Do you want to start a private hostel and need to write a plan? If YES, here is a sample private hostel business plan template & FREE feasibility report.
If you are an investor or an aspiring entrepreneur with a real estate background and you are looking towards owning an investment portfolio in the real estate industry, we will recommend that you consider investing in building private hostels in strategic locations.
If you decide to build a private hostel in a college or a tourist community, you are sure of making huge returns from your investment. This is because there are loads of college students, campers and travelers who usually prefer lodging in hostel facilities as against hotels because of the affordability.
If you want to partake in this thriving industry, then you need to obtain all the necessary licenses and permits. The truth is that the market is still pretty much open for new investors to come in. Although there are competitions at various levels in the industry, but if you are able to come up with a good business strategy, then you are sure of getting your own fair share of the market in the industry.
Below is a sample private hostel company business plan template that will help you write yours with little or no stress.
A Sample Private Hostel Business Plan Template
Table of Content
- 1. Industry Overview
- 2. Executive Summary
- 3. Our Products and Services
- 4. Our Mission and Vision Statement
- 5. Job Roles and Responsibilities
- 6. SWOT Analysis
- 7. MARKET ANALYSIS
- 8. Our Target Market
- 9. SALES AND MARKETING STRATEGY
- 10. Sales Forecast
- 11. Publicity and Advertising Strategy
- 12. Our Pricing Strategy
- 13. Startup Expenditure (Budget)
- 14. Sustainability and Expansion Strategy
1. Industry Overview
A hostel whether private or public owned is a type of low-cost, short-term shared sociable lodging where guests can rent a bed, usually a bunk bed in a hall of residence, with shared facilities such as lounge, laundry and sometimes a kitchen. Rooms in hostels can be mixed or single-sex and they have private or shared bathrooms. Private rooms may also be available, but the property must offer dormitories to be considered a hostel.
Aside from campus and campground, hostels are popular forms of lodging for travelers, cycle tourists, and gap year travelers. They are part of the sharing economy. Usually people prefer lodging or living in hostels because it is cheap especially compared to hotels and of course because of the opportunities to meet people from all over the world, find travel partners, and share travel ideas.
Interestingly, loads of hostels in the united states are locally owned and operated, and are often cheaper for both the operator and occupants than hotels. Hostels may offer long-term lodging to guests for free or at a discount in exchange for work as a receptionist or in housekeeping.
Statistics shows that there are approximately 10,000 hostels in Europe and approximately 300 hostels in the United States. The typical guest is between 16 and 34 years old.
Apart from shared kitchen facilities, some hostels have a restaurant and/or bar. Washing machines and clothes dryers are often provided for an additional fee. Hostels sometimes have entryways for storing gear. Most hostels offer lockers for safely storing valuables.
Some offer yoga studios, cinemas, rooftop clubs, and surf camps. Some bare-bones hostels do not provide linens. Some hostels may have a curfew and daytime lockouts, and some, albeit few, require occupants to do chores apart from washing and drying up after food preparation.
Private hostel business is part of the real estate industry and the Bureau of Labor Statistics (United States of America) projects 11.1 percent job growth for the real estate industry between 2012 and 2022, which is about as fast as average.
During that time, an additional 38,000 jobs will open up in the industry. Hence any private hostel construction company that is well equipped and positioned will sure rake in huge revenues from this industry within this period and of course the future is bright.
Some of the factors that encourage entrepreneurs to start their own private hostel business could be that the business is highly thriving and profitable business and an aspiring entrepreneur can successfully launch the business if they have a pool of cash.
Lastly, if you are going into the construction and management of private hostels, it is very important to be creative and to be able to use your ideas to meet the rapidly changing needs of the society when it comes to low-cost, short-term shared sociable lodging facilities.
2. Executive Summary
Golden Generation© Private Hostels, Inc. is a real estate development company that will major in the construction of private hostels for the college students, campers and travelers in and around Ohio State University, Columbus which happens to be the largest university in the US in terms of student enrollment.
Golden Generation© Private Hostels, Inc. is going to be a self-administered and a self-managed real estate investment trust (REIT). We will engage in the construction of private hostels that will meet the needs of a wide range of clients. We will work towards becoming one of the largest private hostel construction companies in the United States of America with active presence in major cities.
As part of our plans to make our customers our number one priority and to become one of the leading private hostel construction companies in the United States of America, we have perfected plans to adopt international best practices. Golden Generation© Private Hostels, Inc. have overtime perfected plans that will help us to become a specialist in our area of business.
Golden Generation© Private Hostels, Inc. will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.
Golden Generation© Private Hostels, Inc. is owned by Eric Moore. Mr. Moore has a Degree in Civil Engineering. He is a property guru that has worked with top Real Estate Companies in the United States of America for many years prior to starting his own business. Other investors with same investment ideology whose name cannot be mentioned here for obvious reasons are going to be part of the business.
3. Our Products and Services
Golden Generation© Private Hostels, Inc. is going to build different types of private hostels in and around campus communities in the United States. Our intention of starting our private hostel construction company is to favorably compete with leading players in the industry.
We are well prepared to make profits from the industry and we will do all that is permitted by the law in the United States to achieve our business goals. Our business offerings are listed below;
- Construction of private hostel for a wide range of clients
- Renting, selling and leasing private hostels
- Real estate consultancy and advisory services
4. Our Mission and Vision Statement
- Our vision is to become the ideal picture of private hostels in and around Columbus – Ohio and of course the United States.
- Our mission of starting a private hostel construction business is to make available highly conducive low-cost, short-term shared sociable lodging facilities for college students, campers and travelers, and to become a national and international brand by building private hostels all across key cities in the United States
Our Business Structure
Our company’s structure is not entirely different from what is obtainable in the real estate industry. As a matter of priority, we have decided to create a structure that will allow for easy growth for all our employees and also, we have created platforms that will enable us attract some of the best hands in the industry.
We are quite aware that the success of any business lies in the foundation on which the business is built on, which is why we have decided to build our private hostel construction company on the right business foundation. We will ensure that we only hire people that are qualified, honest, hardworking, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders.
As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more depending how fast we meet our set target.
Golden Generation© Private Hostels, Inc. is fully aware of the modus operandi in the real estate industry, hence adequate provision and competitive packages have been prepared for independent real estate brokers. Our marketing department will be responsible for managing this aspect of our business structure.
Below is the business structure we will build Golden Generation© Private Hostels, Inc. on;
- Chief Executive Officer
- Facility Manager
- Real Estate Agents
5. Job Roles and Responsibilities
Chief Executive Officer – CEO (President):
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
- Creating, communicating, and implementing the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Responsible for fixing prices and signing business deals
- Responsible for providing direction for the business
- Responsible for signing checks and documents on behalf of the company
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Evaluates the success of the organization
- Reports to the board
- Supervising multi-disciplinary teams of staff including cleaning, maintenance, grounds and security
- Ensuring that basic facilities, such as water and heating, are well-maintained
- Managing budgets and ensuring cost-effectiveness
- Allocating and managing space between buildings
- Ensuring that facilities meet government regulations and environmental, health and security standards
- Advising businesses on increasing energy efficiency and cost-effectiveness
- Overseeing building projects, renovations or refurbishments
- Helping businesses to relocate to new offices and to make decisions about leasing
Real Estate Agents
- In charge of leasing and renting out hostel rooms under our ‘to let list’
- Responsible for handling, reporting on and evaluating the component systems of a building (electrical, fire, roofing and plumbing)
- Keeps daily logs, including photographs taken during inspection
- Document all customer contact and information
- Represent the company in strategic meetings
- Help increase sales and growth for the company
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Provides managers with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
- Responsible for financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting for one or more properties.
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensuring compliance with taxation legislation
- Handles all financial transactions for the company
- Serves as internal auditor for the company
6. SWOT Analysis
The fact that private hostel construction business is very rewarding does not mean that there are no challenges in the industry. Starting a private hostel construction business in the United States of America comes with its own fair share of challenges, you would have to abide by the law and also compete with loads of other investors in the real estate business.
In order to compete favorably in the real estate industry as a private hostel construction company we have been able to hire the services of tested and trusted business and HR consultant to help us conduct critical SWOT analysis for us.
We intend maximizing our strengths, explore all opportunities we will come across, properly manage our weakness and confront our threats. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Golden Generation© Private Hostels, Inc.;
Some of the strength that we will be bringing to the table in the real estate industry is our robust relations with property investment moguls in the United States of America. Our access to pool of college students, campers and travelers most especially bikers and cyclists who are willing to stay longer in private hostel facilities and also, we have a team of experts who have cut their teeth in the real estate industry.
Our commission structure and relationship with freelance real estate agents in Columbus – Ohio and other state in the US will also count towards our advantage.
As a newbie in the private hostel business, we might have some challenges competing with big time realtors and other private hostel construction companies that have been in the industry for many years; that perhaps is part of our weakness.
The opportunities in the real estate industry especially as a private hostel construction company is massive considering the number of families that would want to own their own private hostel. We are well – positioned and ready to take advantage of any opportunity that comes our way.
Some of the threats that we are likely going to face as a private hostel construction company are unfavorable government policies, and global economic downturn; global economic downturn usually affects spending power and the real estate industry is known to encounter decline in sales and profits during this period.
7. MARKET ANALYSIS
- Market Trends
Lodging for people who are out of station is a response to an extremely complex set of economic, social, and psychological impulses. For example, some college students, campers and travelers most especially bikers and cyclists may choose to spend more on housing because they feel they can afford to, while others may not have a choice but to stick to low – cost private hostel as against expensive hotels.
Market forces, policy decisions, and demographic changes have converged, making it more difficult to increase private hostel for renters. In essence, most private hostel construction companies are targeting college students, campers and travelers most especially bikers and cyclists who are likely going to need such properties.
Another obvious trend that is common in the industry is that most of them are improvising on more means of making money in the real estate industry. As matter of fact they are also acting as property developers and home staging agents amongst many other functions that they are involved in.
The trend in this industry if you intend being ahead of your competitors is to have a restaurant and/or bar within your private hostel facility. Washing machines and clothes dryers are often provided for an additional fee. Hostels sometimes have entryways for storing gear. Most hostels offer lockers for safely storing valuables. Some offer yoga studios, cinemas, rooftop clubs, and surf camps.
8. Our Target Market
As a private hostel construction company, our target market cuts across different classes of people. We are coming into the real estate industry with a business concept that will enable us work with a wide range of clients. We have put plans in place to recruit freelance agents (brokers) nationally to represent our business interest wherever we are located in the United States of America. Below are our target markets;
- Short-gap travelers most especially bikers and cyclists et al
The availability of competent and reliable real estate professionals under our payroll, our business process and of course our pricing model are part of our competitive advantage.
Another possible competitive strategy for winning our competitors in this particular industry is to build a robust clientele base, ensure that our private hostel designs are top notch and we have all the needed facilities that will appeal to our target market.
We have standard shared kitchen facilities, a restaurant and/or bar within our private hostel facility. Washing machines and clothes dryers will be available for an additional fee. We will also be offering lockers for safely storing valuables, yoga studios, cinemas, rooftop clubs, and surf camps.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and objectives. We will also engage freelance real estate brokers/agents on a commission level to help us market our services.
9. SALES AND MARKETING STRATEGY
We quite mindful of the fact that there are stiff competitions in the private hostel cum real estate market in the United States of America, hence we have been able to hire some of the best business developers to handle our sales and marketing department.
Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization. The training is not restricted to only our full – time employees but also all our freelance brokers that are scattered all over the United States of America.
Our goal is to become one of the leading private hostel construction companies in the United States of America which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force in the industry. Golden Generation© Private Hostels, Inc. is set to make use of the following marketing and sales strategies;
- Introduce our private hostel construction company by sending introductory letters alongside your brochure to college students, campers and short-gap travelers throughout the city where our private hostel construction company is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get our message across
- Create a basic website for our business so as to give the business an online presence
- Directly market our services
- Join local private hostel construction business associations for industry trends and tips
- Join local chambers of commerce and industry with the aim of marketing our services
- Advertise our business in community based newspapers, local TV and radio stations
- List our business on yellow pages’ ads (local directories)
- Encourage the use of Word of mouth marketing (referrals)
Sources of Income
Golden Generation© Private Hostels, Inc. is established with the aim of maximizing profits in the private hostel industry. Although we are a private hostel construction company, but part of our work force are also licensed real estate agents hence we intend generating additional income from diverse means in the real estate agency.
We have successfully built a vibrant real estate network that covers the whole of the United States of America so as to help us build a profitable business. Below are the sources we intend exploring to generate income for Golden Generation© Private Hostels, Inc.;
- Construction of private hostel for a wide range of clients (college students, campers and travelers most especially bikers and cyclists)
- Renting, selling and leasing private hostel
- Real estate consultancy and advisory services
10. Sales Forecast
It is a known fact that as long as there are college students, campers and travelers in the United States of America, there will always be need to for private hostel construction companies.
We are well positioned to take on the challenges that are synonymous to private hostel construction businesses in the United States, and we are quite optimistic that we will meet out set target of generating enough income/profits from the first month of operation and grow the business beyond Columbus – Ohio to other states in the United States of America within record time.
Below are the sales projections for Golden Generation© Private Hostels, Inc. it is based on the location of our business and the services we will be offering;
- First Fiscal Year (FY1): $1.2 million
- Second Fiscal Year (FY2): $3 million
- Third Fiscal Year (FY3): $4.6 million
N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and any major competitor offering same services as we do within the locations where we have a strong business presence. Please note that the above projection might be lower and at the same time it might be higher since some factors are beyond our control.
11. Publicity and Advertising Strategy
We have been able to work with our consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the private hostel cum real estate industry by storm which is why we have made provisions for effective publicity and advertisement of our company. Below are the platforms we intend to leverage on to promote our private hostel construction business;
- Place adverts on both print and electronic media platforms targeted towards college students and short – gap travelers
- Sponsor relevant TV shows so as to be able to communicate our brand and what we do
- Maximize our company’s website to promote our business
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, LinkedIn, Google+ and other platforms (real estate online forums) to promote our business and list our hostels for rent.
- Install our Billboards in strategic campus locations in and around Columbus – Ohio
- Distribute our fliers and handbills in targeted campus and tourist areas from time to time
- Attend landlord and residents association meetings with the aim of networking and introducing our business.
- Ensure that all our workers wear our branded shirts and all our vehicles are well branded with our company’s logo et al.
12. Our Pricing Strategy
Part of our business strategy is to ensure that we work with the budget of our clients to help them meet their expectations.
Since we are not directly in control of the pricing system in the real estate industry, we can only abide by what is obtainable in the industry. But one thing is certain, our private hostel facilities will always be safe and preferred by lodgers.
- Payment Options
At Golden Generation© Private Hostels, Inc. our payment policy is all inclusive because we are quite aware that different people prefer different payment options as it suits them but at the same time, we will not accept payment by cash because of the volume of cash that will be involved in most of our transactions.
Here are the payment options that Golden Generation© Private Hostels, Inc. will make available to her clients;
- Payment by via bank transfer
- Payment via online bank transfer
- Payment via check
- Payment via bank draft
In view of the above, we have chosen banking platforms that will help us achieve our plans without any hitches and we will also pay our freelance sales agents with same platforms.
13. Startup Expenditure (Budget)
From our market survey and feasibility studies, we have been able to come up with a detailed budget on achieving our aim of establishing a standard and highly competitive private hostel construction company in Columbus – Ohio and here are the key areas where we will spend our startup capital;
- The total fee for incorporating the business in The United States of America – $750.
- The budget for permits and license – $2,000
- The cost for hiring business consultant – $2,500.
- The cost for computer software apps (Accounting Software, Payroll Software, CRM Software, real estate software, and QuickBooks Pro et al) – $7,000
- The budget for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $5,400.
- The cost for the construction of the first hostel facility in Columbus – Ohio – $1.5 million.
- The cost for equipping our office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $150,000
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
- The cost of launching our official Website – $600
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $5,000
Going by the report from the market research and feasibility studies conducted, we will need approximately 2.5 million dollars to successfully setup a small scale but standard private hostel construction company in the United States of America.
Generating Funds/Startup Capital for Golden Generation© Private Hostels, Inc.
Golden Generation© Private Hostels, Inc. is owned and managed by Eric Moore and other business partners. They are the financiers of the business which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources.
- Generate part of the startup capital from personal savings and sale of his stocks
- Generate part of the startup capital from friends and other extended family members
- Generate a larger chunk of the startup capital from the bank (loan facility).
N.B: We have been able to generate about $1 million (Personal savings $800,000 and soft loan from family members $200,000) and we are at the final stages of obtaining a loan facility of $1.5 million from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.
14. Sustainability and Expansion Strategy
The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and business structure. If all these factors are missing from a company, then it won’t be too long before the business closes shop.
One of our major goals of starting Golden Generation© Private Hostels, Inc. is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to rent/lease our private hostel facilities a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.
Golden Generation© Private Hostels, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.
We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check: Completed
- Business Incorporation: Completed
- Opening of Corporate Bank Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Construction of the first private hostel facility in Columbus – Ohio: In Progress
- Conducting Feasibility Studies: Completed
- Generating capital from the CEO / President and Business Partners: Completed
- Applications for Loan from our Bankers: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents and other relevant Legal Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Promotional Materials: Completed
- Recruitment of employees: In Progress
- Purchase of the needed hostel furniture, office equipment, electronic appliances and kitchen and laundry equipment and gadgets: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business (Business PR): In Progress
- Health and Safety and Fire Safety Arrangement: In Progress
- Establishing business relationship with key players in the industry (networking and membership of relevant real estate bodies): In Progress