Get our latest content by email

Subscribe to our newsletter

How to beat the competition

Stop being a commodity and focus on differentiating yourself from the competition.

Picture of Tim Zenderman

Tim Zenderman

Founder & Former CEO

Image for Blog Post: How to beat the competition

Are competitors keeping you up at night?

Do you have your competitors' Hostelworld and links open in your browser tab next to this one?

Maybe your hostel's pricing strategy happens to be "a little cheaper than the competition"?

If you're losing your mind monitoring your competitors' every move, then this post is for you.

The commodity problem

How we choose to play determines how we compete. So, before we begin with how to beat the competition, let's understand how we don't want to play.

So, ever heard of commodities?

A commodity is an economic good (a bed, in our case) that the market treats as equal regardless of who produced them.

So, think: gasoline, wheat, rice, etc.

When you buy these goods, you don't really care who produces them, because they are pretty much the same...

The takeaway here is that commodities compete almost exclusively on price.

So, if one company can manage to produce gasoline at a lower cost per liter, they have the upper hand. Generally, lower costs are only attained at a huge scale. Which is also why the companies that produce commodities also have massive scale. The only thing that matters for them is producing the commodity at the lowest possible cost.

Make sense?


Now, back to your hostel: If you find yourself competing on price and nothing else, your beds have become a commodity. Just like gasoline, most people won't really care (or see any difference) where it comes from or who sells it, as long as they are getting the cheapest price.

Let that sink in for a second.

Yea, bad news...

Now, the reality is that your hostel is not the same as all the other hostels in your city! All hostels are different. So, why are you trying to compete on price alone??

Aside from that though, there are many more reasons why selling your beds as a commodity and matching the competition is a bad idea.

Let's walk through a few of those reasons:

You're always one step behind

When you update your beds' rates based on your competitors' changes, you are always one step behind.

When your competitor adds a new amenity and you copy them, you are always one step behind.

How can you beat them if you're always following what they do? The answer is that you can't!

A race to the bottom that you can't win

Remember when I mentioned that companies with massive scale are the ones that compete in commodities markets?

Well, the same thing applies here. If you allow your beds to become a commodity, then the only thing that you compete on is price. And when you only compete on price, it's a matter of who has the cheapest price. And that my friend, is a race to the bottom.

The question becomes: Who can sell for the cheapest rate and still survive? If you're not massive hostel, then competing on price could prove to be fatal...

Do yourself a favor and stop racing to the bottom!

How to not be a commodity

Luckily for you, there are other ways! What you need to understand is that your beds are not a commodity, and you shouldn't be competing on price alone.

Differentiate your hostel

Party hostel? Chill hostel? Adventure hostel? Say it loud and make sure everyone searching online knows exactly what kind of hostel you are.

Your hostel is unique. Make sure prospective guests know that.

Differentiate your hostel. When you are the party hostel in town, you create demand for your hostel and you compete with much fewer hostels.

That differentiation also protects your hostel from new hostels. If you just compete on price, a new hostel can easily come in and steal bookings by undercutting your rates. But if your hostel is the party hostel, it's going to take a lot more work than dropping rates to take bookings from you.

Sweat your travelers' needs

Talk to your customers and understand how they are traveling and what kinds of experiences they are looking for while they travel.

Is there anything you can add to your hostel that will help guests have a better stay? This is the place that new ideas should come from, not from competitors!

It's not a matter of one-upping your competitor, it's a matter of being the best possible fit for your guests.

Good profiles on OTAs

Unsexy as it may seem - OTAs are still hot right now.

Sit down and reconsider your profile on each OTA to make sure it is as awesome as it can possibly be.

Is there anything you can do to rank higher? Or to deliver your hostel's unique value more accurately?

Think about:

  • re-writing your hostel's description,
  • uploading the best possible photos of your hostel, and
  • making sure your guests have an incredible time at your hostel.

These will lead to more bookings, happier guests, better ratings and in turn to more bookings!

Conclusion / Moral of the story

Don't lose your mind watching your competitors. Sure, pricing is important! It's definitely one of the things travelers take into account when booking. But don't let it be your differentiator. If your only differentiator is being cheaper than everyone else, you're in trouble (for the many reasons described above).

If all you do is watch the competition, you'll always be one step behind and are sure to go insane. Don't be reactive to their changes. Be proactive by marketing your hostel's value in the right places and offering what your guests want.

Photo by Jonathan Chng on Unsplash.

Subscribe to our Newsletter to get our latest content by email!

You can unsuscribe at any time.


Share this article

Simple management for small properties

Avoid overbookings. Synchronize your offer. Simplify your life.