7 Secrets of a Successful Hostel Business in Ecuador

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Have you ever seen yourself as the successful owner of a backpacker hostel?

Maybe not.

But if you’re thinking about moving to Ecuador, this is one business idea worth considering.

Now, a true hostel is a special kind of hospitality business that caters to backpackers, or primarily younger folks, often right out of college, who travel the world on shoestring budgets for extended, often 6 to 12 month time periods.

The main accommodation option for hostels are shared dorm rooms, where people rent beds, not rooms, for the night, and yes, folks can enter into the same room even if they don’t know each other.

I know the business well, I backpacked the world for 6 years after I graduated from college… mainly working online and living out of my backpack in hostels spending months living in hostels in places like Bogota, Cebu, Hanoi, and Kuala Lumpur.

Ecuador, a cheap, interesting place to visit with lots of rural activities, cheap public transport and food, and all on a cheap, exotic continent boasts a nice flow of backpacker tourism.

Now, I myself have started an unsuccessful hostel before, in Santo Domingo, Dominican Republic, and you will too if you don’t follow these 7 secrets to the hostel business in Ecuador… (I’ve also worked as the administrator of a successful hostel.)

7. Choose a location on the backpacker trail.  Every country has one.  As adventurous as us backpackers think we are, the vast majority (90%) stick to a set route.

In Ecuador, the places backpackers visit in droves are:  First, they usually drop into Ecuador from Colombia and head straight to Quito, where they’ll probably take a day trip to the cloud rainforests of Mindo or to the big open-air Andean market of Otavalo, then go on down to Banos, then to the coast where they’ll stop in Montanita to surf and party.  Then they’ll cut over to Cuenca and afterward jet straight to Mancora (Peru) from where they’ll continue south along the Peruvian coast.  Secondary locations are Canoa on the northern Ecuadorian coast and Vilcabamba in southern Andean Ecuador.

This is the main reason the hostel I started in Santo Domingo failed, I chose a country, and a region in general, backpackers don’t tend to visit.

The Caribbean.

It’s simply not backpacker-friendly with a lot of cheap accommodations, cheap-frequent buses and cheap eats.  These days, Puerto Rico is even more expensive than the US, Cuba is expensive for foreigners who have to use a different monetary system than the locals.  Haiti, where I visited right before the earthquake, has zero acceptable budget accommodations, I had to stay in a guesthouse for $40 a night used mainly by Peace Corp volunteers.

There was nothing else.

The DR, where I was, lacked budget accommodations as a whole, buses were hard to figure out, and also food expensive.  It gets even more pricey as you head further south in the Caribbean to places like the Virgin Islands, and St. Maarten.

The lesson, stay on the beaten path, off it you will have less competition, but also a lot less demand.

6. Have a social area.  Most backpackers simply look for a clean, safe place to crash for the night, but most importantly, a place where they can socialize and meet other travelers.  Have an area dedicated to meeting people.  Details like round tables instead of rectangle ones add to the openess of the atmosphere.

5. Sell beer.  Yes, backpackers will walk a mile with their pack in blazing mid-day heat to save $2 on accommodation, but that night they may spend $10-20 in beer.  Sell beer at reasonable prices and your revenues will jump and you’ll add to the social environment.

4. Have the right services.  Backpackers don’t care much about hot water, parking, cable TV or AC, but boy do they love, and need free WIFI internet, preferibly in their room.  Included breakfast?  Not necessary, but they like it.  Guided tours aren’t really worth offering cause they probably won’t buy them, they’ll just want to know how to do it themselves.

3. Offer kitchen access.  There’s not much point to have an on-site restaurant, most backpackers won’t eat there if they can find cheaper on the street corner.  But what they really love is being able to cook their own food, open your kitchen up to them to please them.

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