chinese guesthouse

New research published on tourism lifestyle businesses

In case you haven’t noticed, there’s not a lot of money being spent to research the hostel industry. We have prestigious universities and million-dollar research firms dedicated to studying hotel management, but when it comes to hostels, often the best we can do is take research from other realms and extrapolate the findings to our own. Dr. Gang Li is a professor at the School of Hospitality and Tourism Management at the University of Surrey. Last month in the Journal of Travel Research he published a paper on how owners being motivated by lifestyle over profits impacts small tourism businesses. Although his research subjects were guest houses in China, the similarities with the hostel industry couldn’t be more striking. Check out what Professor Li’s research uncovered and how it applies to owner-operated, independent hostels.

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How does this connect to hostels?

Before you close this tab because you think it’s irrelevant to you, take a quick look at the similarities between Dr. Li’s research and the world of hostels. Read these excerpts and tell me these descriptions don’t perfectly describe most owner-operated hostels:

“Lifestyle entrepreneurs are different from traditional business owners in that profits are not their sole aim... In a small tourism firm, business decisions reflect the values, attitudes, and motivations of the owner because the owner is often the major or sole investor in the firm... The tourism industry provides a superior environment for lifestyle entrepreneurs. Tourist destinations, especially nature-based destinations or towns of cultural or historical interest, tend to have favorable geographical locations and comfortable social and natural environments that match the requirements of lifestyle entrepreneurs. Moreover, the entry threshold requirements, such as initial capital and technological demands, for tourism businesses such as guest houses are relatively low... These entrepreneurs value egalitarianism and harmony in a community… They seek closer relationships with the natural environment and with opportunities to initiate inclusive community relationships that stress social worth rather than material wealth.”

gang li

Dr. Gang Li

Hospitality & Tourism researcher

Dr. Li researched guest houses but the ethos they embody has “hostel” written all over it. The world is full of hostels that value harmony and community relationships, with a sole owner who is motivated by their values and attitudes over profits and material wealth, that started a hostel in a naturally, culturally, or historically significant location that suits their lifestyle. This could not embody the spirit of hostel owners any better, and since universities won’t be publishing academic research on hostels any time soon, we better pay attention and see what we can learn from Dr. Li’s findings.

Dr. Li’s hypothesis 

Professor Li’s research tested the hypothesis that lifestyle oriented tourism operators do better at corporate social responsibility than profit oriented tourism operators. “Corporate social responsibility” is not just when big corporations donate money to charities as a public relations stunt. More broadly, CSR is “the ethical principle that an organization should be responsible for how its behavior might affect society and the environment.”

Yangshuo

Dr. Li's research subjects were from Yangshuo, China, a beautiful place for a lifestyle business.

Dr. Li’s findings

After collecting data on 153 guest houses, Dr. Li’s research showed his hypothesis to be correct. Lifestyle-oriented guest houses offered their guests a better experience. Their guest houses were more personalized and the owners were more involved in helping the guests, particularly by helping them bridge the gap between the travelers and the locals. They have better relationships with their employees and their communities. Lifestyle-oriented entrepreneurs also run guest houses that help preserve the environment and the area’s heritage. These owners are more personally satisfied and more motivated to continue operating in the future than those owners that are motivated primarily by profit. Dr. Li's findings definitely resonate with the stories of many hostel owners. So many of them pour their heart and soul into their hostel. A small hostel's decor will frequently reflect the personality and the interests of the owner. They enjoy helping their guests experience their town like a local. Many treat their staff and volunteers like family members. They take personal pride when they witness travelers enjoying their stay. 

The downsides to being a lifestyle-oriented business owner

Unfortunately there are some downsides to being a lifestyle-oriented lodging business owner. Dr. Li’s paper explains that these businesses generally have only a few employees or volunteers and that their working arrangements can be flexible. This fluidity sometimes causes conflicts because there’s not a formal employment contract in place. Small hostel owners deal with these problems all the time especially because they are typically much more dependent on work trade arrangements than their larger, profit-motivated counterparts. Generally hostels overcome these difficulties over time by refining their processes for choosing and training workers. New hostel owners should do everything they can to learn from the mistakes of others.

Professor Li’s “most serious concern is the lack of managerial capacity.” Most of these operators don’t have formal training and education for running a lodging business, and there can be a steep learning curve. He also mentions that they often make decisions for idealistic reasons and aren’t prepared for some of the realities of doing business. This resonates with the hostel industry as well. For example, it takes some hostel owners a while to develop a sophisticated rate strategy that accurately accounts for the dynamic lodging demand in their area. Some are opposed to dynamic pricing, considering it a moral/ethical issue, not wanting to engage in what they perceive to be “price gouging.” The solution to this problem isn’t going back to university and getting a business management degree. Instead, new hostel owners can learn from more established hostels and from the vast resources available online (including this blog!). Again, the key to faster success is trying to avoid learning everything the hard way. So many small, first-time hostel owners re-invent the wheel, arriving at solutions through trial and error, learning from their mistakes, when there are much faster, easier, cheaper paths to success.

chinese guesthouse

Research-based policy recommendations

Professor Li concludes with some suggestions for changing government policies towards these lifestyle oriented tourism businesses. He suggests a special system for registering guest houses in China. This problem with government registration translates well to the United States, where hostels frequently face a regulatory gray zone. Most municipalities don’t recognize “hostel” as a form of business, and try to force it to fit into the regulatory framework of a hotel, bed and breakfast, or vacation rental. Ensuring that governments properly recognize hostels will help facilitate the growth of these small, socially responsible businesses.

Dr. Li also suggests that governments look to these owner-operated businesses as part of their sustainable tourism initiatives. Between climate change and the over-tourism, sustainability is an increasingly important issue. Because small, lifestyle operators have a tendency to treat the community and the environment better, he suggests that trying to attract more of these little lodging businesses will help encourage sustainability more than making efforts to entice large, corporate operators. You hear that, mayor? If you want to encourage sustainable tourism in your city, it's locally owned hostels you want, not big multi-national chains.

He also encourages the creation of more training resources for these small operators, most of whom are first-time business owners. Here in the United States we have resources like the Small Business Administration and local Chambers of Commerce that help entrepreneurs on their paths to success. Are there resources for small business owners in your area that you could use to help your hostel succeed? 

BackpackerBiz takeaways:

  • Chinese guest houses have more in common with hostels than you thought.
  • Small, lifestyle-oriented lodging businesses are better for the environment and the community.
  • Being a lifestyle-oriented business owner can be hard without the proper training or resources.
  • Governments should do more to encourage more lifestyle-oriented owner-operated tourism businesses.

Author's note: Because most hostel owners and managers are too busy to read the Journal of Travel Research on a regular basis, I did my best to convey Dr. Li's findings to the hostel community. If you'd like to read his paper directly, you can download it free here.

About the Author Byron Bunda

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. 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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