Jens Munch, CEO
February 08, 2018

The hostel industry is changing

During 2015 we were attacked by poshtels. Since then hostels have been on fire. Recently, the sale of Generator Hostels and the launch of JO&JOE marked the culmination of this trend. Hostels are now a serious business and industry.

But how are they actually different from hotels on an operational level?

Flexible & shared inventory

For all you hotel revenue managers out there: imagine you can turn half of your rooms into student accommodation for 9 months a year. And imagine you also sell each of the beds in your property at different prices through alternative channels. Now imagine that you also have to ensure you never sell beds in the same room to both men and women.

This is the day-to-day reality of a hostel. It’s not easy to get your head around and there’s only a few solutions in the market that can help you. MEWS PMS is one of the PMS that is capable of understanding shared inventory.

Unique means unique

Another important difference between hostels and hotels is that properties are unique. I know, I know, everybody thinks their property is unique. But unique and authentic are at the core of hostels. Guests expect a personal, relaxed and intimate touch.

This means that the old revenue management approach of rate-shopping is less applicable than ever in the hostel industry. Without market data references the hostel revenue manager is forced to do the right thing - analytical forecasting and pricing.

More granular metrics

There are a few cliches I can’t seem to stop myself from using - this is one of them:

“What gets measured gets done”

The problem with shared is how to measure revenues. If you track room and bed revenue separately you won’t be able optimise your property. Instead you will have to fix your allocation and optimise each separately.

The right way to solve this problem is the inverse. RevPAB, Revenue Per Available Bed, needs to be your default metric across the whole property (including rooms). This will allow you to dynamically allocate inventory in an optimal way. And also to price beds by demand for beds, and rooms by demand for rooms.

How can Pace help?

Our algorithms update every 6 hours, are not dependent on market information, adapt very quickly to changes in demand, and use RevPAB as the central metric for hostel-properties. We are already integrated with MEWS and have Cloudbeds in progress - these are the most progressive PMS solutions for hostels.

Below a screenshot of some of the cool stuff we’re doing with RevPAB and hostel-specific categories. Get in touch so we can tell you more.