Contrary to popular opinion, competition is a good thing. It indicates that a customers are willing to pay for your service. A lack of competition is something to be wary about because it might mean that your service might not exist for a reason - nobody wants it. Before getting into the details of your own hostel, it’s important to first thoroughly understand the market that you are trying to serve as well as the current players in this market. Getting to intimately know the strengths and weaknesses of your competitors will help you build a hostel with a sharper focus on filling a niche in the market.

Start online

Most travelers start planning their trip from home - on the internet. You should be able to find all the information you need about your competitors from Tripadvisor, Hostelworld, Booking.com and even Airbnb. Start off by looking for hostels in your vicinity and get a rough idea of where they’re located, the price they charge and try and get a feel of whether travelers are happy with them or they find a few things to be lacking.

What if hostels already operate at your location

If hostels already operate at your location then you need to clearly understand what your hostel from bring to the table. In order words, you need to have a well defined value proposition. Maybe the only hostels that do exist are large 200 bed factories which have somehow lost their soul and alienated a segment of backpackers. For instance, Munich is an important city on the European backpackers trail and given that Germany was instrumental in the birth of hostels, Munich should technically be a completely saturated developed market. This could not be further from the truth because Munich is currently home to 10 hostels and a staggering 550 hotels.

Munich main hostels are very large (200 beds each) and are located very close to each other - Wombats, Euro Youth, Jaegers and Meininger. The other hostel offerings (A&O) are all incredibly sterile and this leaves a huge gap in the market when it comes to a small friendly social hostel. So to sum it up, if you’re looking to open in a location that already hosts a few hostels, it would be best to revisit the list of hostels in Section 1 and ask yourself which type of hostel is currently missing. Starting from this point you can then begin to develop your value proposition and your long term strategy (more details in Section 3)

What if there are no hostels at your location

If hostels do not operate at your location, then your first task is to find the alternatives that backpackers are currently using. Maybe they’re staying at guest houses which are cheap but don’t offer free wifi or do not have any sense of community for instance. Maybe they’re forced to book hotels that cost a lot more than a dorm bed. Depending on how the market currently behaves, you will be able to craft your business strategy to compete on price, value proposition and by creating a community of travelers at your hostel.

Get out of the building

Move your ass. Get out there and go look at the world through the eyes of your customers.