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How To Set Up a Backpackers Hostel: 10 Things I Wish I Had Known + Three Bonus Tips

I would much prefer to sit down with you for a chat over a glass of something fine, but this is the next best thing 😊

Setting up, owning, and managing a hostel is one of the most challenging jobs I have ever done, but also one of the most rewarding. Oh, the lifestyle!

We all have the aim to become the “go-to” hostel in your destination, right? The one that travellers who have stayed with you pass on as their top tip for those heading in the your direction.

Getting there is a rocky road. You will find long, flat stretches of tarmac where you feel like everything is going along swimmingly, and then you will turn a corner and run head on into what seems like an insurmountable obstacle. Some people fall at that hurdle, (which is not actually a bad thing., it is better to find you are not cut out for it early on!), but for those who persevere, climb up and rappel down the other side victorious, great job! This is the just the start of a superb adventure!

Here is my hostel. 19 km from the foot of a very active volcano located in Pucón, southern Chile. Pucón is the adventure tourism capital of the country. There is seriously not one adventure sport or activity that you cannot do there. Blessed with a huge lake, black sand beaches, numerous national parks, hidden waterfalls, and some of the best rivers for kayaking in the world, it is a paradise for play!, which means it is a major attraction for active tourists too.

I was 28 when I bought a plot of land with a view of the volcano two blocks from the main street and five blocks from the beach. It was gold dust! The plot already contained two wooden cabins that were to become The Tree House Hostel. I originally wanted to call it The Escape Goat, but the town hall wouldn’t let me have a pet goat!

Anyway, you want to know what I wish I had known… so let’s get on with that bit and you can always get in touch to hit me with any other questions later. Here we go!

1. The value of really understanding your target market is critical to success.

Really, really do your research on who your target client is and what they want and need. The more you understand them, the more you can meet their needs which in turn means enhanced guest satisfaction which means better online reviews and therefore more business coming your way. Work out how to exceed expectations at every point in the guest stay, and even before. I have a great example of the thought process required to dig deep and get to know your target client in this blog here.

2. Maximise every square metre of space available to you.

By doing a really good job on #1, you will be able to work out how to best distribute your spaces so that you maximise occupancy, and therefore income. This will depend on what your target client wants and how their groups are made up (families, couples etc). Backpackers hostels are no longer all about just solo backpacking travellers. You don’t want to have too many family rooms if your guests are mainly couples because you will end up housing couples in rooms that are too large, when you could have separated that large room into two.

3. Calculate a salary for you right from the start.

This sounds so obvious, but when you start out the lines are greyed out between work and play so it can be easy to just carry on building a business, growing your presence on- and offline, and playing hard with your first guests. From day one calculate the salary and, even if you don’t take it, write it in stone that you will begin taking your salary after six months for example. That will of course all depend on your investment plan and needs but what if you suddenly need a manager and then realise your income doesn't cover the cost of one?

4. Take time to train your staff.

Infuse them with your energy and ethos. If you have them onside, your guests will feel the satisfaction of your team. You cannot fake happiness and contentment at work. Your staff are your ambassadors. Even if you only have one cleaning person, make them the happiest cleaning person in your town. This does not mean you have to pay them more than everyone else. That will actually put you in a weak position for negotiation with future employees. It is simply about making them feel as important as possible in their job. Listen to what they have to say, implement changes that make their jobs easier, and get to know their families. That goes a lot further in a community than you can ever imagine.

5. Build an email list right from the start.

This is hugely underestimated and often comes after a drive to get more followers on social. You do not own your social profiles or your followers, however, your email list is your property. There is a simple strategy you can follow to do this. Click here for an introduction.

6. Get very clear on what sort of marketing distribution strategy you want to follow.

Encourage direct, use OTAs as visibility tools, build great relationships with a select few agents and operators. Remember you are only as good as your marketing, and to shine, you need to be really, really good at that. Avoid outsourcing it, at least until you completely understand it yourself. You need to be fluent in the ins and outs of who you are marketing to and how to reach them. Someone else might be able to help with ideas, but you know your business, and your aspirations, better than anyone. Check out my widely shared blog here from January 2021, that talks about creating rates and policies that match consumer trends in this post-Covid travel recovery.

7. Take time to research what you should charge.

It is very, very difficult to change your pricing structure six months in. Really set time aside to work out all the factors and costs that you need to consider and that are important in your destination, and therefore important to your client. You should definitely take a look at what your competitors are charging, but only from a marketing and competitive set point of view. Never base your pricing on what others charge alone. You can be the most expensive and still attract clients if you offer the right value and exceed guest expectations at every turn.

8. Put some real thought into your cleaning system.

We all know that cleanliness is crucial, more now than ever before. Create a system that is as efficient as possible by keeping all your supplies in one place. It can be a worthwhile investment to purchase some kind of trolley cart. It doesn't have to be anything purpose made, just something with wheels that you can store everything in and push into the rooms when necessary. If you have multiple floors, create a dedicated space to store cleaning supplies on every level.

9. Make an effort with your local language skills to build relationships.

It is very hard to set up a business in another language if you don’t have a certain level of competency. You will have to meet with people at the municipal offices frequently, you will need permits and will have to deal with the tax office. You can of course take someone along to help you with this, but I have seen how (more often than not) this doesn’t work out too well. Even if your language skills are not perfect, communicate as best you can and be polite, so polite, even if the paperwork is driving you crazy. As an outsider you are being observed to see how well you fit in. You never know when you will need a favour from someone and new travels fast about how ungraciously someone behaves. Be nice. All. The. Time.

10. Check on the ownership of digital assets if you are buying an existing hostel.

Ask for a list of the current online assets, where they are hosted and who currently manages them. The big one here is of course the website. If you love the current branding you want to make sure that you can take that over as it is. It can be costly to have to start again, not just in terms of $$ but also from a reputation perspective. A database of past clients should also form part of the portfolio that you receive and this is worth gold as it gives you a solid list to start nurturing as soon as you take over.

Bonus Tip 1:

Set personal boundaries.

Be ready for the business to take over your life every day all day at the outset. Then get tough and put in some personal boundaries so that it doesn’t consume you over time.

Bonus Tip 2:

Learn as much as you can about Responsible Tourism.

Current consumer trends show that more than ever people are aware of the fragility of the planet and our role in creating a better future. It is easy to implement Responsible Tourism practices into your business so take some time to understand what it is and use it to make a positive difference in your community. Awareness, responsible implementation and sharing of this information creates a ripple effect which encourages the development of a more resilient tourism destination. Who doesn’t want that for the future of their business? Read my introduction to Responsible Tourism here.

Bonus Tip 3:

Put the Frequently Asked Questions about your destination on the walls!

Write them, print them or paint them on framed pieces of fabric as I did, however you do it, just make sure you do it. I promise you, it will save your SO much time!

So, that’s it from me for now!

I loved my time running The Tree House Hostel! My time there only came to an end years later when I moved away for love, but those long afternoons in a hammock chatting with such interesting people from all over the world hold a very dear place in my memory.


If you are interested in learning more about managing a balanced sales and marketing strategy created specifically for small, independent hotel, lodge, b&b and hostel owners the best place to start is with this super short yet super informative Top 5 Consumer Travel Trends video. Click the image below to gain access:

Also, as always, if you just want to bounce around ideas or pick my brain, feel free to drop me a mail at

Good luck on this journey!

Found inspiration here? If you would like to receive more helpful, relatable and actionable content relevant to your business, click here to sign up to my email list. No spam, no bombarding you. Just really useful stuff. I look forward to having you onboard :)


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