Can a backpackers hostel bring in a bounty?

The nightly rates are lower, but does that mean the income you can make from a backpacker hostel or budget hotel will be at the lowest end of the accommodation business spectrum?

We believe that, with lower operational costs and multiple beds per room, a backpacker hostel or budget hotel can be an excellent high-yield business for owners and silent investors alike.


Reasons to invest in backpacker accommodation

1. Lower building costs

Backpackers and digital nomads or older travellers on a budget don’t expect a brand-new building or an ocean view

2. Lower fit-out costs

There’s no need for expensive bathroom fittings, marble tiles, deep-pile carpets and the like.

3. Longer stays

Although backpackers pay a lower cost per night than visitors to four- or five-star hotels, they stay longer and spend more overall. (According to a Tourism Research Australia report, backpackers account for 13.2 per cent of total tourism spend in Australia (or $3.2 billion).

4. Lower operational costs

These properties run successfully with less staff needed than with a higher-end hotel. With customers having longer stays, there’s also less turnover in linens so laundry costs are lower.

5. Additional income streams


Think about keeping some cycles on hand for rent. To attract a slightly older crowd, invest in a few pedal-assist e-bikes.

Food truck
If you aren’t providing a free breakfast or other meals, then you might find a coffee/food truck that will visit your premises regularly.

Most major tour companies offer decent commission on every tour booked.

Surf school
In coastal locations, partner with a surf school for commissions.

Book their next accommodation
This is a lovely gesture in itself but you might be able to get a commission on the booking.


How to create a winning backpacker hostel

We’re covering the basics here. To get more insight into what backpackers value, check out the reviews on Trip Advisor.

1. Choose a great location

Younger backpackers and older travellers want to be close to the action so location is key. In Australia, many older inner-city pubs and Motels have been converted to backpacker accommodation. In coastal regions, you want your hostel reasonably close to the beach.

2. Keep it clean

Younger travellers might not be the tidiest but they’re uncompromising when it comes to cleanliness. So make sure common areas like bathrooms are cleaned daily.

3.Provide free Wi-Fi

Wi-Fi is oxygen for younger travellers. Offer free Wi-Fi and speedy internet and your consideration will be reflected in their reviews of your property.

4. Provide chill-out areas for a social atmosphere

If you can’t create a communal terrace or courtyard, a kitchen/dining area complete with sturdy tables and chairs can give your guests somewhere to interact. In backpacker hostel reviews, a standout positive is the chance to meet new people.

5. Provide secure storage

Your guests will welcome a safe space in which to store their valuables such as laptops, tablets or phones.

6. Provide self-serve laundry facilities

A coin-operated commercial washer and dryer won’t’ deliver huge profits but both items should pay their own way.

7. Choose your market, niche or theme

Some hostels promote themselves as party places while others are valued because there’s a no-noise policy after a certain hour. If you’re close to the beach, then you might want to stick to the surfing motif.

8. Offer a mix of room types

Dorms are fine for single 20-somethings. Couples or older travellers tend to want their own room.

9. Offer good-sized kitchen and refrigeration space

As your backpacker guests tend to stay for weeks at a time, they appreciate somewhere to cook for themselves and store their food.

10. Promote your hostel on international directories and social media

If you’re running a great hostel, your guests will find you through word of mouth. However, until then, you’ll need to bang your drum to get the word out.

11. Set up a jobs board

Partner with some local businesses and allow them to post jobs on your jobs board. Most backpackers will appreciate the chance of local work.

12. Crunch your numbers

We suggest you have operating capital for at least a year. Get out the spreadsheet and work your costs so you break even at around 30 per cent occupancy.


Quality wins with word-of-mouth referrals

To ensure you get the all-important word-of-mouth recommendations, go for quality items and facilities and maintain your property well. Keep your ideal clients in mind, provide the features and services they value and you can become the number one destination in town for the savvy, low-fuss traveller.

Chris Rowe & team

With a strong appreciation of what constitutes a successful accommodation business sale, I’m able to recommend a sale price for your business; whether its a hotel, motel, resort, backpackers, caravan park, or management rights , at optimal market value. During my time as a broker, I have sold in excess of 100 properties around New South Wales, Victoria, Queensland and the Northern Territory. On average, I can take a property from ‘Listed’ to ‘Sold’ within 30 days.

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