panic, as you can use an online business plan software to help you put it together. Using this solution will give you several benefits, including:

• Being led step by step through the writing process, with instructions and examples given for each part of the plan.
• Answering simple questions and letting our business plan software crunch the numbers for you
• Getting access to ready-made business plan templates 
• Creating in the end a professional document, formatted, and ready to be sent to your bank.

If you are interested and looking to give it a shot, you can try our software for free by signing up here.

Even though it looks scary at first glance, creating a financial forecast is an integral part of your business plan.

9. Raising the capital required to open your hostel

Opening a hostel requires significant investment. The sky-high rent prices in tourist-dense cities and the diverse range of equipment needed for set up means that funding needs to be allocated as quickly as possible.

Thankfully, there are multiple ways to get funding to back up the opening of your hostel.

You can begin by dipping into your savings to start building up the company’s equity. If you have a business partner, you can ask them to do the same. And nothing’s stopping you from calling up a friend or family member to join as an investor to help increase the sum.

You could also go to the bank to obtain a business loan. This could help you cover part of the equipment needed to kit out the premises.

Before calling up the bank, make sure your credit history is as strong as possible. You will also need to provide the bank with several financial documents, so try to organise them ahead of time.

You could also think about crowdfunding, a practice whereby funds are raised by different people in modest amounts. It would not only help you raise money for your business but also awareness of your brand.

And that’s that – you officially know how to open a hostel!

We hope this guide has helped you clarify the vision for your hostel so you can now look forward to the different stages involved in turning your idea into a reality.

The post The 9 Crucial Steps to Open a Hostel appeared first on OLD-Minster.