Starting a cheap hostel in a small town... will it attract homeless people?

[Ellie69]

I'm thinking about starting a cheap hostel in a small town. The town is about 30 minutes away from a larger town. 50 minutes away from a university, and right near a community college. There are many outdoorsy things to do, (there's a river, some lakes are within an hour of driving, etc). There are some airbnb hosts that have individual rooms listed for about $30 per day, that look like they are booked about 20-25 days of the month. I'm thinking of starting a hostel that has 2 bunk beds, so 4 people per room, 5 total rooms and 2 or 3 bathrooms (I will be building this house from scratch), so it will be a total of 20 people max (maybe it's too much?). I will charge $10 per bed per day. Not sure how much cleaning it will need. Would $90 per day on cleaning be a good estimate? I'm okay with hiring my own cleaners or with putting a person in one room to clean it all (free room being the compensation, plus additional compensation). Or with hiring a cleaning company. Anything works, but I would like to save money on this. Not sure how to approach this. 

However, my worry is that if I charge such a low rate of $10 per day, it will attract a lot of homeless folks who may disturb the smell and cause other guests have an unpleasant experience... But if I raise the rate too high, then I won't make money because I will have low occupancy... What are your ideas/suggestions? 

[Jess78]

@Ellie0

No one on this forum could say for sure who an opeation like that would attract since we don't know where you are, what the competition is, or what the demographics of tourists in your part of the world is like. You need to do your research! Start small with renting bunk beds on airbnb or something out of a room in your home and see what it brings in.

The first part of any business is to write out a business plan. Figure out what demographic you would target and see if your small town attracts enough of that demographic to support such an operation.

It sounds like you are seriously considering sinking a bunch of money into starting your own hostel, but I would encourage you to start off with an Airbnb listing from a room in your home first to see if you really enjoy it, see what the guests are like in your town, experiment with the price structure you're toying with, get a better idea of what it costs to clean and upkeep a property, etc. There are licenses, inspections, legalities, and building codes for opening a hotel. Figure in marketing costs, listing fees, insurance, accounting, utilities, supplies, linens, legal, loans, and make allowances for seasonal and market slow downs.

Please be careful. Low budget can be great for young and idealistic world travelers, espeically in cities that are attractive to that demographic. Low budget can also be great for drug dealers, the unemployed, etc. You could find yourself with a big mess on your hands if you don't take your time and sort all this out before taking steps.