Over the past few years we’ve had more than our fair share of people asking us about hostels in India. The line of thought among the 20-something year olds in India is to quit your job and become an entrepreneur. If you’re an entrepreneur without an idea, then just go ahead and open a backpackers hostel. There have been several articles in the press glamorizing hostels, where less than an hour of research was spent on these articles. Gross negligence has resulted in hostel names being misspelled in the process. From the newest shiny gadget to a radical new way of thinking, everything has to go through the excruciating adoption lifecycle and hostels are no different. Given that I’ve spent the last 4 years dreaming about hostels, I will try and take you through the adoption of backpacker hostels in India.
“Hostels provide budget-oriented, sociable accommodation where guests can rent a bed, usually a bunk bed, in a dormitory and share a bathroom, lounge, and sometimes a kitchen. Rooms can be mixed or single-sex, although private rooms may also be available.” – Wikipedia
Backpacker hostels originated in Germany in 1912 and approximately 99 years later in 2011, the concept came to India. Amber and myself quit our high-paying consulting jobs in Singapore and moved back home to India to open what was arguably India’s first backpacker hostel on the sunny shores of the backpacker capital of India – Goa. Backpackers have been coming to India for decades but with everyone was so focussed on finding themselves, no one ever bothered to start a hostel. Asterix Hostel was a drastic move away from family operated guest houses and it got off to a flying start. Asterix quickly made a name for itself on all the usual review sites and even sneaked into the erstwhile backpacker bible – The Lonely Planet in a record 2.5 years (hence erstwhile). In fact the success of Asterix Hostel caught us completely off-guard and with both of us differing on the long term plans, Asterix was shut down and it quietly receded into myth. Amber went on to open Moustache Hostel in Delhi, while Laura (my partner) and I kickstarted The Hostel Crowd in Goa.
This particular moment in 2013 coincided with the birth of several hostels and hostel chains in India.
After the Asterix demise, I got a chance to reboot the hostel machine and start from scratch; this time learning from Asterix’s mistakes (I can write a book about that). Hostels, and most other small businesses, have the inherent risk of taking on the personality of the owner. Most hostel owners get to know their guests personally. This is a great thing until the owner moves away from the business and then everything falls apart. We opened Jungle and Prison simultaneously in the first year with the objective of operating design led hostels in India. The focus was to completely remove the owners from the guest experience and create a scalable model without compromising on the underlying values or quality. 2014-15 saw the birth of Old Quarter in Panjim, Goa’s capital city and Maritime in Fort Kochi, Kerala. With these 4 hostels, THC as a brand was firmly established within the backpacking circles of South India. The guarantee of standardized quality and a unique experience at each hostel resulted in guests making their way through Goa and Kerala by hopping from one hostel to the next. The coming week will see the opening of THC’s 5th hostel – Summer.
In an industry that typically consists of innumerable small players, Zostel changed the game with 7 MBA students deciding to do for hostels what McDonald’s did for burgers. Instead of growing organically which would’ve taken decades in India, they raised a million dollars in funding. They opened two hostels in Rajasthan in 2013 and then proceeded to quickly opened 6 more hostels with the money. The expansion was so rapid that one of their hostels opened inside a mall in central Gujarat and with backpackers struggling to find Mumbai on a map, the Gujarat plan was highly optimistic. With little or no infrastructure, staff or processes to back this rapid expansion, Zostel Goa and Zostel Gujarat silently shut down with no Facebook fanfare. Zostel then continued to make the impossible happen by raising another round of 15 million USD from investors. But this time, plan had changed. Operating hostels was hard work and so Zostel 2.0 transitioned to a booking engine built around franchising their brand to a bunch of devotees who were willing to do all the work, invest all their money and give Zostel a 15% commission. They then (obviously) went international. Zostel is currently the only hostel giant in India and they are not afraid of throwing their weight around. However, what remains to be seen is whether their business model and questionable work ethic is sustainable in the long run.
After shutting down Asterix, Amber wasted no time in moving back home to Delhi and opening up a hostel there. Armed with the experience of having operated Asterix Hostel for 1.5 years, Moustache Hostel monopolized the hostel scene in Delhi until 2015 when the competition finally arrived. Amber made hay and expanded his brand by opening Moustache Hostel Jaipur. Most backpackers who stay there don’t realize that a mini-fortune was invested into building this perfect hostel from scratch to make their stay completely frictionless. Moustache is very consistent with delivering the same quality day after day. However with so many hostels opening in Jaipur and Delhi, standing stationary is a risky game and only time will tell whether Moustache has built walls high enough to survive the ongoing onslaught from competitors.
Pankaj and Pallavi quit their jobs and started Stops in Varanasi with the goal of building something substantial and taking it across the country. From day one there were no shortcuts and they took great care in getting every detail of the hostel right. In fact, they did not even charge anybody for several weeks after opening their hostel because the hostel wasn’t complete. Although this must’ve been financially stressful, in the long run the goodwill paid off with Stop Varanasi firmly establishing itself among the top 10 hostels in India. Next came their Delhi project which made Stops Varanasi look amateurish. The attention to detail continued and where it stands right now, Stops is paying a lot more attention to maintaining the utmost quality of their operational hostels as opposed to expanding rapidly with a low quality product.
The early majority was made up of people who had stayed at backpacker hostels in Europe, South America, etc and then noticed backpacker hostels popping up across India. They visited these hostels and then began to question why no such hostel existed at their favourite place. And then like all entrepreneurs, they stopped talking and started doing.
Backpacker hostels somehow attract guests who are not afraid to take chances and stand up for something they believe in. It takes an incredible amount of courage to abandon your home, pack some belongings into a backpack and venture out of your comfort zone to explore the world. So it should not come as a shock that most backpacker hostels are run by backpackers on crack (sometimes literally). In India, these prolific hostel owners are everyday heroes who battle bureaucracy, social stigma and overcome financial nightmares to put their hearts and savings on the line by running a backpackers hostel. However, in many cases the reward isn’t monetary in nature. It’s the possibility of traveling without moving, making friends with people of the world in your living room and having a house full of life and a life full of excitement.
Several hostels in India like The Hosteller and Roadhouse Hostels would like to make the transition from amateur hostels to professional businesses. Currently operating 2 hostels each, the biggest challenge that lies ahead of them in this development is staff. Hostels generally employ lower wage employees who do not possess the necessary skills to single-handedly manage a property which results in the properties currently being driven by the personalities of the founders. Which makes for great hostels but as a business is not scalable. Hiring a skilled general manager for every property is financially infeasible and highly risky. This silver bullet strategy of hiring a manager to deal with everything can only work as long as the motivations of the manager aligns with the owner assuming this manager is competent in the first place (not a guarantee in India). Solving problems through automated processes is the only sustainable but time consuming solution.
Like any other developing economy, India has its fair share of me-toos and no better place to find these types than in an industry that hasn’t become an industry yet. This facet of a growing industry is mostly invisible to the public but as a hostel owner, I’ve had quite a few run-ins with this type. Although the early adopters have their advantage, that advantage can quite easily be overcome by the wannabes. And this game gets dirty pretty quickly. You find wannabes behind your reception computer trying to copy data off the hostel laptop. Some wannabes take a more direct approach and go straight to the landlords to try and rent the hostel you created off them at a higher price. In a growing industry, the enemy is the Government because regulation does not keep pace with economic development. However, a lot of effort is wasted in mudslinging and fending off competitors instead of uniting as a industry to press for reform.
India is going to see a boom in the number of hostels in the next 5 years. Given the archaic practices of family run operations that currently service the budget sector across the country, there is definitely a huge scope for improvement. A couple of budget hotels have already started replacing double beds with bunks and referring to themselves as hostels. However, in the process of commoditizing hostels, a little bit of the culture behind why hostels exist is lost. Backpackers are very quick to sniff this out and in an age of perfect information cosmetic changes don’t fool anyone.
Most of the new entrants in the hostel industry are first time entrepreneurs who are very exuberant about the upsides but do not consider the huge responsibility it is to operate a business that is open to the public 24/7. Taking our cues from a developed market like Singapore, we can see that it went from a handful of hostels in 2010 to 75 hostels in 2015 which resulted in price wars, a wave of hostels shutting down and with the wheat being separated from the chaff. Given how quickly backpacker hostels are growing in India, we might not be a long way away from this. And as Warren Buffett always said – only when the tide goes out do you discover who’s been swimming naked.
What most people imagine when they think of a job by the sea is flip-flops, waves, sunshine, beer and finally a job that pays the bills. Being an entrepreneur by the sea allows you to have all of the above but in a way that you would never expect.
The alarm rings and I sleepily reach over to hit snooze but midway through the motion I realise that it’s just a dream. The alarm never rings. My mind just wakes up and makes sleep impossible. Hundreds of unfinished thoughts from the previous night flood my memory and there’s a daily struggle between my toothbrush and computer. Work is just part of my life. It’s so well integrated into my life that it’s no longer work. It’s just life. To me, work is an ugly word used to describe the actions of people who wake up with alarms and take mundane train rides to a sterile white room called the office. As an entrepreneur, my transit takes exactly 10 seconds (from the bed) and my office is my home which in turn is a beautiful 100 year old Portuguese villa.
Entrepreneurship allows me to do something I like doing. In fact it allows me to do anything and when I’m not running around like a headless chicken, I usually choose to do something that will have the most impact. Life is short and wasting precious time on beautifying an excel sheet is frivolous. And so I made a decision to become an entrepreneur to ensure that my work and my life has some meaning to me. Entrepreneurship is not a profession, it’s a way of life. It starts the moment you make a conscious decision to take ownership of your life. To be the master of your own destiny. You have to accept responsibility for every success, failure and for the direction of your life. This means that at every single point in time, you are where you are because you choose to be there. And in my mind, what better place to choose to be than Goa.
Living life in Goa comes with quite a few perks. First on that list would be a piece of art perfected over decades – the fish thali. Added to this, the air is clean and traffic jams don’t factor in my daily vocabulary. In my mind Goa undoubtedly has the highest standard of living in India. The Goan culture of Susegad prevails throughout the state. Susegad originates from the Portuguese word “sossegado” which means quiet and depicts Goan way of always taking it easy and living life in contentment. As a city person, my first reaction to this form of life was frustration and anger which slowly gave way to acceptance and understanding that life isn’t going anywhere if the shops close at 2pm. Balance is the key.
As entrepreneurs in Goa, Laura (my life and business partner) usually conduct our meetings over a long walk down Miramar beach – no laptops, no notebooks and the horizon as our physical limit (which does wonders for our discussions). As we go about our exciting business of starting new hostels, at some stage the regular offenders have to be dealt with – finance, accounting, legal, procurement, etc etc. In an increasingly connected world, the internet gives us the luxury of operating a location independent office and Goa provides an idyllic setting to go about our daily routine.
The truth is that life is either a tightrope or a feather bed. If you’re not on the tightrope, you’re sitting on your ass. So we wear flip-flops because we can, watch the waves during our meetings, sweat in the sunshine as we go about our work and at the end of the day, celebrate our small victories with a cold beer. Cheers!!
Its 3:00 am and my phone’s ringing. Not ideal. I tell myself it’s all a part of my dream, turn over and attempt to bury my head under my pillow. All to no effect. That annoying Nokia tune continues, undeterred by my lame evasive action. I blindly claw my way to the desk and answer the phone. It’s my security guard patiently explaining that one of our guests (who has probably had one too many beers) has now decided to leave Goa at 5 am. So she now wants the receptionist to magically appear and help her clear her bill. What’s worse, she has no cash and can only pay by credit card. I’m in no mood to give away a free stay to a flakey, half-drunk backpacker who has difficulty grasping the profound concept illustrated on our ‘reception hours’ sign. This leaves me with only one option. I’m going to have to wake up and trudge back to the hostel at an hour when no sober man should be walking the streets of Goa, leave alone Vagator (tiny beach-side village swarming with nocturnal 60 year old hippies). What’s worse is the entire ordeal has to be borne with a smile.
Fast forward a few hours and I bump into the same woman at breakfast. She cheerfully tells me that she has now decided to stay another night because the buses didn’t work out (at 3 am!!…you think??). It takes considerable self-control to not tell her that she has the IQ of a mentally challenged goat.
You see, it’s all part of the job – Backpacker Hostel Owner.
Running a hostel in paradise is every backpackers dream. Free money, interesting people, no boss, no work, beer all day long and truckloads of beautiful women or hunky men passing through. Unfortunately this couldn’t be further off from the truth. Except of course for the truckloads of beautiful women passing through (beauty obviously indirectly proportional to brain processing power).
Now let’s put aside all those vivid images of a truckload of women and get back to the scenario of owning a backpackers hostel.
From the outside, the romantic in you could take over and conjure up a dreamy, surreal, simple existence, free from the clutches of corporate slavery and the materialistic reality of our 21st century world. This is true in its entirety. But the story is incomplete. Figuring out the perks of the job is the easy part. Even a 5 year old with an active imagination could do that for you. What happens behind the scenes is something that is not so apparent.
The entire hostel is now equivalent to a monkey on your shoulder. And it’s a spoilt little monkey that wants all your attention. So now, drinking a beer on the beach while worrying about making next month’s rent isn’t so much fun anymore. But money aside, there are bigger things to worry about.
By far the biggest challenge in the backpacking business. In India, you’ll have to wade through endless layers of red tape and bureaucracy cleverly designed to push you to the point where you pay a bribe only to preserve your sanity. The administrative fee associated will always be so laughably small that it might convince you that this bribery based system actually works (another discussion another time). Compare this to Europe where you probably need a license for drunk backpackers to take a piss in your garden. However you can be assured that this process is well documented and can even be completed online. It will unquestionably be accompanied by a hefty and equally ridiculous fee. Be it the paranoid legislation of Europe or the bribery fueled bureaucracy of India, business licenses will account for more than a few grey hairs.
This one’s a biggie since you will be dealing predominantly with the minimum wage workforce. In Goa, with 91% of the adult population drunk before lunch, it’s difficult to find reliable staff. And once you find them, teaching cats to do backward flips is as realistic as teaching uninterested folk to sort thrash. Maybe I’m being a bit too harsh because people here live in a simpler age. However, backpackers don’t live in the same age and this means that its your job to bridge the gap which eventually leads to you pulling out all the grey hairs (earned in the previous step).
Rowdy Australians breaking the commode, hormonal Germans breaking the freezer door (twice in one week), small soft-spoken Japanese men committing unspeakable atrocities on dead chickens in the kitchen, frisky couples ruining the hammocks, trigger happy American teenagers destroying the flush – the list is endless. Budget 4 hours a day on picking up behind people. On the bright side, you will get very good at fixing bathrooms. Let’s hope you can put that on your resume.
While doing all this you know at the back of your mind that if people don’t make as many bookings next month, you might not be able to afford that Ferrari before you turn 30.
Take a break from it all, crack open a beer and have a chat with the World-savvy lot currently occupying the hostel. Be warned that if they find out you’re from the hostel, they’ll spend a minute telling you how you’ve got the best job in the world and the next 10 minutes asking you for elaborate directions to the ATM. This is when they’re in a good mood. If a member of the opposite sex spurned their advances the previous night, you either run for shelter or bring out the heavy artillery. If it’s any consolation, the hostel owner ALWAYS wins any battle of words. If some smart-ass backpackers do happen to win an argument, them being unceremoniously booted out onto the street is an automatic disqualifier and you become the winner again.
Given my confidence that the Fire License Department is oblivious to the existence of a computer, let alone this blog, this is my latest addition to the list of worries. My cleaner “accidentally” set a coconut tree on fire (I don’t want to talk about it) which drove home the point that a random event completely out of your control could take it all away in a heartbeat.
Don’t get me wrong. All this isn’t terrible. It’s just a part of the job. A part that often is carelessly glazed over by people building sand castles in the air. As a hostel owner, every morning I wake up with a choice – beer, beach and babes or spending time training my staff, worrying about finances and figuring out improvements to the hostel. On most days I choose the latter for numerous reasons – the challenge, satisfaction and freedom that comes from creating something from nothing.
So if your retirement plan involves setting up a backpacker’s hostel by the beach so that you can drink beer all day long with beautiful members of the opposite sex, I’d suggest you take the easy way out, book the first flight out to Goa and stay at Jungle Hostel *.
* Do note that we have a 1 month maximum stay policy.
If you’re still convinced that this is the right path for you, then be sure to check out a new course that I have just released to help you start your own hostel.
Having quit my job to start a backpackers hostel, let me tell you that getting into the backpacking business is less glamorous than what it appears. However, a job is only as fun as you allow it to be.
After setting up India’s first backpacker hostel and watching it fail (long story), I hit the drawing board again and started from scratch. 3 years and 4 hostels later (check it out and give us a like), I’ve had my fair share of ups and downs in the backpacker hostel industry. The best part for me at the end of the day is that I’m in control of my precious time and my job allows me to do exactly what I want to do at any point in time. Life is mostly a holiday (except when the toilet’s broken). A couple of times every week someone at the hostel confides in me that their dream in life is to open a hostel. So, let me break down this process to give you a glimpse into what goes into the making of a backpackers hostel..
There isn’t a bachelors of backpacking (yet) and starting a backpackers hostel requires no eduction. In fact it requires no specific skill but once you’re done you will be a jack of all trades. A pinch of common sense should guide you well enough along this journey. Don’t sit on the fence with this decision. Life will pass you by. If you’re looking to start a backpackers hostel, nobody but you will be able to say whether its the right or wrong thing to do. Trust your instinct and do what you think will make you happy. Do it now. Don’t wait for tomorrow.
Great. So you’ve decided to start a hostel. Now comes the question of where. This may come as a rude shock to you but your choice of location is the biggest factor that could make or break your business. If your stretch of beach isn’t popular, having the swankiest backpacker hostel will not bail you out of that hole. Don’t rush this decision. Try and backpack through your chosen destination first to see the World through the eyes of a backpacker. And while you’re backpacking through town, talk to as many people as you can. By the end of this exercise you’ll need to know who visits, from where, for how long and why. If you find sitting by the beach with a beer and chatting with fellow backpackers hard work, you might need to rethink this choice of profession.
Next comes selecting a house that will hold up against an army of rowdy backpackers. Taking 2 steps back, the purpose of your place is to enable backpackers to meet each other. A fundamental draw for backpackers is that your place will have to be affordable. As for enabling backpackers to meet, a common room is of paramount importance. While viewing possible houses bear in mind tiny details such as number of beds you can fit into the house without asking more than 8 people to share a bathroom (the biggest limiting factor). Although not obvious from the offset, your relationship with your landlord will be incredibly important too. Ensure that your landlord knows exactly what you plan to do with the house. As far as buying a house goes, remember that you’re in the backpacker business and not real estate. Limit your risk and stick with renting.
This step is to be executed at the same time as the previous step. Whether you like it or not, you will need a business plan. Plug the house rent, estimated operational expenses (electricity, internet, cleaner, etc), price per bed per night and your plan should give you the occupancy required for you to cover your expenses. Is this a reasonable number? From experience, try and ensure that you can cover all your expenses with an occupancy of around 30%. If that’s not possible,either your house rent is too high or your beds are too cheap. Fortunately you won’t have to reinvent the wheel and you can just use somebody else’s excel genius to figure out the finances.
This is the bitch. Get started as soon as you sign your lease agreement. Unfortunately the procedures vary from place to place and my advice will be useless to you. Get all your information from the horse’s mouth, do the right thing and cover your ass. Always.
Once you’ve signed the house lease and applied for your licences, you’re 60% there. The rest is the easy part. It’s time to get busy and start shopping. Bunk beds, lockers, rugs, curtains, mattresses, blah blah blah. The shopping list will drag into the hundreds and you’ll be ready to give up at numerous stages but you’ll have to soldier through it (or maybe thats just because there’s no love lost between me and shopping). Having done this a couple of times I’ve come to realise that ready made stuff will always be inferior and less durable to custom made stuff. Backpackers are experts at breaking stuff. However, custom furniture and fittings cost a fortune. If you’re opening your first hostel, get it from the store and aim at keeping your costs to a bare minimum.
Finally comes the most exciting part of the entire process – setting up the hostel. Seeing all your ideas come to life is incredibly satisfying. However, do remember that every day spent setting up the hostel is an expense because you’ll be paying rent and not earning any money. Get operational as soon as possible. Backpackers are awesome people and incredibly forgiving when they realise that you’re making a genuine effort to do something special. Don’t wait for your hostel to become perfect (3 years down the line, we’re just getting started).
Throw open your doors and let the good times roll..
Building a reading corner
Branding, painting, etc
Somewhere to sleep
April 1st, 2012
Exactly one year ago, I set out from my little rabbit hole to explore the World and find out what exactly was my role in this complicated World. A year later, I’ve learnt a great many lessons from amazing places and people alike.
Allow me to talk you through my journey over the past year.
My last day as an employee of a corporate sweatshop. I’ve been handsomely rewarded for my time but that’s the problem. I’ve grown too comfortable with my life to even question whether this fat paycheck, a new computer, another exorbitant dinner is what I wanted from my life and my time. Breaking out from the system is probably the hardest thing I’ve ever done. And I don’t even know I’m a part of the system.
AIDS, malaria, hunger, global warming to name a few are silently killing our future while we’re all asleep. What could be more noble and fulfilling than saving the World. Working with an NGO shows me that there is still some hope. Nice people who care about our future do exist. Unfortunately it also shows me a dark side of human nature – money matters a whole lot more than what we’d care to admit. Without money to incentivize people, efficiency plummets. In these circles bureaucracy is the weapon of choice. With a loss of faith in NGOs and corporations I’m left with little choice but to strike out on my own.
But while I’m in South America, I may as well have a little wander around.
Brazil, Guyana, Venezuela, Suriname, Thailand, Singapore, India – you’ve read about it here. The World’s beauty continues to astound me and remind me that our existence is fragile. Camping atop Mount Roraima which stood alone for centuries is a testimony of our ability to conquer anything.
The problem is that we don’t stop there. Rapid deforestation of the Amazon in Brazil, illegal diamond mining in Guyana, relentless trawler fishing in Thailand are all destroying, in a heartbeat, habitats that took years on end to evolve. It dawns on me at this stage that if we let our greed run unbridled, very soon there won’t be much left.
Most small businesses fail. Who were we to break the norm. Seeing an opportunity in the market, we throw caution to the winds and jump right in. Selling Italian sports shoes in the Worlds fastest growing economy is great business. But the Gods were against us and so were the Italians. However, while it lasted, working for myself was satisfying, liberating and incredibly efficient. Let me explain this new found efficiency. If I felt like sleeping at 10am, I took a nap. If I was working, I was working and not toggling between screens wishing I were somewhere else. I now understand what it is to be master of your own destiny. And it feels good. Moving on, its time for plan B.
The lack of a plan B leads to a mini-retirement. Retirement is to work as marriage is to romance – the end goal (I’m kidding). However before spending my entire life working towards this elusive retirement, I spend 3 months on a mini retirement. I live by the beach and do nothing. Mainly because I have nothing to do. I wake up every morning and (if not hungover), head to the beach for a run.
3 days later…I’m bored. 3 months later…I’m ready to pay someone for work. And this is when it becomes blatantly obvious that retirement is not for me. I will work as long as I can but not for money. I intend to work to earn the satisfaction of having worked and for the joy of creating, building, contributing and learning among other factors.
While spending time on the beach, it becomes very apparent that beach side dwelling places in Goa can do with a facelift. Frogs jumping on you in the showers doesn’t make for a good guesthouse experience. After countless hours of speculating, house hunting, constructing and gardening, Asterix Hostel is born. A few reviews later and we’re at the top of Hostelworld and Hostelbookers as the best hostel in Goa by overall rating. And that’s where we stand right now.
With so much happening in the past year, I find that I still don’t know the answers to most of the questions I began to ask. I’ve come to realize that it’s ok to not have answers but it’s still incredibly important to question everything. Accepting status quo is a disease that will prevent you from achieving the impossible. And with that philosophy in mind, it’s time to see what the next year has in store for us..
Thank you for following my journey here at theOrangeMango over the past year. Stay tuned for stories from a crazy unplanned motorcycle road trip through the beautiful slopes of Nepal..