How to Start a Hostel: Legal Considerations

International visitors increasingly flock to experience Australia’s beaches, bars and diverse landscapes. In 2015-2016, the holiday houses, flats and hostels industry generated over $1.1 billion in revenue, with signs of continued growth over the next five years. From backpacker accommodation to bed and breakfast (B&B) to short-term rentals, there are numerous options for affordable accommodation.

For many backpackers and those travelling on a lower budget, hostels can be a favourable accommodation option. If you are looking to start a hostel, there are a number of important factors to consider before stocking your bar and planning the weekly social calendar. This article sets out regulations and policies that all hostel owners must adhere to ensure the safety of guests.

Check-In Time

Before you sign any lease or property agreement, you must ensure that the premises can be fitted out to operate as a hostel. You should contact your municipal council to determine whether zoning regulations affect how you can set up as an accommodation provider. A planning permit from your local council will establish that you have permission to develop your property or undertake any development to change the purpose of the property.

Regulations vary from local and state building and planning to public health occupational health and safety standards. Hostels are known for higher guest density due to bunk beds and shared living arrangements. Consequently, fire regulations tend to be more stringent for hostel providers to ensure guest safety. These regulations include fire and evacuation plans clearly displayed and clear means of escape from every room.

Label Your Food and Drink

Hostels that provide food must obtain a licence from their local council that permits food being sold or distributed on premises. Each state or territory has an equivalent Environmental Health Officer, who will inspect your property and ensure that you comply with state and federal obligations. Some hostels offer more than a shared kitchen, such as a restaurant or cafe. Operating a restaurant or cafe requires additional licences and should be registered accordingly with the regulatory body. Also, if you are selling alcohol on premises, liquor licensing laws also apply.

Register Your Business

You must register your business before commencing operations. Registration not only includes applying for an Australian Business Number and Tax File Number but also registering as an employer if you intend to hire employees. If you plan to trade your hostel under a name other than your own, you are also required to register your business name. A business structuring lawyer can also assist with setting up your hostel’s business structure, whether it be a partnership or as a private company. Each business structure offers its owners different levels of protections, as well as tax obligations.

Key Takeaways

While entry costs can be low for the hostel industry due to more basic fit out requirements, business owners should not neglect the strict licensing and accommodation regulations that hostels must adhere to. In addition to obtaining accommodation permits, a hostel should also have the correct business structure in place and employment contracts drafted. If you have any questions about starting your hostel, get in touch on 1300 544 755.