Running a hostel can be fun. You find yourself meeting new people every day, learning about their world, and helping them get the most out of their stay in your destination.
But you can’t forget the bottom line that keeps your hostel running healthily – revenue.
So how can you make sure you’re doing what you can to improve yield and profits at your hostel? Keep reading to find out.
1. Revisit who you’re targeting
Have you done a clear analysis of your guests’ demographics (age, country of origin) and behaviour (how much they are willing to pay, how far ahead they book)?
You’ll need a guest database that you can export into a spreadsheet so that you can analyse this accurately. Your hostel’s property management system (PMS) should have this capability.
Without having a clear picture of who you are targeting, your efforts to maximise revenue will fall flat.
2. Revisit the pricing of your hostel products
You will likely have different products – for example, mixed dorms, female-only, male-only, private room, private room with ensuite bathroom.
How do yours compare to competitors in the market? You’ll need to know which products you can charge more for if you want to maximise revenue effectively.
3. Create hostel pricing strategies
There are some basic strategies that you need to master to manage your revenue effectively.
- Rate strategy. How you price your beds based on features and amenities. For example, a private room with an ensuite bathroom is worth more than a bed in a mixed dorm room.
- Seasonal pricing strategy. High season (when demand is high and you can increase rates) vs. low season (when demand is low and you can introduce discounts and promotions).
- Up-selling strategy. Sell extras and package them with your beds to add value. For example, you can offer an airport shuttle service and include it in the price.
When creating your pricing strategy be sure to take into account the commission you’ll have to pay to your distribution partners.
4. Improve your hostel distribution strategy
Once you have your rates in place, it’s time to see how you can improve profit through your distribution strategy.
- Online travel agents. Are you partnering with the right online travel agents (OTAs) that are geared towards hostels, such as Hostelworld? How much commission are you paying to OTAs? Make sure you work on your direct online channel so that you can have a healthy balance of OTA and direct bookings.
- Retail travel agents. Many millennials go to retail travel agents to book package holidays. Make sure that you partner with these agents and have a way of distributing your inventory – like through a global distribution system (GDS).
Your hostel’s PMS should be able to seamlessly connect to your channel manager and internet booking engine, so that you can update rates from one central place.
5. Get measurement right
Make sure you can measure your improvement with the right reports in place, and set the right kinds of KPIs.
Xotels recommends these metrics:
- Overnights (the number of people who stayed the night);
- Bednights (the number of beds used);
- Bed occupancy (beds used as a percentage of available bed nights);
- ABP (average bed price – the price paid per bed for a specific period);
- RevPAB (revenue per available bed – bed revenue as a ratio of available bed nights); and,
- TrevPAB (total guest spend per overnight as a ratio of available bed nights).
A system like GuestCentrix will allow your hostel to do all of the above, and more! Click here to learn more about how GuestCentrix can improve yield and profits at your hostel.