The Coronavirus has turned the travel industry upside down and many hostels are simply in survival mode. By now you’ve likely had to make extreme measures to ensure the long-term survival of your hostel like renegotiating the terms of your lease or laying off your staff. Now that the initial shock has passed but we are a long way from a return to normalcy, here are a handful of suggestions for improving your hostel’s chances of survival.
Non-refundable flexible rates (NRFRs) are a good strategy for bringing revenue into your hostel now, while giving guests the flexibility they need to feel confident booking. Before Covid-19, many hostels offered non-refundable rates, giving guests a discount in exchange for less flexibility. However, with travel restrictions and lockdowns making it harder to predict the future, the popularity of the non-refundable rate has decreased.
Airlines, which previously would charge insane fees for changing bookings are now giving guests the ability to change their itinerary without penalty. This gives the guest confidence that if the pandemic should impact their future trip, they won’t lose their money. It also has the smaller benefit of ensuring that travelers stay home if they’re feeling sick. Before the Coronavirus, a traveler might push through an illness if the trip they booked was non-refundable, which puts your guests and staff at further risk of infection.
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NRFRs are a good idea for getting more reservations on the books for the future but bringing the revenue in right now. You can collect the payment in full at the time of booking, but allow guests the flexibility to change their dates.
For more information on Flexible Non-Refundable Rates, check out this post from Hostel Consulting.
Now is a great time to get your hostel listed on more OTAs. Before the pandemic, many hostels chose to only list their inventory on two to five of the most popular OTAs. Many didn’t feel it was worth the hassle to list on a less popular site that would only bring in the occasional booking. During the pandemic, hostels cannot afford to leave stones unturned. Smaller OTAs may still bring you the occasional booking, especially if your local competitors are not listed on the same OTA. OTAs also can increase your direct bookings through the Billboard Effect. Cornell’s Center for Hospitality Research found that listing on OTAs increased direct reservations by 7.5 to 26% because would-be guests gain information about the property from its OTA listing, but then book the room through the property’s own website.
High-quality channel managers like Cloudbeds/MyAllocator enable you to list your property on over 100 different sites. These connections require some effort at the beginning to get registered on the site, build your listings, and map them, but once the work is done connecting a new OTA, the channel manager handles the rest. Getting connected to more OTAs is a great way to use the downtime created by Coronavirus to marginally increase your bookings.
Many hostels are already familiar with the practice of using long term guests to fill empty beds during their off-season. Almost every hostel in Sydney, Australia uses weekly or monthly rates during the winter to keep their beds full with working holiday backpackers (tourists with work rights who stay in the country for months or years), until the peak season when there are enough short-term tourists to keep it to nightly rates only. The same practice of long term rates can be used during the pandemic.
Hostels are a great place for long-term guests to live while they are relocating to a new city, studying at a local university, or participating in a language learning program. However, there are certain types of guests that are bad news for hostels with long term rates. Long term rates may be attractive to those who are “down on their luck,” but these guests are typically detrimental to your hostel and unattractive to the short term guests staying with you. Whether your hostel is popular with families looking to travel on the cheap, or nineteen year-old backpackers who want to party, your hostel has a certain vibe and atmosphere that will suffer greatly if your hostel starts to resemble a homeless shelter.
Besides ruining the atmosphere, hostel owners should be very careful about the local tenancy laws that apply to guests staying long term. If your long term guests start to qualify as “tenants” according to local laws, it will make them harder or impossible to evict if they start to cause problems or fall behind on paying their rent.
The Covid-19 pandemic is the perfect time to start thinking about how you might capture more of your guest’s trip budget than just what they spend on a bed. Travelers frequently choose hostels so that they have more money for food, drink, and activities during their trip. How can you divert that non-accommodation spending back to your hostel?
The easiest way to increase ancillary revenues is to think about retail. What items could you store behind your reception guests that your guests might want to purchase? Bottled water, combination locks, and earplugs are very common options. If your hostel has done a great job with branding and has a cool logo, would merchandise like stickers or t-shirts sell? If your hostel isn’t located next to a supermarket, would guests enjoy the convenience of buying certain grocery items from you? Selling items is the easiest way to make money off ancillary revenues, just make sure the prices stay relatively competitive. As refreshing as it is, you won’t sell many Cokes at the reception if the price is $5.
The more challenging but more lucrative way to increase ancillary revenues is to partner with local businesses that your travelers visit. Could your hostel arrange for guests to rent surfboards or cars? Could you sell tickets to local museums or attractions that your guests visit? Are their tours or activities you could book on behalf of your guest? These partnerships take time to arrange but just as hostels pay commission to OTAs, hostels can charge commission to other companies that get customers from your hostel. This can also improve the guest experience because you’re able to offer them the convenience of planning their day for them.
A sidebar on technology:
Your guest has the most money in their budget when they’re booking their trip. By the time they’ve arrived at your front door, they’ve likely spent money on food and transportation and have already booked a portion of their itinerary. Most high-quality booking engines like Cloudbeds enable you to sell packages and add-ons on your website. If you’re able to sell bicycle rentals, museum tickets, or surfing lessons while they’re booking their bed, it will increase sales and save your staff time versus selling in-person at the reception desk.
Before the pandemic, Reputation Management was a hostel management task that was typically neglected. Hostel owners would keep their eye out for new stellar reviews or slanderous awful ones, but few made deliberate efforts to increase the number of positive guest reviews they would receive. However, here are a few statistics from TrustYou and TripAdvisor that emphasize the importance of reviews:
With reviews playing an ever-important role in the traveler decision-making process, now is the time to start paying close attention to your reviews and seeing what you can do to increase the number of positive reviews you receive. This simply starts with writing a thoughtful response. There are ample guides that outline best practices to responding to reviews, both positive and negative. Next, how do you encourage more guests to leave positive reviews?
The easiest way to encourage more guest reviews is to send an automated thank-you email to all guests after you check out. PMSs like Cloudbeds enable you to create your own customized template that reflects your hostel’s voice and brand, including a link to review sites for those who had a positive experience, or the best way to get in touch with management if they had a less-than-awesome experience. However, an automated message won’t get you nearly as many positive reviews as direct communication will.
If you or your staff had a personal interaction with a guest and you know that they love your hostel, you can ask them directly to leave a review. This is most effective while they’re still at the hostel. If you see the guest mindlessly scrolling through Instagram in the common areas, you can approach them. A sincere, gracious explanation of how important positive reviews are to the success of your hostel coupled with a suggestion that they take two minutes away from Tik-Tok to leave their review now will often work. If you’re not comfortable with this approach or think it too forward, a personalized email after check-out is an option. Design a template and leave a placeholder for the individualized section (e.g. Dear [Steve], thanks for staying with us. [We hope the rest of your road trip goes well.] Reviews are really important for our hostel so we’d appreciate it if you click here to leave one. [Enjoy the Grand Canyon] Sincerely, Arizona Backpackers Hostel)
I hope that you found these suggestions helpful. There is no silver-bullet, one-size-fits-all solution for saving your hostel from the impacts of Covid-19. Like any recession, it’s the business owners that innovate that will be most likely to survive. Simply cutting costs and slashing rates is not an effective strategy for overcoming this disaster. I’d love to hear what creative ideas your hostel has come up with to save time and money, increase revenue, and keep pushing to make it through this history-making period in the travel industry.
Byron has worked with hostels big and small, city and rural. His first job was as a receptionist in San Francisco and his favorite was leading the events for a 500-bed hostel in Sydney. Today he's a Market Manager at Cloudbeds. Besides all things hostel related, he enjoys motorcycle riding, especially because it's the perfect way to get from hostel to hostel!
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