How to Start a Hostel Business and Open in the Same Year


Hostels have a stronger sense of community than any hotel, AirBnB, VRBO and the like room stays. As the digital addiction increases, a sense of community has become a commodity. Providing this experience kills two birds with one stone. Hostels are able to provide travelers a place to lay their heads, and experience a social aspect in their travels.

The reasons to start a hostel business in the digital trend that increasingly make communities as a commodities are boundless. A step further beyond these whys, is the how to. In short, this article will go over the following ways in how to start a hostel business:

  • Determine and analyze target market
  • Purchase or convert a hostel
  • Outreach via website content for greatest exposure
  • Organize legal and tax accounting
  • Organize hostel management software and platform

Going through these process in regimented way can open your hostel business in no time, and have a good system for flow. You never want to start any business without forethought on the associated process. So I’ll show you how to think about this post-process so you can know what to expect in opening your hostel.

Month 1 – 3

You want to start off strong during the first quarter.

Notice how I used the term quarter. Treat opening your hostel as a business and start setting up your goals in quarterly segments.

First you will list three goals that you want to accomplish during this quarter. Make sure they are actionable in taking the steps towards the mentioned list above.

For example, for the bullet point purchase and convert a hostel, you may write a goal stating you will need to source and buy 5 bunk beds and paint for quarter 1. Don’t worry, I will go through a more detailed outline to cover the previously mentioned bullet points.

Okay, now that you’re able to think of your year as quarters, go ahead and write 3 actionable goals you want to take for this quarter. You will then review this every day and recognize what you did to take that extra step, and how you could go a little further every day.

At the end of the quarter, you will do an over all review, and determine your priorities for the next quarter. At that point you will create another three goals to focus on. Rinse, wash and repeat.

Let’s go a little further in how you can set the goals to start your hostel business. We can do this by understanding what you need to get done to success fully provide a product (hostel) and attract your customers (travelers).

Determine and Analyze Target Market

There is a couple thoughts that are not deal makers for this criteria.

You do want to make sure the area the hostel will be in is open to tourism and that you have an interest in managing a hostel here – at least to a point where it can become self-sustaining.

You can determine the market by seeing if other tourist businesses in the area do well in the tourist season.

For instance, is the local raft guide or kayak company busy in the summer? Or are their summer camps there where kids go to?

Chances are if the place is packed this is a market that can be targetted for travelers to stay in places such as hostels.

Market analysis doesn’t have to be overly complex. Common sense, and some research is the best way to aid this along.

Purchase or Convert a Hostel

If you already have a house in your target area, you can convert it to a hostel with a couple of tweaks.

Otherwise, you can start searching for houses that can be ideal for a hostel.

These houses will usually be larger and have bathrooms than can cater to several people.

Once you do have a house, the main tweaks are adding bunk beds to your rooms and having Instagrammable spots in the house. These spots can serve as free promotions for travelers that will take Instagram photos and tag your hostel.

You can add additional bathrooms if necessary. This arrangement can be a bit costly. It may help to evaluate after your first hostel season in if you’ll need to add an additional bathroom.

Outreach via website content for greatest exposure

I’ve mentioned Instagram to market your hostel. But this is more of a passing promotion technique.

The best way to market your hostel is to create website content for your website that will rank in Google.

What I mean by this is, if you create articles based on queries searched on Google, and if your article is the best match, Google will rank your website for searchers to click.

This technique is greatly under appreciated, but it is the holy grail of marketing.

You can find queries people are searching by starting to type out something related to your hostel, and Google will autocomplete suggestions.

Here’s an example of my typing “best hostels in”

The listed auto complete suggestions, are queries that others are searching on Google.

If you write the best article to match these queries, Google will provide your article to searches. In turn your article becomes a sales funnel for your hostel.

Organize Legal and Tax Accounting

You will need to get advice from your legal and your CPA professional when starting out building your hostel.

For instance you maybe advised to create a legal entity to run your business. This can also help separate your personal transactions and business transactions.

Doing so, will make your tax day a lot easier to coordinate transactions and to see what deductions you may qualify for.

Meanwhile you may use tax accounting software for book keeping.

Organize hostel management software and platform

For bookings and guest management you will need to use a hostel management platform.

This way you can keep track of your transactions, your guests and reservations.

Sometimes booking websites can be very accommodating to your software management needs. Be sure to sign up for these related online traveling agencies.

Related Questions

How much money do you need to start a hostel?

You will need enough money to cover a down payment for the property, and miscellaneous business expenses that should cover the amount of time in case anything happens to start a hostel. A back can grant loans for these kinds of businesses, they would have a more specific idea in how much this would cost.

What are the requirements to start a hostel?

The requirements to start a hostel are a house to host, a marketing strategy and hostel management software. The house or property is obviously a must. In order to market it you will need a strategy, with web content outreach being the most effective. Lastly, hostel management software can be a place to manage bookings, transactions and reservations.

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