Category: Investor News/Analysis

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. You can check here accommodation in Shepparton.

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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Your plans of moving to Ecuador or abroad could seriously be altered if your pension or IRA imploded.

And with the highly volatile state of the global economy, that just may happen.

Most think they’re diversified if they own stocks and bonds, and safe if they have a few hundred thousand in the bank.  They’re wrong.  Because they’re all “paper” or cash assets.

In these turbulent times you better protect yourself and your pension by investing at least in part in metals, specifically gold.

Why protect your wealth by buying gold?

Gold is where people seek safety and refuge for their savings while big government and banks fail to pay their debts.

When the US Government balances their budget and pays the debt the need for gold will be diminished… is anyone holding their breath?

Any type of crisis around the world could cause the price of gold to skyrocket, and those already invested to get rich.

Gold is and has been the only true moneythe world has known in recent times, fiat money systems where governments can print up as much as they like historically have NEVER LASTED.

The problems in our whole financial system stem from when the big banks of our nation began flooding the market with derivatives and futures contracts which are basically IOUs of a certain amount of gold (and other metals and materials) payable in the future.

The problem is these derivatives were naked shorts, or basically, backed by nothing, they where IOUs for a product they didn’t have.

Pensions loaded their portfolios with these papers.

So did the Euro union.

But our government looked the other way because it helped the US dollar retain it’s false strength.

Whenever there is a pullback in the price of gold these days its due to this type of market manipulation, but in our history no human or group of humans have been able to curb a bull market.

China loves these manipulated “gold deal times” and buys gold like crazy, effectively causing a transfer of true monetary wealth from the west to the east.

It is what it is.

So what would happen if there was an event somewhere in the world that made everyone jittery and wanting to claim their promised share of gold from these futures.  This would cause a default or maybe another round of money printing which will only delay the inevitable default.

And what would a default mean to our financial market? A total collapse because investors will lose their faith in the system.

Greece is on the verge of defaulting, and getting booted out of the EU, maybe even this week as reported by numerous high-profile financial analysts like this article at The Economist.  And all the while the Euro is the lowest it’s been in years.

When Greece is allowed to default this will signal to the rest of the world Germany is no longer willing to front the problems of the union, which could be the end of both the union and the Euro.

Many respected analysts believe the Euro won’t make it out of 2012.

I don’t either.

But people won’t run for the US dollar as many expect, they’ll run for gold.

In fact, the crash of the Euro will probably cause most to lose faith all together in un-backed paper currencies, causing the dollar to implode as well.

There are many other events that could happen any day now that could literally skyrocket the price of gold beyond anyone’s control.

-Like an invasion of Iran.  Most don’t realize shortly before we invaded Iraq Saddam said he would stop selling his oil for dollars.  Just 3 months ago Iran released that they are now accepting gold for their oil.  And US warships are circling.  There’s even a July 1st deadline in place for nations to stop buying oil from Iran.

-Or the Euro crashing.

-Or any nation deciding to back their currency by gold.  If one does, they all MUST or risk withering down to nothing.

-Or QE3 (Quantitative easing round 3).  Meaning the US officials decide once again to a deep round of money printing in order to prevent a crisis.

So protect yourself and your Roth IRA/Pension fund from having all “paper” assets by diversifying at least in part into gold or don’t say I didn’t warn you!

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Loja, Ecuador

“I’m not going to be taking a shower this week,” I thought yesterday as I arrived here in Cuenca.

The feeling reminded me of last year when I first arrived to live and work in southern China on a bus from the border of Vietnam.

On the bus, I met a friendly (and attractive) Chinese woman who invited me stay in her home until I found a job. What she didn’t tell me on that night bus in her very broken English was how cold it gets indoors in southern China in the winter.

You see, below a certain river in China, the government deems it warm enough that the people don’t need heat in their homes, to save energy, well, it’s not warm enough! In fact, indoors, it’s freezing, especially at night, and the showers are electric heated (like many in Ecuador) which at best are luke warm effectively killing my urges to shower and any chance I had with the woman.

Many nights I had to sleep with a winter coat tucked under a few blankets with a winter hat. It sucked. But I did find a job (in northern China where they have heat in the homes).

Cuenca isn’t that cold, but it gets chilly, especially at night, and again, its one of those places where its just warm enough that most locals don’t bother installing heaters, but people not used to it can get cold.

Cuenca, often mentioned as the number one place to retire in the world, as ranked by the popular International Living Magazine, is in fact a nice, inexpensive place to live with a growing, social expat community… but for many, it’s just too cold and damp.

So where in Ecuador will the international press begin to push when Cuenca gets higher priced or overdone?

Loja.

Loja is a smaller version of Cuenca about 5 hours south with many of the virtues of Cuenca, even lower prices and warmer weather!

Loja, like Cuenca, is a smaller city with a large town feel tucked in a valley in the Andes Mountains. They both have beautiful old colonial towns, rich culture, friendly locals, and things to do nearby, but Loja is only 1 hour from the Amazon and less than an hour from Vilcabamba which serves for many as a great weekend getaway.

The Cuenca daily temperature oscilates around 68 F HIGH – 48 F LOW while the year-round Loja daily climate oscilates around 84 F HIGH-58 F LOW effectively making it a warmer version of Cuenca.

Prices are cheaper too for many things, like the $1 taxis you can take from any point in town to any other point. Lunches around $2. And boy do they have some delicious local delicacies like the Tamal Lojano and Tigrillo. Must-tries!

Unfurnished 2 bedroom rentals start around $300 a month while the purchase price for the same type of property starts around $45,000.

Where are some other warmer versions of Cuenca?

I’d try Paute, a small town 1 hour from Cuenca with a warmer climate. Or the Valley of Los Chillos near Quito, also a smaller town with a slightly warmer climate than nearby Quito due to the lower elevation.

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