Tourism Co. turns attention to PR’s budding hostel sector

Written by  //  March 27, 2017  //  Tourism/Transportation  //  No comments

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Conturce Hostel, scheduled to open sometime in May once it clears its last permit hurdle, represents an investment of around $500,000.

The upcoming launch of a premium hostel in the Condado area is sure to draw more attention to this type of lodging geared to young travelers but gaining traction with budget travelers of all ages.

Hostels make up a tiny segment of Puerto Rico’s hospitality industry but the youth market it caters to is one of the fastest growing segments of international tourism. By 2020, it is expected to account for more than $400 billion in travel expenditures.

This lodging category can also expect increased attention from the government with the Tourism Co. gearing up to inspect hostels following the agency’s move last year to include them in the regulations governing the island’s tourist facilities.

Prior to 2016, hostels were only required to register with the Tourism Co. for purposes of the Room Tax but now they will need to meet regulatory requirements to operate as a business.

No date has been set yet for the inspection but Juan C. Vega, from the Tourism Co.’s Planning Office, said it will begin “soon.”

Meanwhile, the owner of the newest hostel in town is putting the finishing touches on what he hopes will be the first government-endorsed hostel in San Juan.

Conturce Hostel, scheduled to open sometime in May once it clears its last permit hurdle, represents an investment of around $500,000.

It occupies two floors and the rooftop terrace of a recently renovated three-story structure on Loiza Street, a magnet area for its eclectic mix of restaurants.

The hostel’s polished look and aesthetics, enhanced by colorful art and eye-catching design touches, make Conturce stand out from its more modest competitors around town.

(The unusual name, a conflation of the words Condado and Santurce, alludes to its geographical location. It is located in the Condado tourism area, which in turn is part of Santurce.)

Owner José Hernández-Castrodad said his privately funded investment covered remodeling and construction (around $300,000) and the cost of purchasing two floors with access to the building’s large rooftop which offers sweeping views of the area.

Hernández is a businessman whose real estate company, Angora Properties, is dedicated to the development and leasing of commercial and industrial properties in the Caguas area.

He said the state of the economy has forced Angora to make “adjustments” such as reducing expenditures, lowering rental rates, and carving out lease areas into smaller spaces.

The hostel is a way to diversify, according to Hernández. As part of his research in setting up the new business he hired mystery shoppers to scout local hostels and report back on how these operations were run.

With seven rooms and 34 beds, Conturce will be profitable as long as it maintains a monthly occupancy rate of 50 percent, according to Hernández. Rates will range between $28 and $38. He plans to market the property through such travel websites as Hostal.com and airbnb.

With seven rooms and 34 beds, Conturce will be profitable as long as it maintains a monthly occupancy rate of 50 percent.

Hostels gain ground
According to the Tourism Co., there are five hostels currently operating in San Juan but an informal check turned up at least 10, based in different parts of the city: Santurce, Condado, Ocean Park, and Río Piedras. Out on the island, there are hostels in Rincón and in Fajardo.

Although a relatively new concept in Puerto Rico, hostels are common in Europe where they are a popular lodging choice for young backpackers and budget travelers.

Typically, a hostel offers low rates, dorm-style accommodations (bunk beds) and shared bathrooms. Rooms are either mixed or single-sex but private rooms may also be available. Common areas, such a lounges and the kitchen, allow travelers to socialize and share their experiences, an aspect of the hostel stay that is at the core of its appeal.

Traveling on the cheap may appeal to the young but it’s an idea increasingly being taken up by American travelers of all ages.

Once exposed to the hostel concept in Europe, American travelers are encouraged to try it in other places, said Walid Garga, who runs Eshta Hostel out of a white-washed, modest two-story home off McLeary Street, in Ocean Park.

“Not everyone has a big budget,” he said, noting that Puerto Rico is a big destination in the Caribbean and could use more low-cost lodging choices. It was precisely because he saw a gap in this type of offering that prompted him to start the hostel at an investment of more than $150,000 in private capital. It opened its doors last November.

Tourism industry players agree that diversification is a good trend.

Puerto Rico Hotel & Tourism Association President Clarisa Jiménez said hostels “give our visitors another option for their stay.”

“The economic crisis and travel tendencies force the tourist to want to reduce expenses,” said Tourism Co.’s Vega, adding that hostels appeal to an international market, which is why his agency wants to promote them.

“The same as with the luxury market, we must cater to (hostels) and diversify Puerto Rico’s tourism offer,” he said.

The average daily rate in a Puerto Rico hotel in 2016 was $182.79, according to Jiménez.

Local hostels offer an affordable alternative with rates as low as $15 for a bunk bed and private rooms between $55 and $75, depending on the season.

Though they receive some walk-in traffic, most hostels depend on online bookings.

At Casa Santurce, based in a three-story building in the colorful Alto del Cabro sector in Miramar, 95 percent of clients make reservations through hostelworld.com and booking.com on whose websites the hostel is listed, said manager Christopher Weibel.

Sites get 15 to 20 percent from each booking, he said.

Guests typically stay one night or as many as two or three weeks, according to Weibel. Repeat customers are common. He sees all age groups but most guests are young people between 18 and 25 years old.

Youth travel is considered one of the fastest growing segments of international tourism. Youths ages 15 to 29 make up more than 23 percent of the more than one billion tourists who travel internationally each year.

A report released last year by the World Tourism Organization (UNWTO) estimated that by 2020, some 370 million youth travelers will generate more than $400 billion in total travel expenditures.

Salient in the report:

  • Young travelers stay a longer time in a destination and spend more money.
  • The youth market tends to be less volatile than the tourism market as a whole.
  • Young people attract other visitors to the destinations they visit and help give these places a “buzz.”
  • Young travelers are likely to return to the places they visited earlier in life.

Hostels may not offer all the amenities of a big hotel but they cover the basics a traveler needs and help save money that can be spent on other things, like food and entertainment. Ask any tourist staying at a hostel and the money-saving lure is sure to come up.

Debbie Zulberti flew into San Juan on Friday in advance of her Sunday sailing date and turned up at The Palace Hostel, based on a quiet street in residential Miramar. Staying in the hostel was inspired by her good experience with this type of lodging in Italy. Still, before booking a private room at the Palace she made sure to read online reviews, a common practice for any traveller these days.

Zulberti, a youthful woman in her 50s who lives in Florida for part of the year, said the Palace was exactly what she and her traveling companion needed: “A place to just lay my head down and shower and not spend a lot of money.”

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