How to Start a Backpackers Hostel

by on April 8th, 2012

Asterix HostelHaving quit my job to start a backpackers hostel (check it out and give us a like), let me tell you that getting into the backpacking business is less glamorous than what it appears. However, a job is only as fun as you allow it to be. You’re the boss and your job involves hanging out with interesting people on holiday. Life is a holiday (except when the toilet’s broken).

Let me break down this process to give you a glimpse into what goes into the making of a backpackers hostel..

1. Take the plunge

There isn’t a bachelors of backpacking (yet) and starting a backpackers hostel requires no eduction. In fact it requires no specific skill but once you’re done you will be a jack of all trades. A pinch of common sense should guide you well enough along this journey. Don’t sit on the fence with this decision. Life will pass you by. If you’re looking to start a backpackers hostel, nobody but you will be able to say whether its the right or wrong thing to do. Trust your instinct and do what you think will make you happy. Do it now. Don’t wait for tomorrow.

2. Hang with the hippies

Great. So you’ve decided to start a hostel. Now comes the question of where. This may come as a rude shock to you but your choice of location is the biggest factor that could make or break your business. If your stretch of beach isn’t popular, having the swankiest backpacker hostel will not bail you out of that hole. Don’t rush this decision. Try and backpack through your chosen destination first to see the World through the eyes of a backpacker. And while you’re backpacking through town, talk to as many people as you can. By the end of this exercise you’ll need to know who visits, from where, for how long and why. If you find sitting by the beach with a beer and chatting with fellow backpackers hard work, you might need to rethink this choice of profession.

3a. Find your dream house

Next comes selecting a house that will hold up against an army of rowdy backpackers. Taking 2 steps back, the purpose of your place is to enable backpackers to meet each other. A fundamental draw for backpackers is that your place will have to be affordable. As for enabling backpackers to meet, a common room is of paramount importance. While viewing possible houses bear in mind tiny details such as number of beds you can fit into the house without asking more than 8 people to share a bathroom (the biggest limiting factor). Although not obvious from the offset, your relationship with your landlord will be incredibly important too. Ensure that your landlord knows exactly what you plan to do with the house. As far as buying a house goes, remember that you’re in the backpacker business and not real estate. Limit your risk and stick with renting.

3b. Be the man with a plan

This step is to be executed at the same time as the previous step. Whether you like it or not, you will need a business plan. Plug the house rent, estimated operational expenses (electricity, internet, cleaner, etc), price per bed per night and your plan should give you the occupancy required for you to cover your expenses. Is this a reasonable number? From experience, try and ensure that you can cover all your expenses with an occupancy of around 30%. If that’s not possible,either your house rent is too high or your beds are too cheap. Fortunately you won’t have to reinvent the wheel and you can just use somebody else’s excel genius to figure out the finances.

4. Shop till you drop

Once you’ve signed the house lease, you’re 60% there. The rest is the easy part. It’s time to get busy and start shopping. Bunk beds, lockers, rugs, curtains, mattresses, blah blah blah. The shopping list will drag into the hundreds and you’ll be ready to give up at numerous stages but you’ll have to soldier through it (maybe its because there’s no love lost between me and shopping).

5. Paint the walls red

Finally comes the most exciting part of the entire process – setting up the hostel. Seeing all your ideas come to life is incredibly satisfying. However, do remember that every day spent setting up the hostel is an expense because you’ll be paying rent and not earning any money. Get operational as soon as possible and tweak things as you go.

Building a reading corner

Library

Gardening 101

Garden

Branding, painting, etc

Front Gate

Somewhere to sleep

Dorm

And if you’ve gotten this far, here’s why you should think twice before opening a backpackers hostel.

(photo credit to Amber, my partner in hostel crime)

Jason Noronha

Jason is a backpacker, saxophonist, writer, volunteer, photographer, entrepreneur, mountain climber and barefoot marathoner on a mission. A mission to travel the World in search of adventure..

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  1. Joe says:

    As long as you are having fun. Enjoy what you are doing.

  2. Sachin says:

    That is insane! Where is this though.

  3. Anna says:

    Isn’t that a little bit every backpackers dream, to have your own hostel?

    Oh, and had I been there I would have been more than happy to help you with number four :)

  4. Dr.S.P.Bhattacharyya, Doctor, Siliguri, West Bengal says:

    Dear Mr. Noronha,

    It was indeed a pleasure going through your travelogue on the lesser known premium beaches of Goa, in The Statesman 8th Day supplement, a couple of weeks back. It was indeed grist to a wanderlust’s mill.

    Incidentally, I plan to visit Goa during the first week of July,2012,—–which is very much in the midst of the monsoon.

    I would like to have your suggestions/opinions, if possible, with regard to what to expect from Goa in monsoon, places to visit in Goa, watersport facilities expected to be available during monsoon, hotels/guest houses in North and South Goa that you paricularly recommend, information about your Asterix hostel and lastly any other suggestion you would like to give.

    Thanking you and awaiting more fascinating articles from you in the Statesman columns in near future. With regards,

    Dr.S.P.Bhattacharyya
    Faculty member
    North Bengal Medical College
    SILIGURI, West Bengal

  5. Carbon Investment says:

    Useful content, you continually come up with the most useful stories and of
    course How to Start a Backpacker Hostel

  6. Belén says:

    Hi Jason.
    Thanks for your comment. I am living and enjoying Australia actually but I am thinking about start a backpacker next year in my country, Spain. Your opinions will be helpfull for me

    • Jason Noronha says:

      Hi Belen..only one thing to say to that – do it!
      Been 7 months now and its been quite a ride so far. Learnt quite a few lessons about running a backpackers hostel – email me in case you need any help with your business plan..

      • Una says:

        Hi Jason,

        I want to start my own backpacker. I live in Cape Town, South Africa. Is there any way you can help me with guidance and a business plan?

        Thanks and kind regards,

        Una

    • sahil says:

      hi Belen,

      I am really thinking to open backpackers , i read your comment and saw the mutual interest we share. I am actually looking for people to open a backpackers together, so if you are looking for people too then maybe we can have a discussion regarding this. also opening a backpackers in spain would be a great idea.
      you can mail me if you like its – sahiljindalind@gmail.com

  7. Char says:

    Am about to embark on an adventure this year – having just lost my job – and this idea has always been in my mind – myself being an avid traveller and I simply love talking to people from other cultures and places – thank you so much for this useful article!

  8. Jon says:

    Great article! I’ve just gotten back from a backpacking trip in Burma and being a backpacker, I’m very keen to start my own budget hostel. Thanks so much for this gem!

  9. Anette says:

    Thanks for a good article! I also want to open a hostel… yet to decide where. How come you chose Goa?

    • Jason Noronha says:

      Anette – I was born and brought up in Goa and Goa didn’t have a hostel until we got started, so it was a no-brainer. Good luck with your search. Let me know if you need any help..

  10. charlotte says:

    Hi

    nice to read your post – i am just trying to decide on where to open one the hardest part for sure.. i am torn between the sun/water, snow/mountains or in the countryside and thats before i have thought about country!!

    Do you make an ok living out of it so far?

    Charlotte

    • Jason Noronha says:

      well..its been 11 months and i still haven’t managed to pay myself a salary. but still – this doesn’t feel like work at all :)

  11. Gail says:

    Hi
    living in Toledo Belize and did some backpacking in Mexico and loved it! im having thoughts of opening a hostel in Punta Gorda since there aren’t any here however most tourist are just passing through to Guatemala. Do you think this would be a grt idea?

    • Jason Noronha says:

      Hey Gail…It doesn’t matter if people are just passing through. What does Punta Gorda have to offer? And can you create a kickass hostel to ensure that people stay there and never leave? But it’s also important to take a look at hostelworld and hostelbookers to see what’s the current situation and how other businesses are holding up.

  12. Anthony says:

    Hi Jason,

    I’m actually wondering myself to open a backpack hostel in America Latina. I would like to ask you some stuff about the operating charges existing in this activity and how to count the potential custommers of the market.

    Can you answer me by email please?

    Cheers,

    Anthony

    • Jason Noronha says:

      Sure. Drop me an email and I’ll help you out.

      • Nick says:

        Hello mate,

        I am certain I need to open a hostel before summer next March in Amsterdam. I’d ideally want to open on a beach somewhere but from what ive read amsterdam has teh best occupancy rates in europe and also a longer average stay for guests so im following the numbers. The beach hostel will happily be my second hostel. I’ve stayed in a lot of hostels in the netherlands and spoken to a lot of staff and surprisingly the majority of them aer completely unpaid, just accom and food ( a lot booked through http://www.workaway.info) so if i put in a lot fo hours myself in the first year i can see staff costs being low. I would absolutely love any info you can help in regards to my business plan and what popped up for you that wasnt expected. Ive also worked in hostels in rome and greece and barely feel like this is working as i love travelling so much.

        looking forward to hearing from you

        Nic

      • Jason Noronha says:

        All the best Nick. In terms of what wasn’t expected, there were tons of things. But you’ve just gotta keep your head on your shoulders and fix it. I’d be happy to help out if you’ve got any specific questions about it. Just drop me a note.

        Cheers

  13. Jescinta says:

    Hi Jason,

    Great post! I am all inspired!!

    My partner has a holiday house which has a day spa attached on a large block of land in Capurgana in Colombia a little coastal town near the border of Panama. The location is really remote but a hidden gem. There is only access via boat or via air and there are no cars in the town. Its a real hidden gem.

    The business is not generating enough enquiry as it stands at the moment and I am in the process of putting together a business plan on converting the holiday house into a hostel with camping facilities. I would love any tips you have..

    I have a million questions:
    Is there any cons in having camping?
    Is a bar essential?
    Do you think food is essential?
    How do you get a place found ie on Lonely Planet, Trip Advisor, Travel Agencies?
    Is there a world wide back packing/ hostel association?

    Cheers – Jes

    • Michael Bauman says:

      Jescinta,

      Good morning! I owned a tiny bar in Panama for a bit, and I found similar issues.
      I am currently in the United States, but would be very interested in visiting your Hostel in Colombia. Can you send me some details, or website? Thank you!
      Best Regards,

      Michael

  14. Michael Bauman says:

    Great site!
    I love that you have followed your dream!
    Would you consider taking on a volunteer worker/employee for a few months?
    Thank you!

    Michael

  15. Lobsang Sangbo says:

    Very useful comment. I am in about 75% starting a hostel in Boudha, Kathmandu, Nepal. Just turned a large warehouse of 20ft by 60 ft into a five rooms with attached toilet. One room will be a common room and four rooms with three single beds each. Our family owns the house and we have more rooms to expand in future which are on rentals for now. What do you think about a no smoking policy? i used to volunteer in a non profit that used to do anti smoking program and believe in zero tolerance.

    • Jason Noronha says:

      a no smoking policy is awesome. shouldnt be a problem at all. i just got back to goa from kathmandu – stayed at alobar1000 and the sparkling turtle. good luck in your venture!

  16. Daniela says:

    Hi!
    I’d like to open a hostel in Canada…I’m Italian, and I don’t know the right legal procedure?
    How is burocracy there? How can I start up a hostel?

    Thank U!!!

    Daniela

  17. Raymund says:

    How’s it going Jason! I stumble onto your site, as I am researching on how I can open up a backpacker hostel here in Singapore.

    Can you give me some advice on getting the business plan up? And what are the must have in the hostel.

    Thanks!

  18. Jason says:

    Hi!!! Great to read your story mate and I’m looking to do the same thing in South America. The only thing that I would like to pick your brain about is how did you go with renting the hostel an staying there visa wise? Or are you a resident of India? And how much would you recommend to have saved to open a hostel (for example in India as that’s where you have done it) cheers Jason

    • Jason Noronha says:

      i am a resident of india. would be best if you got an expert to advise you on the laws of the land where you plan to setup your hostel..

  19. Alex says:

    thanks for the info, m about to start one.

  20. Ashley says:

    Thanks for the straightforward article. Is it possible to still travel and run a hostel? Do you find somebody you trust to take over in your absence? Or are you grounded for good?

  21. Joanie says:

    Hi,

    My name is Joanie. I am currently doing a bachelor’s degree in counselling but Im not too sure if I enjoy what I am studying. I fell in love with Australia and I really want go back back there but I want a career first. My dream is to open a backpacker in Australia. I got few ideas but dont know where to start. I got heaps of questions to ask ya. If you could email me on my email joanie.ballard1@gmail.com Would be great cheers xx

  22. Craig says:

    Hi. I wonder if you can give me any advise on setting a hostel up in spain. I have been researching this idea for some time now. I am looking to start out by getting an agreement with a landlord for a hostel and renting (whilst living there myself) I wonder if you have any information regarding this along with anything to do with getting the relevant permits or meeting any regulations and even what order you would go about this. For example do you get the rental agreement and property before all the permits etc. I do understand that there are different rules and regulations everywhere and so spain may not be your area. If you can not help, is there another website or any links that may help at all. I would really appreciate any help. Thankyou craig bradford

    • Jason Noronha says:

      Hey Craig – just my 2 cents but would be best to find out the laws about the permit before signing any agreement. Once you sign the agreement ensure that there is a clause that requires the owner to help you out with whatever documents you might require to procure the permit. There should also be a way out of the contract for you if the license does not come through within a stipulated period of time. Cheers.

  23. cesar gonzalez says:

    Hey my dad own a ranch in perquin elsalvador. Central America. Its near the revolution war muesem half hour from the Honduras border. My dad being owner is a lot of head aches crossed. Do you think I can have a successful hostel. Id be the host im 26 moved to Australia when I was 2 years old I backpacked after not seeing my dad for 10 years he built a ranch. I can send you pictures.

    • Jason Noronha says:

      Anythings possible man. Draw up a business plan and get going.. One option would be to have a written agreement with your dad (depending on your relationship of course)

  24. Kia says:

    I was trying to figure out if you have a twitter page.
    Hi and thanks for the eye-popping blog post.

  25. Matt says:

    Hi all there…

    I owe a property in Mexico of almost 1000 m2 with 3 building on it. Its 3 blocks from the busstation, 2 from the main supermarket and 5 from the zocalo. It would be perfect to open a hostel or camping on it. I managed a hostel for 5 years, but want to travel again. I am looking for someone (person, couple, friends) that would love to have their own hostel. I offer the place for the first year free of rent… after that we can see how to continue… contract for 5 or 10 years would have my preference, but also buying the place is an option. I am willing to invest an other $ 200.000 (mex. peso) to help the right people, with the right vision, to make this the best place possible. Its close to Chichen Itza, and some of the best cenotes in the world. Drop me a line if interested. Matt

  26. Sunil says:

    Hi Jason
    I too have dream of opening backpacking hostel or small hotel . Would love to talk to you .
    Sunil

  27. Gia says:

    Hi Jason:

    Thanks so much for your great blog post. I feel a real strong sense of reinforcement after having read both the ups and down of starting a backpackers hostel. I’m personally aiming at Latin America with a specific focus on Costa Rica. In a few months I hope to head down and work in a few well-run hostels so that I can get a true feel for what it takes and whether or not it’s a total fit. I am running a property in NYC and I agree with you. It’s A LOT of work – especially when people flush too much paper down the toilet. Also the attention to detail is finer because people leave lights on. They will leave the door unlocked if they can’t be so bothered and other things people do when they are in a property that they don’t care about but if you’re serious about it, and can detach from those factors, like you said – the benefits are great.

    My question: You are the second person I heard of renting a property to run a hostel. How would that work with the landlord? Have you included a clause that will not let the owner cancel your lease? or— What if the owner suddenly decides he or she wants a cut of your profit? -or wants to raise your rent significantly? Have you encountered any of those types of issues and can you suggest how to possibly safeguard against them.

    Thanks again for your very organized blogpost!

    Gia

    • Jason Noronha says:

      Hi Gia,

      You need to have all the details listed in your lease agreement with your landlord. However, do remember at the end of the day your lease agreement is just a piece of paper and you need to maintain a good relationship with your landlord. He needs to understand what you plan to do and needs to support this. Once you’ve got a good relationship going with the landlord, there’s a lesser risk of any unpleasantness. I’ve rented properties for 3 years now and although it has been a bumpy ride, it still works. Rental is beneficial to buying since you might not get sufficient return on investment if you purchase a (possibly expensive) property.

      Drop me a note if you need to get into more detail.

      Cheers,
      Jason

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  32. vans says:

    I’m planning to travel to Goa Oct 1st. I travel and blog. I’m curious to come over and stay at your hostel.. and probably put up in my blog and my page. itenerary details from 02nd Oct to 04 th oct.. let me know how to go about it. Thanks!!

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