models and numbers for US hostels

[menzelg]

I have been considering the possibility of starting up a hostel for a bit now and I'm curious about what resources are available for business models and if there are firm numbers available as far as profitability in the short term/long term. I would love some examples of how many years it was before people started seeing a profit. Certainly this will vary but if I was able to get some baseline ideas it would help. I am thinking of opening a hostel in Bellingham, Washington which is an hour north of Seattle and about 45min (minus border time) from Vancouver, BC. It is a college town with a good night life and great hiking, backpacking, biking, skiing, whale watching close by. And with the 2010 Olympics in Vancouver, I predict a major increase in exposure. I am a bit concerned however that with two major cities nearby it may not get the tourist traffic I would need to sustain a place. Does anyone have a similar experience?

[Hostels]

If you have big cities nearby that have hostels you might be able to arrange with some of the hostels to send visitors back and forth between your properties.

If most people at your hostel are going to go to Vancouver at some point then you could tell one of the hostels in Vancouver that you will direct your visitors there in exchange for them sending some of their backpackers to you.

[menzelg]

That's a really encouraging idea! I believe that once word of mouth gets around, there is enough of a draw to get people to stay most of the season. It is just the first few years? that kind of make me nervous. I imagine there would be a fair number of Americans that would stay to visit friends at the college and get wasted but I would much rather attract more of the foreign backpacking crowd.

What process can you recommend for evaluating if it is economically feasible?
My current plan is:

Determine the local zoning laws to see if there are restrictions
Consult the local travel board to get a feel for what the tourist population is like
Contact hostels in Vancouver and Seattle to see what type of guest traffic they see
Consult with local Small Business Bureau about business plan/investment capital
Consult with a lawyer to predict possible pitfalls/legal hang-ups

If it still seems viable at this point:

Set up LLC
Begin raising capital
Find a space
Purchase/Lease, submit plans and renovate / furnish
Begin advertising for future opening / possibly get affiliation with HI or similar
Purchase insurance
Open

These are broad categories so any advice to flesh them out would be most welcome.
Can anyone share what sort of time frame they had from idea to actually opening? I know that depends on a bunch of factors but it would be great to get some actual experiences.

[Hostels]

It is just the first few years? that kind of make me nervous. I imagine there would be a fair number of Americans that would stay to visit friends at the college and get wasted but I would much rather attract more of the foreign backpacking crowd.

I've only worked with hostels in "hub cities" but I don't think it would take years to get the word out.

Backpackers use the Internet to find hostels. If you begin building an Internet presence and relationships with other hostel owners nearby before you open, you could get a head start.

I just looked up the bus fare from Vancouver -- $16. From Seattle it's $18. Not bad. Looks like a great location.

[menzelg]

There is also a train that goes from Bellingham to both cities (and although Amtrak is a bit more expensive it's a cool ride.) A ferry up to Haines, AK and a friend of mine works on a whale watching boat to Victoria, BC that is pretty affordable for what you get.

I guess getting back to the initial subject, are there business plans available for opening a hostel? I don't really have much of my own cash for start up at this point so I would need to approach investors who would certainly need to see some hard facts.

[santa klaus]

If you have big cities nearby that have hostels you might be able to arrange with some of the hostels to send visitors back and forth between your properties.

I already said this in an earlier thread.

Invite hostel staff from nearby city hostels once a year. Don´t charge them anything and make sure there´s enough booze.

Receptionists can spread "the word of mouth" much better then anyone else, because they are in contact with travellers every day.

[Hostels]

I already said this in an earlier thread. Invite hostel staff from nearby city hostels once a year. Don´t charge them anything and make sure there´s enough booze.

That is a great idea, especially the free booze...

[menzelg]

I definitely agree with that (we get great music here as well and the booking is local so possible deals there are always an option too) That said, I am definitely a ways away from that.

Here's a link for the city's tourist site:

http://www.bellingham.org/

[uktrail]

That would be a great place to have a hostel, it fits nicely into a 'west-coast chain'. However, there is one negative aspect. Backpackers visiting Britain and Europe are notorious for jumping rapidly from capital to capital, missing out all the good stuff in between. And if you are trying to see half of Europe in 3 weeks, who can blame you? In Britain, the foreign visitors you meet in country-area hostels are most often those who are working in London for a year and taking weekend or short trips.

Is it the same for visitors to America? I am afraid a typical backpacker would do LA - San Francisco - Portland/Eugene - Seattle - Vancouver, and would just not bother to fit in places in between.

I guess you should see this as a marketing challenge, maybe you need to become known to backpackers while they are planning their tour.

Anyway, I encourage you to have a go!

[menzelg]

That is precisely my concern. Someone on a limited schedule would likely opt to take that itinerary and skip over the smaller towns. Potentially just a marketing challenge but something that is tough to guage.

Thanks for the encouragement.