Is it true that you can increase bookings by focusing on a specific target market?
Before we dive into niche marketing, I strongly recommend reading my article about the Hostel Marketing Plan first if you haven’t done so already.
It’s a dreaded topic especially to those among you who are already fighting low occupancy rates. I truly understand that focusing on a potentially smaller market can be a scary thought at first.
Before we decode why this is one of the major fallacies, let me clarify:
We do NOT argue about accommodating only a certain type of people (e.g. only females in their thirties). There’s nothing wrong with that.
Instead, what we are talking about is MARKETING to a specific target market. That means channeling your marketing activities in order to attract a certain group.
We certainly do welcome anyone who wants to stay with us – but with regards to marketing, our effort goes towards a carefully targeted group.
Defining a target market plays a crucial role in your marketing strategy and is the foundation of your overall success. It dictates ALL your following steps in your marketing plan.
Allan Dib, the bestselling author of my favorite book The 1-Page Marketing Plan describes the power of focus as follows:
“A 100 watt light bulb, like the kind of light bulb we normally have in our homes, lights up a room. By contrast, a 100 watt laser can cut through steel. Same energy, dramatically different result. The difference being how the energy is focused.
The same thing is true for your marketing.”
Why A Big Target Market Leads To Fewer Guests
The attempt to please as many potential guests as possible often begins with the name of hostels.
Let me give you two examples:
- “Hotel & Hostel”
- “Party & Relax”
Another and more common way is to use a description that says:
- “for everyone older than 6 years”
- “for solo-travelers, couples, families and groups”
Moreover, I see hostels that intentionally hide their biggest selling points like being a party hostel. Why? Because they fear that it will turn off other potential guests.
Conventional wisdom and a healthy sense of logic would have you to believe that this strategy is superior. I mean, the broader you focus the bigger the pool of potential guests, right?
The first time I read about defining a target market, my gut feeling was off as well. I thought “why would someone voluntarily limit a target market? What’s the point?”
However, what I didn’t know at that time was that:
In terms of marketing, “everyone” means “no one”.
Think about it.
If you’re a handsome 35 years old guy, looking for a quiet hostel to chill out after a long trip – which of the following hostels would you opt for?
- A) Oasis Hostel – for grown people who want to relax and recharge. Adults only
- B) Party & relax hostel for everyone older than 6
- C) Party Anthem Hostel – for the crazy people. We host the sickest project X parties EVER
I reckon you’d choose hostel A.
Now imagine you’re 22 years old. You’ve just finished your studies and now you’re looking for a place to celebrate your achievement … and, of course, soak your brain cells in alcohol.
Which hostel of the above would you choose?
Pretty obvious, huh?
The point is, if your angle is too wide, your message gets diluted – it doesn’t speak to anyone.
At this point, you might be thinking – “But what about big companies like Apple, Coca Cola, Nike – they shoot at pretty much everything!”
And yes, you’re right!
What they do is mass marketing, sometimes also called “branding”, where they spend gazillions to get their name out there. While this is effective, it requires a HUGE amount of money and a MASSIVE timeframe.
Think of mass marketing as the typical behavior of villains in a classic action movie.
I case you don’t watch these kind of movies, here’s the executive summary of 95% of all action scenes:
The villains have big machine guns and shoot in all directions as soon as the good guys approach. Sometimes they hit a graze shot, however, most of the time they hit anything but the target. The good ones typically are outnumbered by far and have smaller guns. Nevertheless, they inevitably find a way to defeat the bad guys in the end.
The question is, how do they do it?
In a classic movie, the good guys only make 1-2 precise shots instead of firing in all directions. And that’s exactly what you want to do in your marketing: shoot like Jason Statham when it comes to getting your message out there.
Some of the seasoned hostel owners among you who have been in business for decades might still find yourselves a little wary. After all, you’ve experienced fully booked hostels without targeting a specific market. So why bother now?
In short, the competition has changed – and not for the better.
Potential guests are now able to compare your hostel to many others and have several other similar options like Airbnbs or Couchsurfing.
In fact, multiple hostel owners even labeled the increasing competition as their #1 challenge when it comes to running their hostel. If you haven’t seen the survey results in my free report yet, be sure to check that out.
That’s why it has become a NECESSITY for small businesses – like your hostel – to focus on getting in front of the right people as opposed to a lot of people.
Otherwise, you’ll end up as the “jack of all trades, master of none” who’ll get missed in the clutter.
Since this is no new concept, there’s already an established name for the solution:
The antidote against increasing competition is called niche marketing.
Definition Of Niche Marketing:
Niche marketing is the process of addressing a narrow target market – called “niche” – with their specific wants, needs, and personalities.
It’s often labeled as the “secret” to stand out in a competitive field. The goal of niche marketing is to create the thought of “Oh yeah, that’s for me” in your potential guest’s mind.
Niche marketing is the most effective way to market your hostel for several reasons.
#5 Benefits Of Niche Marketing
#1 Niching Leads To More Bookings
If executed correctly, niche marketing gets you a fully booked hostel in two ways.
- A) Active Marketing
Through studying your target market, you’re able to speak to the needs and values of your niche. You know their motives, their secret desires, …, their everything and therefore know which strings to pull to make the puppet dance.
Hence, your message is being perceived as more relevant, authentic and tailored to the listener.
Furthermore, you’ll have access to additional media channels that you otherwise couldn’t use (e.g. gay forums for a gay-only hostel).
- B) Passive Marketing
Another positive side effect is that people in niches tend to be in frequent contact with other people in that market.
- Fitness freaks are often in contact with other fitness junkies
- Deeply religious people are often in contact with other religious people
If you’re homosexual and your best gay bud tells you about this cool gay-only hostel in Sydney. Would that capture your attention more than a recommendation from your mother?
In a nutshell: Niche guests have the potential to become your best marketers! Or put another way, you’re doomed to get more word of mouth and a higher brand recognition by targeting a specific group.
#2 Niching Makes Prices Secondary
If you’re in the unfortunate situation that your dog suddenly loses lots of weight and looks like he’s going to bite the dust soon, would you prefer to see a general vet or a dog specialist?
I assume it’s the latter.
Now if you had an appointment with a dog specialist, would you expect the receipt to be higher than from a general vet?
That, my friends, is the beauty of targeting a niche! By focusing on a narrow target market, prices become secondary and are even EXPECTED to be higher.
Hence, niching is part of your hostels’ pricing strategy.
In addition to that, you’ll become a specialist who’s sought after rather than shopped on price. That’s because potential guests can’t compare you with the other hostels anymore – you’re the only orange in a pot of apples.
Heck, if you’re doing it right, you even have the chance to become a travel destination rather than a suitable accommodation in your area.
To give you a personal example: I’ve never had aspirations to visit Singapore as a tourist. However, recently I discovered a hostel that makes my mind scream: “HELL yes, that’s EXACTLY for me!”
It’s a startup and entrepreneur hostel chain called “Tribe Theory” and the first sentence on Hostelworld says: “Are you a young startup or entrepreneur on a budget, busy building your business venture and need an affordable yet soulful accommodation in the heart of Singapore? Then look no further!”
And the sale is done. Seriously.
I truly don’t care for the price, let alone other hostels in that area. The thought of networking, like-minded people, inspiring personas… I’m sold.
I. Just. Book. My. Stay. Period.
And that, my friend, is the power of focus, which brings me to my next point…
#3 More Engaged Community
Imagine what the community of an entrepreneurial hostel looks like. What people will you find there? Can you see how they’re all dressed similarly, equipped with their IT gadgets, networking like crazy… Do you smell the coffee? Can you visualize that place?
The community aspect and growing an own culture is the #1 WILD CARD that hostels can play unlike any other type of accommodation. People might book your hostel because of your reviews and facilities, but they’re staying because of the people.
You can offer the best facilities, but if your guests have a hard time to connect with each other, the likelihood of them extending their stay is pretty small.
#4 Better Return On Investment (ROI)
As a result of #1, #2 and #3 you get a better return on your investment. You not only increase your bookings by focusing on a niche but also save advertising costs with your carefully targeted message.
Using our previous analogy: you’re saving a massive amount of bullets by making a few precise hits instead of firing in all directions.
And for my financial geeks who are waiting for me dropping that keyword… Yes, your overall marketing now is more cost-effective. You’re welcome 😉
#5 Niching Makes Life Easier And More Enjoyable
Niching also has tremendous effects on your personal life. Let’s give it a closer look.
Imagine you’d want to surprise your partner with a home-cooked dinner. You know his tastes and preferences. Therefore, you combine the right ingredients and you KNOW he’s going to LOVE it.
Now imagine cooking dinner for 15 kids on your son’s birthday. Surely you’ve seen all of them running around before, but heck, what do they like or dislike and what are they allergic to?
So you choose a meal that’s a bit “easier” and less special and HOPE that everyone’s going to LIKE it: Pasta with a simple tomato sauce.
And despite your best effort, it happens: Mike doesn’t like tomatoes and Kate is gluten-intolerant. So you scurry in the kitchen and mix up a special treatment. After all, you want to be a good host, right?
Which option do you prefer?
- A) Be certain you prepare something they LOVE
- B) Hope you do something they LIKE
The reason I might bother you with this seemingly “no-brainer” question is because more than 85% of hostels choose the latter!
That’s like wearing a weight vest during a marathon! Surely you’ll manage to crawl to the finish line somehow – but it’s just so unnecessarily hard.
Realize that you can’t please everyone all the time. In fact, it’s impossible to be everything for everyone.
The bottom line: it’s MUCH easier to satisfy the needs of one specific group rather than satisfying many different people! It’s also simpler to “wow” your niche because you know exactly what they value.
- Wooden dishes and cutlery don’t mean jack for the average guest, but you can make a sure bet that greenies are stoked about it
- A ping pong table doesn’t get any attention from an elderly guest, but young folks are excited about it
Niching is not only an easy way to bring your personal passions and interests into your hostel, it’s also an effective tool to avoid “pain in the ass” type of guests.
Your hostel should be fun. Don’t let the wrong marketing strategy take that from you.
At this point, you might wonder how to implement this “niche thing” in your hostel.
That’s why I first want to give you a general idea through some examples of what it can look like before we dive into the concrete steps to find your own niche.
Common niches in the hostel industry:
- Party hostel
– Offers all the necessary facilities from a bar to hi-fi system to ignite the young party people
- “Activity” hostel
– Offers additional activities and often includes free or low-cost courses
– E.g. Surf hostel, golf hostel, ski hostel, climbing hostel,…
- Relax or wellness hostel
– Offers more privacy and chill-out areas
– Can offer additional spa facilities like saunas, massages, etc.
- Business hostel
– Offers all necessary equipment for business people to work
- Food or culinary hostel
– Offers special food
– E.g. Australian BBQ hostel (kangaroo, crocodile and emu), pizza hostel, pancake hostel,…
- Fitness hostel
– Offers special facilities (e.g. gym) and or fitness-oriented meals
- Arts or history hostel
– Includes artworks or historical artifacts
- Love or romantic hostel
– Offers more privacy and facilities with a romantic atmosphere
- “Only” hostel
– E.g. men only, female only, gay only, lesbian only, family only, motorcyclists only,…
- Nudist or clothing-optional hostel
– Has certain house rules that restrict the clothing etiquette
- Pet-friendly hostel
– Offers all the facilities to accommodate our furry friends
- Event hostels
– Offers location and catering for special events
– E.g. weddings, bucks’ parties, bridal showers, birthdays, music festivals,…
This is your chance to include further passions in your hostel.
Be creative, yet practical.
How To Find Your Target Market
The easiest way for you to find your target market is to create a list with all possible ideas and evaluate them with the PCPI model.
Before you rate each category on a scale of 1 to 10 and calculate the overall score, you first need to think and research your actual demand.
An ideal niche is neither too small nor too big. As a rule of thumb: Choose a target market where it’s realistic that you can fill your hostel with at least 50% ideal guests on a continual basis.
And yes, that’s a tricky one. That’s why you’ll implement niche marketing step-by-step and readjust along the way. More on that shortly.
The main PCPI categories:
1. Profitability (P):
How profitable is it to serve this market?
Remember: It’s not about turnover, it’s about the profit
- 1 = expect high-end facilities for a few peanuts
- 10 = easily satisfied and pay handsomely
2. Competition (C)
How competitive is this market segment in your area?
Remember: you have to be relatively valuable, not just valuable
- 1 = highly competitive market
- 10 = little to no competition
3) Personal fulfillment (P)
How much do you enjoy hosting this type of guest?
- 1 = pain in the ass type of guests
- 10 = angels – can’t wait to see them!
4) Implementation difficulty (I)
How much effort and resources are needed to meet their needs?
- 1 = time- and cost-intensive
- 10 = finger snap
Depending on if you’re already a seasoned hostel owner or if you’re just starting out, there are additional considerations:
- Is there a consistent need?
– E.g. a surf hostel in an area where it’s too cold to surf in 8 out of 12 months
- Is there a future need? – Avoid trends that fade
– E.g. a green smoothie hostel
- Can you truly address their needs and solve their problems?
– E.g. offering spa facilities to relax next to a kindergarten with squealing kids
- Do you have all the certificates and permits?
– Look for zoning restrictions and other regulations
– E.g. serving alcohol requires a special permit
- How well can you relate to and understand the target market?–
– E.g. a gay hostel owner knows best what his gay guests really want
A. RELAX HOSTEL
OVERALL SCORE: 23
B. PARTY HOSTEL:
OVERALL SCORE: 22
C. FOOD HOSTEL (e.g. Irish specialities)
OVERALL SCORE: 35
D. ACTIVITY HOSTEL (e.g. yoga)
OVERALL SCORE: 27
In the example above, the perfect niche seems to be related to food. It’s profitable, there’s almost no competition, you love cooking and you can implement it in a matter of days.
How To Start Niche Marketing
In this section, we’re going to focus on the actual implementation.
As you might have noticed, there are several unknowns in choosing a niche. You’ll only ever see if it works out if you give it a try.
Therefore, I recommend a step-by-step implementation where you measure and improve your results regularly. That way you keep potential losses small and keep building and refining your foundation for the future.
For example, you could start niche marketing solely on one specific media channel (e.g. Booking.com) and test how it works out in comparison with other online travel agencies or previous results (if available). This process is often called “split testing” or “A/B testing”.
Whatever works best for you, make sure that you’re not the guy who’s spent thousands of dollars on new facilities only to find out that they aren’t needed.
Therefore, your main focus in this phase is to gather as much feedback as possible so that you get a better understanding of the demand and your niche’s real needs.
This is also the part where it pays out to make a comprehensive research about your target market. The most effective way to uncover the actual needs is by conducting a survey.
Apropos survey, did you already take this quick survey here? 😉Thanks in advance!
Whatever you decide is best for your hostel, make sure to go step-by-step and, most importantly, enjoy the process!
Benefits of Niche Marketing
The Ultimate Checklist
Before you leave: Answer this quick question and help our community.
What was the worst investment you made in your hostel only to find out that it was a complete waste of money?
Share your opinion in the comment section below!