Hostels abroad: the advantages of the format and the profitability of the investment

While Russia is actively trying to prohibit the placement of hostels in residential buildings, in the West the popularity of this format of delivery of the property to rent is only gaining momentum: the tourists, cheap, owners of beneficial cities — not expensive. Against this background and the growing attractiveness of investment in hostels. “Tranio” explains what hostels are and at what price you can buy abroad and why is it worth to invest money in them.

Hostel (from the English hostel — “hostel”) is a budget mini-hotel, often designed for young backpackers, and is located in the Central district of a large city. The idea of a hostel for the first time realized the German teacher Richard Shirmann, who at the beginning of the XX century have arranged a permanent place for overnight youth from poor families in the medieval castle of Altena.

Low price — the success of

From the usual hostels hotels have lower occupancy (average of 30-60 Euro per day), informal atmosphere and a lesser degree of privacy. Hostels may be located in a detached house, and can take only one or several floors of the building. In most classical of hostels no private rooms, but there is a room with multiple bunk beds, bathroom common areas, reception area and small kitchen.

The demand for hostels from tourists is high because of affordable prices of accommodation. Even during the 2008 crisis when the hotel industry in General was experiencing hard times, the hostels sector is confidently kept afloat. This business is profitable because, despite the rapid development of the segment, there is still a shortage of supply: about 20 % of the tourists from all over the world are young people, with temporary housing, calculated on the youth, only about 5 %.

The demand for hostels from tourists is high due to the affordable prices for accommodation

The rate of return for hostels average about 6-8% per annum depending on the location and value of the object. For example, about 6 % brings a hostel in the center of Barcelona, cost of 1 million euros (nine rooms) with an average occupancy level of 80 %.

How hostels make money at low rates for accommodation? The fact that they not only rent beds and rooms, but also receive income from the sale of food and beverages in a café, as well as toiletries and other necessities.

According to the calculations Tranio, the minimum investment cost to open a small hostel is 300-500 thousand Euro for the object under reconstruction and 1-1,5 million euros for the purchase of businesses. While such facilities pay for themselves quickly — in about 10 years — of course with proper management.

Hostels are changing the profile

Previously, hostels were extremely super-cheap option. Now, some operators are aiming to attract a more sophisticated audience. The concept of hostels is changing gradually, and his mind and the range of services they increasingly resemble small hotels. In Europe and the United States appeared a new concept poshtel (posh — “posh” + hostel). These hostels give guests the opportunity to stay in a private room, in some places there are even suites and penthouses. “Pasteli” or boutique hostels include swimming pools, restaurants, bars, gyms, rooftop terrace, free Wi-Fi and Breakfast.

Some of these hostels offer transit to the airport, equip an Internet café, engaged in leasing of cars. A variety of services and entertainment does not stop there. For example, in the Berlin hostel ONE80° there is a night club located in the basement, Generator in Dublin — a cinema, in Icelandic Kex — library. Accommodation in boutique hostels in major European cities such as Berlin and London, costs about 70 euros per day. However, some are cheaper EUR 40. In the United States, according to Tranio, the cost of individual rooms in “PASTELO” is close to the hotel: in Miami — from $ 125/day, in Chicago about $ 200.

In the 10th arrondissement of Paris, running a huge Generator hostel on 950 beds. In addition to the usual rooms of bunk beds at a price of 25 euros per night, the hostel offers private double room costs from 98 euros. There is also a bar and a rooftop terrace with views of Montmartre.

Boutique hostels offer their guests additional amenities such as free Wi-Fi, gym or pool

Popular and small boutique hostels. One of them, the Slo-living, located in Lyon, are only designed for 40 people. Here, too, there are both common room (from 26€) and private rooms (from 76 euros). Optionally you can also include the cost of Breakfast (five euros per day). A choice of croissants, baguettes, cereal, coffee, hot chocolate and tea. In Switzerland there is a hostel, working on the principles of Spa. Wellness Hostel 4000 offers an indoor swimming pool is 25 m long, hot baths and herbal baths — everything you need to tourists after a day of skiing or Hiking. Prices for beds start from 45 euros for a double room — 130 Euro (including Breakfast).

The diversity of concepts hostels almost infinitely large. In Bonn, Germany has a permanent hostel Basecamp that looks like a camp of nomadic hippies. The hostel consists of 16 colorful vintage trailers (from 64 euros per night), uncoupled the train cars (you can remove the parcel shelf for 27 euros or rent a coupé for two for 47 euros), buses and tents.

For hostels often do not build new buildings, they removed the existing ones, because the construction in the Central districts of cities, as a rule, limited. So, Kex hostel (translates as “cracker”) in Reykjavik, built in a former factory building on manufacture of cookies. Stay at this hostel costs about 90 euros per night.

Another hostel, Wombat’s in London, located in a building that used to be a hostel for sailors and a clinic for drug addicts. Here accommodation prices starting from £ 25 per day. U Hostel Madrid hostel is located in the Palace building of XIX century, London Palmers Lodge Swiss Cottage is in a former private mansion.

When buying hostel Tranio experts recommend to pay attention to:

• the geographical position of the city;
• local legislation, in particular the authorities ‘ attitude towards transfer of residential properties and production facilities to the Fund for hotel real estate;
• tenant laws (in some States of the USA living in hostels and hotels during a long period of time is equal to the long-term lease, and since the laws protect the rights of tenants, they are usually difficult to evict);
• transport;
• the nearest airport and railway station;
• the proximity of entertainment centers;
• the number of independent tourists visiting the city.

Yulia Kozhevnikova, “Tranio”

Material prepared specifically for “TAPE-HOME”

Comments are closed.