How Much Can a Small Hostel Earn in Guangzhou’s University Town? A Field Study

Context

Guangzhou Panyu district university town has ten colleges and surrounding villages with many budget inns that are fully booked on weekends.

Field Survey

The investigator visited North‑Pavilion village (within a 1 km radius of four colleges) and interviewed inn operators using a pretext of arranging accommodation for a training group. Data collected included the number of rooms, weekday and weekend rates, and observed occupancy.

Observed Pricing and Occupancy

Room rates: 70 RMB on weekdays, 100‑120 RMB on weekends.

Typical occupancy (four inns):

Friday & Saturday: 100 %.

Sunday: 30‑50 %.

Monday‑Thursday: 10‑30 %.

Revenue Model for a 15‑Room, 3‑Floor Hostel

Assumptions per month (30 days):

Weekday (Mon‑Thu, 18 days) occupancy = 20 % at 60 RMB per room.

Sunday (4 days) occupancy = 40 % at 60 RMB per room.

Weekend (Fri‑Sat, 8 days) occupancy = 100 % at 100 RMB per room.

Monthly revenue calculations:

Weekday: 60 RMB × 15 rooms × 0.20 × 18 = 3,240 RMB
Sunday: 60 RMB × 15 rooms × 0.40 × 4 = 1,440 RMB
Weekend: 100 RMB × 15 rooms × 8 = 12,000 RMB
Total: 16,680 RMB

Cost Estimates

Water & electricity: 5 RMB per room per night in summer, 1 RMB in other seasons.

Cleaning staff: 3,000 RMB per month.

Linen washing: ≈10 RMB per set.

Profit Projection

Using the above costs, estimated monthly profit is:

Summer: ≈10,710 RMB.

Spring/Autumn/Winter: ≈11,502 RMB.

Assuming 90 days of school holidays and 20 days of other long holidays with no bookings, the annual profit for a 15‑room hostel is roughly 100,000 RMB.

Limitations

The model does not include additional revenue from exam‑season bookings, long‑term rentals during holidays, or the initial capital required to build or acquire the property.