Hostel Observations
Rosario, Argentina

Cool Raúl Hostel, my home for about a week now, reminds me of the student housing found near a university.

Imagine walking into a house or apartment near a college in the U.S.—what are you likely to find? A slightly dilapidated living environment, probably filled with furniture and kitchen supplies from a used thrift store; huge speakers pumping out music; a glass vase topped off with panties; a refrigerator full of alcohol; and party-hungry occupants. Welcome to Cool Raúl.

The six-month old hostel was started up by Omar and Israel—two young Argentinean guys (about my age) that pretty much split their days between idling here and partying on the weekends.

Israel's personality is more similar to mine (outgoing, but a little more reserved), which makes him enjoyable to be around. Omar is one of the biggest womanizers I've seen, and the steady stream of cute female travelers and cash profits have done nothing but made him smile recently. Omar says the two things you can't have as a hostel owner are privacy, and a girlfriend.

The tourism scene in Rosario is just a two or three years old, and these guys happened to jumped in at the right time (as one of the first 10 places in town to host travelers in this way).

Hat party

The hostel threw a themed party on Saturday night—a hat party. I must admit, when they invite people, folks show up—in mass. Just like the nightclubs in town, the scene didn't start to shut down until six or seven o'clock in the morning.

I've picked up a bit of a cough—probably from the amount of second-hand smoke I'm inhaling. It's really depressing to see something like 90% of the youthful population with a cigarette in their mouth. No fog machines needed in the nightclubs, the chain smoking of the crowd is more than sufficient.

Sometime late last week Omar and Israel had just gotten back from looking at a location for another hostel (that they're thinking about opening), when we started talking about some of the costs involved for such things in Rosario.

It's absolutely amazing how little these guys are paying in rent here—just AR$800 (US$260) per month! The two said their payments are on the low side, but with the average price of massive multi-bedroom spaces in the city center going for less than US$500 a month, I'm still impressed.

The obvious down side to running a business like this out of a rented building is that all the improvements you make simply boost the equity for the owner. This could be a slight problem when it comes time to renew the lease—a space that's now worth more could bring unwanted increases in rent. But with as much as these guys are charging for a dormitory bunk bed (US$7.50/night), even a 50% increase in rent wouldn't make much of a dent in profits.

From a financial standpoint, renting is a much safer way for guys like Omar and Israel to start up a hostel. It isn't necessary to have much in the way of an upfront capital investment, so the risk is fairly limited. Marketing and networking is where a lot of the heavy lifting is involved.

There were a couple of young hostel owners (from all over Argentina) meeting and chatting here this afternoon. The group is playing with the idea of pulling together to create a small chain of hostels, pushing travelers from one to the next. I've seen this in action before, and if done properly it can be effective.

I'm hoping Andy will green light the hostel project by the time I'm on my way out of the continent—I wouldn't mind building a proper home for travelers in the Philippines come this April.

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