The hospitality industry has seen some major changes lately. With Hilton opting for a budget line of accommodation, it’s clear that even the big players want a piece of the growing market of the low-cost travel industry. The number of budget-conscientious travelers is growing exponentially, and while they might travel only with a backpack, they are solid paying customers whose needs have to be catered. While there will always be enough demand for high-end tourism services, the industry did respond to new circumstances and over the last decade(s) we’ve witnessed an incredible rise in the budget segment of hospitality with hostels, B&Bs and guesthouses popping up on every corner. Maybe it’s the mindset of the travelers that’s changed, maybe it’s just that the travel is easier than ever, maybe it’s due to ever more popular wanderlust philosophy and lifestyle. Whatever the reason, the modern travelers are not looking for a luxurious room, it’s the excitement of discovering the real flair of a destination that’s key to them.
Although it’s hard to find the official statistics, some say there are over 80.000 hostels in the world. It’s a good and fun business, but like every job it’s never all bliss and joy. It takes more than having a few beds, a smiling and outgoing receptionist, and a common area anymore. Luckily, there are tools that help ease the experience. During the HostelSkills Conference, we had a chat with Stephan Leuenberger of Cloudbeds, a US-based provider of all-in-one hotel management system to discuss how we can make running a hostel a smooth ride.
THE PROFILE OF TYPICAL HOSTEL GUESTS AND HOW TO GIVE THEM THE BEST EXPERIENCE
According to Stephan, the profile of the traveler has changed a lot. „Before, we had almost exclusively backpackers staying at hostels, now it’s business people and families as well. The first and obvious reason is that it is cheaper, but the atmosphere and the environment that hostels offer also play a part in it.“
With the growing number of guests and their changed profile, there is obviously some adapting to be done by the hostels, too. A backpacker might not mind having his room, or even location changed due to, say, overbooking, but a family with small children or a businessperson headed to a meeting would be right to complain. And no one wants bad reviews. The service has to be top notch as if they were in a hotel because your business depends on it. Luckily, there are tools that help a lot in running a smooth operation when it comes to hostel management.
„With tools such as property management systems, channel managers, and booking engines, to name just some, things get much easier. With all of these processes automatized, hostel staff saves loads of time, and that time is consequently spent on taking better care of the guest, providing them more one-on-one time and services. When you don’t have to manually access every OTA’s extranet, you are available to do more stuff at your premises, which reflects in better reviews and then you will add more money to your revenue, get more reservations, better ADR, better revenue per available beds, etc. And who doesn’t want more satisfied customers and more money?“, explains Stephan.
Using a channel manager (such as Cloudbeds’ MyAllocator) will connect you to more OTAs, and you don’t have to go inside every OTA’s extranet and change the availability or prices, you can do that with the channel manager and everything will be automatically updated on all the channels your hostel is on. „Hostel staff then has more time to dedicate to creating personal contact with the guests, organize parties, give more human value to the interaction with the guests, instead of doing the boring operational things and paying no attention to guests. It leads to better reviews your hostels gets, and, finally to more successful business“.
A lot more people than one might think still do all this manually. Some of them because they are unaware of the tools available, others because they don’t want to pay, and of course, there are those who are just plain Excel fans. Nothing wrong with any of these approaches, but for the sake of the newcomers to the hostel industry – what exactly are the advantages offered by channel managers, and how to choose the one just right for you? „Let’s suppose you are on several OTAs. You should be. Everything is automatized, so when you get a reservation on one channel, it automatically updates your availability on all the others you’re using. What you need to look for in a channel manager is, in the first place, how many channels does it connect to. You have to select the one that connects to your main OTAs, for example, booking.com, Hostelworld, Hostelbookers… All those you know your guests are using when planning their trips. Another important thing to look for is that it needs to offer some additional features like minimum length of stay, maximum length of stay, close to arrival reservations, etc.“, says Stephan adding that the prices on the market vary, and that the hostel needs to find the products that offer them all the features they need at a reasonable price.
The range of features goes from the very basic to the ones reserved for huge properties, so choose wisely and pay for the product that will get all the work done, but there’s really no need to pay for the features that a hostel as a relatively small property is never going to use.
OTAs DO PROVIDE VISIBILITY, BUT NO NEED TO PAY COMMISSION IF YOU DON’T HAVE TO
Guests go to OTAs, no argue about that. Properties hate paying high commissions, no argue there either. While hostels are always going to complain about the percentages that go to OTAs, it should be noted that many, many, guests will go to them, see the scores, read the reviews and comments, and once they narrow their choice, they’ll google the property and go to its website. Here is where a good booking engine can make all the difference. Once you have them on your website, make the direct sale an easy and stress-free experience. Make them book right away!
As Stephan says, booking engine is a very important tool that helps with this. „It drives direct reservations, without hostels having to pay the commission to the OTAs. So it is crucial to have a booking engine that enables direct reservation instead of having an online form where you can just make a pre-reservation. Don’t make them email you, call you, etc. That doesn’t actually work. Guests need to be able to book as quickly as they would on OTAs. Of course, when it comes to direct bookings, you can offer more affordable prices, packages, special discounts, etc., and all this should drive more reservations on to your booking engine.“
STATISTICS – DREADED BY SOME, USEFULL TO ALL
As our guest on the HostelSkills Conference said, it is very important to have property management system that gives you reports on your average daily rate, revenue per available room or per available beds, your occupancy rate… All those statistics can give you useful insights as to how and where you can improve and grow revenue. „You’ll see where you can maybe charge a little bit higher because you know that it’s going to be booked. Basically, you earn more money by paying special attention to the statistics and reports the system provides.“