All about hostels and how to start one

This post is also available in: Spanish

By: Staff at Panama Offshore Legal Services

E-Mail: Phone: (507) 227 – 6645

Luna’s Castle Hostel.

Luna’s Castle Hostel.

Hostels can be a very lucrative business. They are springing up worldwide and Panama is no exception. Here are some tips on how to start a successful hostel in Panama.

Know the market: Most hostels appeal to the backpacking crowd who are young, budget minded, adventurous and independent. Knowing the type of customers hostels attract will affect marketing strategies.

Location: Surprisingly most hostels are not located in the center of a city where real estate is expensive. A hostel in a small town which is located in a “travel circuit” as a popular regional travel route for backpackers is ideal. Knowing the type of backpackers which the hostel wants to attract will make a difference. Urban backpackers want to be near a subway station (like the upcoming metro in Panama City) or bus station (Albrook terminal) which makes it convenient to travel cheaply. This also makes it convenient for late night or early morning arrivals. Surfers want to be at the best surfing beaches.

Seasons: Panama has high and low tourist seasons. A hostel has to survive the low season.

Hostel Experience: The most successful hostels offer guests unique experiences which they won’t forget and will tell others they meet during their travels. The most successful hostel in Panama is Luna’s Castle in Panama City whose owners converted their hostel into an art gallery with a European style exterior situated in colonial Casco Antiguo. Owning a popular expats bar next to the hostel with affordable drinks and a fun atmosphere for the young crowd helps. This hostel has lounge areas, internet computers, and an indoor movie theater so guests can mingle and be entertained.

The most successful hostels offer guests unique experiences which they won’t forget and will tell others they meet during their travels

Money Makers: Hostels are not just low budget dorms. A successful hostel sells bottled water, sodas, snacks, and organized tours. Having a bar for the guests and the public is a money maker. Some hostels offer local language classes.

A hostel can charge $12 per bed.

A hostel can charge $12 per bed.

Beds: Hostels are unique in that they are similar to dorms where beds can be scattered into several rooms and some private rooms can be offered too. Even at $12 per bed one room with 30 beds can make $360 a night. Private rooms for two can run to $30 per night. A popular hostel during high season can be fully occupied with 60 beds and four private rooms earning $840 a night.

Expenses: Besides rent, hostels offer free breakfast where expenses can be kept low by having a communal kitchen with low cost self service foods. Maids and employee salaries are low in Panama. Maintenance, utilities, supplies, and business taxes round out the typical expenses.

A Panama lawyer: Find a competent local lawyer who knows real estate, labor, liquor, and hotel laws to protect the hostel from legal complications.


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