Your business: how to open a hostel

* The calculations use the average data for the World Starting investments:

1 500 000 - 2 000 000 ₽

Monthly turnover:

470 000 ₽

Net profit:

240 000 ₽

Payback period:

8 months

The hostel is a great option to start in the hotel business, which you can enter with small investments. In this article, we will consider what conditions, documents and funds are needed to open a hostel.

When searching for a good investment idea, you should always pay attention to the dynamics of the markets of developed countries. Often, some economic trends arrive in Russia several years late. One such idea is to open a hostel. The hostel is a small budget hotel where dormitories are offered for living, designed for several residents (from two to twenty-five in a room) with common amenities on the floor or in the section. According to our concept, this is a hostel, but it does not imply permanent residence, but provides hotel services.

The global hostel service supply market is growing at 7-8 percent per year and generates revenue of more than $ 5 billion per year. Explosive growth in the number of hostels is brought by the markets of developing countries: Asian countries (13%), the Middle East and Eastern Europe (11% each). That is, the growth in the number and income of hostels falls precisely on countries similar in economic development to Russia. Now in Russia more than 2000 hostels are registered, and their number is growing. Therefore, you should pay attention to this market and with the correct implementation of the idea to get a highly profitable and fairly simple business.

What kind of room is needed for the hostel

Consider the investment costs that are required to open a hostel. First of all, most of the cost of a hostel is the cost of real estate. Hostel properties can be rented or bought. Both options have their advantages. From a financial point of view, both options are effective. Of course, renting a property is much cheaper in terms of initial investments, but as a rule, a quality hostel requires significant investments in the redevelopment of premises and the creation of the necessary interior, which we will almost certainly lose if the lease is terminated.

Let’s estimate how much property is needed to open a hostel. The area required for the hostel can be determined in accordance with the national standard of the Russian Federation GOST R 56184-2014 "Services of accommodation facilities. General requirements for hostels". A very interesting document, be sure to read it in more detail. According to him, “The area of ​​living rooms / rooms in hostels is determined on the basis of at least four square meters per bed, single or two-story, including the area occupied by the bed.” That is, with two-story accommodation with the number of people living in the room is 20 people, the area of ​​the room must be at least 40 m2. With single-tier bedding, respectively, at least 80 m2.

Next, you need one washbasin, one shower and one toilet for 15 people. In our opinion, this is not enough for a modern and successful hostel. But the minimum requirements are just that.

In addition, a common recreation area is needed, located next to the reception and accommodation service, it is recommended to equip kitchens or mini-dining rooms and a room for staff. So, for example, for a hostel for 30 people with bunk beds, about 130 m2 of the total area of ​​the room is needed. But more is better. After all, it is advisable to offer guests an additional service that will allow you to get additional revenue, such as laundry services, ready-made breakfasts, an apparatus with snacks and coffee, a counter with an excursion program and much more. All this requires space.

In what area is the best hostel location

Now let’s dwell on perhaps the most important point when choosing a hostel - its location. It is necessary to choose an area that is safe from a criminal point of view, close to attractions or a good traffic intersection, in which there are a small number of other hostels or hotels.

Until recently, the choice of this location was not a problem. After all, hostels were also allowed in residential buildings, it was enough just to purchase or rent a room of the corresponding area. Currently, a bill has been submitted to the State Duma of the Russian Federation, with amendments to the law on tourism activities and changes to housing legislation, according to which it will be prohibited to have hostels in residential multi-apartment buildings. These amendments have been approved by the State Duma for many years, but have not yet been adopted (as of September 2018). However, investing in this project, taking into account the fact that the law can be adopted at any time, to put it mildly, is risky. We strongly recommend that you refrain from this.

Of course, you can transfer housing to non-residential fund. But it should be noted that this can only be done with certain restrictions and the property tax in this case will increase several times.

But there is a way out. In our opinion, there is a compromise option for the location of the hostel. This is an apartment. Apartments - this is the type of premises that are often offered by developers, including for permanent residence. Modern apartments, as a rule, are in no way inferior to ordinary residential buildings, either in the infrastructure of the house or in the improvement of the territory. However, from a legal point of view, they are non-residential premises and amendments to the ban on the location of hostels should not apply to them. Thus, the optimal choice as the location for the future hostel will be apartments in the city center near attractions and good transport interchanges.

Let's get back to the value of such a property. It is difficult to say something definitely, it all depends on the region and location. But it is clear that when choosing the option of renting real estate for a hostel, we are talking about several tens of thousands of rubles per month, while acquiring real estate as property, it’s about several million rubles. Of course, the payback period of this project when purchasing real estate will increase, however, if you ever want to sell this property, you can already realize it as a separate business and its value can increase several times.

With any option of providing real estate, you need to spend money on the necessary equipment and repairs in the premises. It will be necessary to re-equip part of the premises, purchase equipment for the kitchen, bathrooms and so on. If you do not save much on repairs, furniture and equipment, then a full hostel complex for 30 people with an area of ​​about 130 m2 will cost about 1.5 - 2 million rubles. As you know, the figure is indicative, since it all depends on the condition of the room and the necessary redevelopment. You can save a part of the specified amount, and significantly increase it. Be sure to make an accurate estimate for repairs when choosing a room for the hostel. You may also need the services of an estimate and designer.

How much do hostels earn and spend

Let's talk about the revenue of the hostel. The cost of accommodation for one night starts from 200 rubles per person. As a rule, this applies to small cities and the cheapest hostels. In a big city, for example, in Moscow or St. Petersburg, the cost will be on average 750 rubles per person per night. But it all depends on the location of the hostel - there are options that are much cheaper and much more expensive. Let's take the average cost of living at 750 rubles. Then a hostel for 30 people will bring a maximum of 675 thousand rubles of revenue per month. Please note that when planning, revenue cannot be calculated based on the full occupancy of the hostel. It would be reasonable to accept occupancy at the level of 70% of the maximum. In this case, the revenue will be about 470 thousand rubles per month.

What will be the main costs of hostel activities? First of all, these are the so-called operational maintenance costs. Consider the main articles of which they consist.

First of all, this is staff costs. Since the hostel provides budget accommodation, you can get by with a minimum of staff. At a minimum, you can get by with two administrators and one maid. But we recommend that, both to ensure the normal workload of the staff, and for the high-quality performance of their services, to hire three administrators who will perform the functions of receiving guests and control household activities.

Of course, wages also vary widely from region to region, but we accept in the aggregate the amount of 140 thousand rubles per month, taking into account salary accruals.

Additionally you will need an accountant. In principle, especially at the initial stage, we recommend that you contact a specialized outsourcing accounting company, since such a company is responsible for the correct delivery of reports and the calculation of taxes. That is, you will have time to understand this issue and adopt the right practices, if in the future you decide to independently conduct accounting. As a rule, the cost of the services of a specialized accounting company for a hostel is small - the accounting statements and the tax regime are quite simple. The cost of accounting services will be no more than 10 thousand rubles per month, which in any case is less than the salary of an accountant in the state.

The next important expense item is utilities. They directly depend on the number of people living in the hostel, we will conditionally define them in the amount of 30 thousand rubles per month.

The costs of routine repairs, correction of minor malfunctions and various expendable little things will cost about 10 thousand rubles a month.

Thus, to summarize the hostel's operating expenses. In a month, based on the foregoing, they will amount to about 190 thousand rubles. Having this amount, we calculate the income of the hostel. It will be about 280 thousand rubles a month.

Of this amount, you must pay taxes (about 20 thousand per month), pay for advertising and other expenses (as a rule, guests of the hostel are offered free coffee or tea). The financial calculations of our hostel show that with the accepted version of the number of beds and their load, the net profit is around 240 thousand rubles. Interesting enough income.

As you can see, the calculations we offer are based on accepted initial data on the number of hostel beds, their cost, and others. But now, since you understand the entire calculation methodology, you can easily draw up your own small business plan, or rather a feasibility study. It is enough just to take your initial data and adjust our numbers taking into account the data that are characteristic of your region.

How to calculate the payback period of a hostel

Now, take the next step. We calculate the payback period of the hostel. In the case of the data we have accepted, we pay back the payback period as the necessary investment costs divided by the annual profit. In our case, we took the cost of repairs and equipment of the hostel in the amount of 1.5 - 2 million rubles. The average annual profit will be about 2.88 million rubles. So, even if we spend 2 million rubles on repairs and equipment, the project will pay off in about 8 months.

Additionally, we must include in the cost of investment the amount for the acquisition of real estate. As we wrote above, it is very difficult to determine any average amount, since the cost of real estate depending on the region and location is very different. Moreover, real estate purchased in the apartment segment is usually cheaper than usually residential property (about 30% cheaper). For example, we define the amount of real estate acquisition of three million rubles. Add them to our investment costs for repairs and equipment and get that, taking into account the full investment costs, the hostel will pay off in less than two years. You also need to calculate the payback period on the basis of your own numbers - the methodology, we think, is quite understandable to you.

What documents are needed to open a hostel

Consider what documents are needed to open a hostel. There is nothing complicated here. We open a company - IP or LLC, register the organization with the tax office. We get permission from the fire service and sanitary and epidemiological station. We conclude a contract for the export of household waste. This is the main list, in some regions some additional documents may be required, but, as a rule, there are not so many of them.

Regarding the choice of organizational form, what to choose, IP or LLC, quite a lot has been written. We will not dwell on this in detail. But, nevertheless, there are some features for hostels. A patent is available for IP. In some cases, it is more profitable than USN and UTII. The possibility of using a patent must be clarified by the tax office at the place of registration of the company. Choose a taxation system in advance, since there are certain deadlines for notifying the tax office about the type of taxation system, they should not be missed.

If you decide to choose an outsourcing accounting company, then they will tell you what type of taxation is better to choose for a hostel in your region.

Pay attention to one more thing when choosing an organizational form for a hostel. IP is liable for its obligations with all its property. In principle, the financial risks of the hostel are not so great, with proper control of financial flows, you simply will not have time to get into big debts - the hostel’s business is quite marginal. But there is a risk of unintentionally causing harm to guests, for example, fire or poisoning. Of course, these factors must be minimized, but no one will give a full guarantee that this will not happen. And the amount of compensation to guests can be very significant, keep this in mind.

Consider insuring such risks. It is possible to insure both property and hostel liability to guests. The market for such insurance in the Russian Federation is not very developed, but any insurance company will pick up interesting package offers that will protect you in case of emergency.

The most suitable types of OKVED for the hostel is 55.12 "Activities of hotels without restaurants". OKVED code 08/18/2019 “Activities of other places for temporary residence not included in other groups” This group includes:

  • provision of places for temporary residence:

  • in apartments, in rural houses, guest houses, etc.

  • in dormitories for students, workers, etc.

How to promote hostel services

Now, let's look at a few basic tricks on how to make your hostel really popular and effective.

  1. Find your niche. Make your hostel unique, come up with an interesting niche in the market. A standard set of amenities like free tea, Wi-Fi and a washing machine may not be enough in a competitive environment. A hostel for art lovers or wildlife lovers will attract more attention than an ordinary faceless place to live. And the cost of acquiring several objects of modern art (of course, not from the top list) can be quite small. Living wall of plants and equipment of several green areas will increase the attractiveness of the hostel for lovers of ecology and nature. Costs can be small, and every positive hostel review can attract dozens of guests.

  2. Give the customer what he needs . Create a perfect guest portrait for yourself. Are these students or seniors? Single travelers or companies? What incomes do they have and what is the purpose of their visit to your region? A good entrepreneur knows what his client’s cat name is. Allow enough time for this and the effect will be significant. Give your hostel a unique face with various necessary details. Set up a book exchange desk or make a board games corner. Come up with interesting events for your guests or organize a tour of the local cuisine. All this can be not only useful from the point of view of attractiveness of the hostel, but also profitable from a financial point of view, that is, generating income.

  3. Pay attention to cleanliness. Most hostel visitors put cleanliness in the first place. If your hostel is not perfectly clean, all efforts to attract customers will be futile. Of course, if the room is located in an old housing stock, where it is especially difficult to maintain cleanliness, then the cost of cleaning will increase significantly. But still, give it priority. Cleanliness in the bathrooms and the kitchen is especially important. Do not spare money on equipment that is easy to clean and clean, such costs will pay off.

  4. Take care of security . In second place after cleanliness, hostel customers tend to put security. Many ratings even give a separate rating to the hostel by this parameter. You must provide basic security even at the stage of choosing a location to host a hostel. Оцените район с криминальной точки зрения. Обеспечьте полную безопасность гостей в хостеле. В наше время путешественники имеют при себе множество ценных вещей - дорогие фотоаппараты, ноутбуки, кредитные карты. Прежде всего, нужно обеспечить гостей удобными и защищенными шкафами для хранения вещей. Предусмотрите наличие в таких шкафах розеток, и гость может спокойно отдыхать, пока его устройство заряжается. Оптимально, если доступ к шкафчику открывается персональной картой гостя. Для обеспечения безопасности необходима видеокамера над входом и наличие постоянно присутствующего администратора, который контролирует входящих в хостел. Желательно предусмотреть в хостеле возможность раздельного поселения мужчин и женщин. Составьте небольшую брошюру, посвященную вопросам безопасности в вашем городе с указанием неблагоприятных районов и правил безопасности в хостеле.

  5. Станьте публичной компанией. И, наконец, обратим внимание на продвижения и увеличение популярности хостела. Вы должны стать публичной компанией, наличия сайта сейчас уже недостаточно. Сделайте страницы своего хостела во всех социальных сетях, особенное внимание обратите на Instagram. Вернитесь к портрету своего идеального клиента и сделайте подачу информации именно для него. Запишите видео, которое потенциальные гости смогут просматривать до визита к вам. Перечислите в нем все достоинства и положительные стороны вашего хостела. Подумайте над живой трансляцией из мест общего пользования хостелом – кухни или комнаты отдыха. И, конечно, самое главное – отзывы. Попросите гостей оставить вам небольшой видео отзыв о вашем хостеле. Разместите как можно больше отзывов в социальных сетях и на своем сайте и это обеспечит вам постоянный приток клиентов. Не забудьте разместить информацию о хостеле во всех доступных агрегаторах, которые предлагают бронирование мест проживания. Комиссия за их работу весьма умеренна, а эффективность высока.

Anton Vodolazov, business consultant, candidate of economic sciences

Contact the author:

(c) - a portal to business plans and guidelines for starting a small business 08/18/2019

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