Banking & Finance, Small Business & Startups, and Travel & Tourism

Startup crowdfunds downtown hostel

April 15, 2014
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Startup crowdfunds downtown hostel
A shot of Stay Hostel’s crowdfunding page to help fund the opening of a hostel in downtown Grand Rapids. Photo via indiegogo.com

Matt Knaack didn’t travel much as a kid, but, at 19, he went on a life-changing trip to England with his well-traveled friend, Tom Damitio, and he fell in love with the experience.

“I think everyone should travel more,” Knaack said.

Knaack and Damitio hope that their new venture — trying to open a hostel in downtown Grand Rapids — will help give others the opportunity to do more traveling.

Funding

This week, the pair is launching a $50,000 fundraising campaign on the crowdfunding platform Indiegogo to get Stay Hostel up and running.

The fundraising campaign will run for 45 days, and unlike Kickstarter campaigns, if they don’t reach their target goal of $50,000, they’ll still get to keep the money raised.

Knaack said if they fall short, they would explore alternative avenues to raise the rest of the needed funding.

The plan

Knaack said that if everything goes as planned, the hostel would be open to travelers in time for ArtPrize.

Knaack and Damitio are already looking at potential locations for the hostel, and Knaack said once they have the money, things should move pretty quickly in terms of getting a lease signed and renovating the space to fit the needs of travelers.

Stay Hostel would have at least two bathrooms, a kitchen, a common area and enough space to accommodate between 12-30 beds.

The pair is estimating that they will need $55,962 to cover startup costs and the first six months of operation, with $15,000 of that going to renovations and at least $18,000 towards the lease and utilities.

The hostel will need to be licensed as a hotel through the city.

Top-rated market

Knaack is employed at Founders Brewing Co. in Grand Rapids and has been buoyed by the number of travelers visiting Grand Rapids just for its craft beer scene.

“We have all the beer drinkers that are coming in, plus countless other people,” Knaack said. “I know that we could fill 12 beds every weekend, probably the entire year.”

He said that Grand Rapids’ rising star as Beer City, U.S.A., as well as Lonely Planet’s designation as the No. 1 place to visit in 2014 make the timing ripe for a hostel to join the hospitality scene downtown.

Economic impact

Businesses stand to benefit from a hostel downtown.

A 2007 study found that a hostel in Boston, which hosted 33,000 guests that year, generated an economic impact of more than $12.5 million to the local economy, with approximately $10 million of that being spent on recreation, food and retail.

Though Grand Rapids is not Boston, Knaack and Damitio have estimated that if Stay Hostel has 5 percent of the guests that the Boston hostel had in 2007, a total of 1,640 guests, travelers could contribute as much as $625,000 to Grand Rapids’ economy per year.

While they wait out the fundraising campaign, Knaack and Damitio are busy trying to increase awareness about Stay Hostel.

The pair will be attending the Heartland Hostel Summit in Indianapolis this month, where they’ll continue to network with other hostel owners.

World of mouth and social media will be the primary way for marketing Stay Hostel. 

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