How to open a hostel: business plan, tips, recommendations

In the last few years, hostels have become very popular in our country. This is due to several factors. Firstly, not everyone can afford expensive hotels, secondly, young people, namely they make up the backbone of hostel clients who are not picky about the conditions of rest, thirdly, good hostels, if they are well-designed, are not inferior in comfort to many hotels, but significantly better in price.

In this article, we will talk about how to open a hostel, what aspects to pay attention to first of all, what documents to collect so that the activity is legal, how to advertise your business, and where to get the first customers. We will also try to draw up a hostel business plan, taking into account all the features and subtleties of the modern real estate market.

Documents required to open a hostel

Your goal is a serious and solid institution, with development prospects not only in your city, but also in the region, and in the future throughout the country. It is clear that you need to officially register your business. For this you will need the following documents:

1. Company registration certificate. If you plan to open one hostel to start with, then a sole proprietorship is perfect. In the future, when the network grows, you can think about registering a legal entity.
2. Be sure to register with the tax authorities, and obtain a certificate of tax payment. Many experienced businessmen advise starting with a single tax, because this will save on deductions to the state treasury and reduce the difficulties with reporting on your activities.
3. Next, you need to get the conclusion of the fire inspection that your premises meets all norms and standards, is safe for visitors and staff. This is a very important point, because you are responsible for the lives of people who will stay with you. No negligence needed. Follow all the requirements of the fire department, and even more.
4. SES conclusion. Your premises in which the hostel will be located must meet the requirements of the sanitary and epidemiological service.
5. An agreement on the lease of premises, or documents that confirm the ownership of real estate.
6. Agreement with a company that is engaged in the removal of solid household waste.

The list of documents is not exhaustive, because our legislation is in a state of eternal reformation and "improvement". Therefore, at the time of the opening of the hostel, we advise you to familiarize yourself with the current legislative framework, find out what changes have been made to the laws governing the opening and operation of hostels. We do not think that in the coming years something will change drastically, but God saves the safe. It is better to be safe than to have problems with regulatory authorities and various government services later.

What should be in a modern hostel

As we have already said, a hostel is not a place where two Tajiks live on one square meter. We can say that this is an analogue of the well-known hostels, only you can rent your place for a day or more. Hostels are mainly used by young people, tourists, and those who like to relax cheaply, and spend the money saved on other, more important things. Based on the main audience of hostels, you can make a list of the required minimum:

• First, free access to the Internet. As a rule, all good hostels have a WI-FI point, with normal coverage and decent speed. Young people spend most of their lives in the global network. Someone works, someone communicates, someone reads or plays games, and for someone the Internet is a virtual world, without which life is no longer life. Everyone has different goals, but the need is the same - high-quality WI-FI. Sometimes the choice of a hostel is based on the availability of free and free access to the network. I am very surprised by the establishments that still charge for the Internet from their vacationers. There is no longer any desire to stay in such a sleazy place.
• Good furniture. Of course, most holiday hostels are not picky, but you should not skimp on whitewash. At a minimum, you need to buy normal beds, after a night on which, a person will not feel back pain.
• Household appliances: iron, hair dryer, washing machine, etc. You need to take care of the comfort of your customers.
• Kitchen with all necessary utensils: kettle, stove, pots, cups, spoons.
• Dining room where everyone can eat. You can offer breakfast yourself, for a fee, you can arrange something like a buffet where you can buy sandwiches and light snacks, or you can not bother at all and give vacationers the opportunity to cook something for themselves.

This is a minimum, but if you want to be the best, then you need to come up with something more. It is possible to organize a game room, where to put several soft sofas, to check a couple of TVs and set up set-top boxes. This will be your chip, and a trump card in advertising, which can attract even more vacationers. If you open a hostel in a tourist city, then free guides and maps for each client can be a plus. This will help the tourist not to get lost in an unfamiliar city, and in this way you will show concern, and once again show that you care about the client.

The problem of many hostels is cleanliness and comfort. If you want to be the best, then you need to always keep the brand, and not work out the first few months at the level, and then let everything take its course. Therefore, sign an agreement with a cleaning company that will do a general cleaning once a week. At the same time, you need to wash the kitchen, shower room, and clean the rest rooms every day. All towels, bed linen, all utensils - everything should be clean, pleasant, neat in appearance.

Choosing a hostel

Separately, it is worth dwelling on the issue of choosing a room for a future hostel. It would seem that there is nothing to think about - a large room, in the center or near the center, and it's in the bag. But not everything is so simple. It is necessary to proceed from some features that will affect the final choice.

First you need to decide which hostel you want to open. There are several types of hostels:

• The first type of hostels is designed for 100 or more people. During the day they need a large room, which is divided into several blocks with separate bathrooms, kitchens, rooms for leisure and recreation. As a rule, such hostels require a lot of effort, time and cost. But the payback is faster. Very often, large hostels are rented by companies that hold seminars or conferences. They invite their representatives from all over the country, and, paying for their housing, lodge them in hostels of this type. If you are lucky, you can sign an agreement with the company that you will constantly provide them with services of this type.
• Average hostels for 30-50 people. This is the most popular option. If you settle in a room for 8 people, then you need from 4 to 6 rooms. You can rent or buy two apartments, connect them together, and organize such a hostel. But most often the whole floor is redeemed, on which there are three apartments. Another one is being equipped as a place to relax, a large kitchen is being made there, and another shower room.
• Small family hostels. This is usually one apartment with 3-4 rooms. These hostels are designed for 10-15 people. Everything is cozy, without unnecessary noise, at home. 3-4 people can live in one room, which is very convenient. If you come with a small company, you can rent a separate room, without strangers. Such hostels do not require large investments, they are easier to follow and take care of, running costs are much lower. And they have one significant plus - the price can be set more. Due to coziness, tranquility, and comfort, you can keep the price 10% higher than that of competitors who have large and medium-sized hostels. And believe me, if you have a good reputation, then many will gladly overpay, but will go to you.

With the choice of a place for a hostel, everything is simple - it is desirable that they be near public transport interchanges, or within walking distance to the main attractions of the city. Many hostels open right in the center, or very close to it. But there is only one minus - the price of real estate. It is very good if you own an apartment, or some kind of residential area, and if not, are you ready to invest a tidy sum? Therefore, it is better to make a hostel somewhere far away, but so that your guests can get by metro, trams or buses to anywhere in the city.

Advertising and promotion of the hostel

The advertisement is engine of the trade. In the tourism business, namely hostels, you won’t get far without advertising. Of course, over time, when several hundred customers stay at your place and they are all satisfied, word of mouth will work well, and the fame of your hostel will spread across the latitudes of our country. But these customers need to be attracted, and for this you need to advertise. We want to say right away that the advertising budget should not be small. But in order not to waste money, letting them into completely ineffective areas of advertising, we will give a few main directions that will be optimal for hostels.

• Internet advertising. For successful business development, you need to create your own website on the Internet. Beautiful and pleasant design, clear structure, maximum information content - these are the three pillars on which a normal hostel website should be based. You must describe your hostel, talk about its advantages, show photos of rooms, bathrooms, kitchens, beds. You can even brag about the view from the window, if you have something to brag about. Also show where the hostel is located on the map, what cafes, shops, public transport stops are nearby. Do not forget that many potential customers are interested in the reviews of those who have already rested in your hostel. Therefore, you need to somehow agitate people to leave their impressions, write comments, share their opinions.

The site is good, but if it is not promoted in the Yandex and Google search engines, then it will be of little use. If you yourself are familiar with the basics of SEO, then you can do promotion. Otherwise, entrust this matter to professionals.

It is very important that your site has several interface languages. If the city is touristy, then there is a high probability that foreigners can stay at your place. And they are looking for places for a future overnight stay just on the Internet.

• Social networks. Don't forget about them either. Create your pages "Vkontakte" and "Facebook". Engage in the promotion and advertising of the hostel there. Conduct various promotions, give out discounts, attract people to your group in every possible way. Social media is a great place to find potential clients. Also, do not forget about the advertising offered by networks. You can set up the targeting you need, and show it only to those who, in your opinion, best fit the image of a potential client.
• Advertising through international online booking networks. Now more and more people around the world are using sites that allow you to book accommodation in minutes. You can study the conditions for admission to such online sites. If you have a good rating, a normal price, positive reviews, then through these sites you will receive up to 90% of all orders. Therefore, it makes sense to try to fulfill all the conditions and get into their base. These sites include Booking, TripAdvisor, Airbnb and others that you can easily find on the Internet.

Investments, profitability and payback of the hostel

If you are going to open a hostel, then the issue of initial investment, profitability and payback will definitely concern you. Perhaps the most important investment is real estate. You can rent it, but then the payback period will increase several times, or you can buy it. If we talk about real estate somewhere in the city center, then often it can be a completely unbearable amount, and not at all realistic for a hostel. Therefore, there are only two options left - either you have a suitable room (this is ideal), or you will rent it. Renting is more difficult. Not every owner agrees to rent out his apartment for this type of business. Unless you sign a contract for a year, or even more, in advance, give a good deposit, and agree to pay 10-15% more than the standard price in the rental housing market. What other initial costs for opening a hostel can be?

• Design and decoration of the hostel. Very often they are decorated in some interesting style that would symbolize the hostel, or the city in which it is located. In Odessa, you can find hostels on the marine theme, the theme of ships, sailors, fishermen, etc. The cost of registration and design depends on your vision and desire to transform the room. Perhaps you will leave everything as it is, and will not invent anything. If you rent a room, then most likely you will not be allowed to roam much in terms of repair and design.
• Furniture. Be sure to buy beds, chairs, tables, furniture in the rest rooms and in the kitchen. In order to save space, you can order bunk beds. This is a common practice in many hostels.
• Household appliances: kettle, iron, hair dryer, table lamps, washing machines.
• Sets of towels, bed linen, cups, plates, pots, spoons, forks and other trifles necessary for a normal life.
• If the price includes bath accessories, then you need to buy shampoos, shower gels.

This is something that should be mandatory, and without which the normal functioning of the hostel is impossible. Everything else, according to your desire, and based on the set of services provided by your hostel, you can buy certain items.

If we talk about a specific amount, then here, too, not everything is clear. When compiling a business plan for a hostel, you should start from the prices that will be at the time of opening the business. Also, a lot depends on the city and region in which you want to start your business. The same can be said about payback. Here a lot depends on the advertising that you give, and on how high quality the services provided will be. A small hostel, which is designed for 15 people, can pay off in half a year. But this is on condition that it will be located in a convenient place for the tourist, and you will provide services at a high level to ensure the constant filling of the hostel.