Welcome back! Last time in “So you want to open a new hostel?” I talked about writing a business plan for your hostel, and one of the key topics was promotion. BananaMan likes promotions such as coupons for free ice cream and funny radio advertisements, but promotional tactics have evolved over the years. Plus, promoting your hostel can be quite challenging, since your target market might appear as large as “anyone who doesn’t live in this town.” How can you promote your hostel to the rest of the world in a cost effective manner?
BananaMan has a secret to share with you: promotions are all about testing tactics, collecting data, measuring performance and learning from this process. The good news is that I love to collect data for you and help you organize it. Our team is working hard to develop more analytics and dashboard tools, which will help you assess your hostel’s operating performance and look at guest trends over time. This can help you judge the effectiveness of promotional campaigns.
For example, let’s say you run a promotional campaign targeting college students from Israel travelling to Argentina over the summer. Wouldn’t it be nice to display charts showing the demographic mix of guests during the summer for this year versus last year to see if there was a noticeable bump in guests from Israel and which booking channels they came from?
Looking at promotionals, I place them in two buckets. The first bucket I call “mandatory tactics” and the second is “discretionary tactics.” Having a website with lots of photos and working with OTAs are both mandatory tactics. Spending time and money on social media, SEO, SEM, online advertising, offline advertising, co-marketing partnerships and referral programs are all discretionary tactics. And by discretionary, I just mean that you have limited time and only so much money to allocate to promotions, so you have to test, collect data, measure performance, and continue to refine these tactics.
There are many factors that will determine which discretionary tactics you should emphasize. If you are already blessed with high occupancy rates, you don’t want to go overboard on promotional expenses just because you can. A marketing budget that is based on a percentage of sales revenue is too simplistic. If you have a new hostel, your occupancy rates may be lower and require you to invest more in building awareness. If your hostel has 300 beds versus 30 beds, scale will impact how much time and money you can budget as well. Your location is also very important. If you are a high profile hostel in a major tourist destination with a major airport, your promotional strategies will be different than a hostel in a small town that backpackers only reach by bus, rental car or hiking boots.
I’d like to talk to you about each mandatory and discretionary tactic in greater detail in future blog posts, and please share with us what you have found works well or doesn’t work for you. We here at BananaDesk believe that a rising tide lifts all boats, so the smarter we become as an industry, the more hostelling can grow for all of us. I also highly recommend that you join the forum discussions at HostelManagement.com. They maintain multiple online discussions about hostel marketing tactics, so join the discussion and learn from the experience of others.