Lauren and Lee Gonzalez opened their first hostel in 2008.
The hospitality industry has been hit particularly hard over the last two years losing billions of dollars in revenue. What’s more, spiraling inflation, wide-spread labor shortages and broken supply chains have added insult to injury. Although no sector of the industry has been immune from these factors, hostels have demonstrated that they are quite resilient in the midst of all these pressures.
Lauren and Lee Gonzalez are the entrepreneurial sisters behind L&L Hospitality, a company that specializes in opening and operating hostels, including Lolo Pass in Portland, Oregon and The Local, in Queens, New York. They understand that the cost of operating is much cheaper than traditional hotels resulting in a higher margin business. Additionally, as the sisters weathered market swings over the past decade and a half, they’ve seen that the budget tourism segment is much more recession proof than higher-end luxury travel. As the hospitality industry has changed post-pandemic, many hotels are becoming more "hostel-like" with expense structure and amenities, including limited housekeeping and middle management positions that allow budget hotels and economy hotels to survive downturns better because fixed expenses are quicker to recover.
“We traveled a lot as students and stayed in hostels abroad that were less than stellar and simply thought that we can do this better,” explains Lee. “By the time we were in college and on our own budget, we recognized that travel is indeed a luxury but one that is so important to personal development and a more profound sense of place in the greater world. Hostels are the key to democratizing travel by making the luxury of travel accessible to a much broader range of people. Our dorm beds start at $36 a night.”
Lauren traveled and backpacked around South America and Europe throughout college, frequently seeking a hostel that was up to par. She started her career in finance, working in sales and financial trading in New York, London, Milan and Hong Kong. Lee started a finance career in Private Wealth Management in New York City. After completing her analyst program on Wall Street, she teamed up with Lauren and moved to Barcelona to pursue her dream of opening hostels.
They opened their first hostel in Barcelona, Spain in March of 2008. They converted the floor of a historic building in the L'Eixample neighborhood into a ten-room hostel that they ran entirely on their own for the first months. “It was a terrific learning opportunity and the best way to deeply understand our guests,” says Lauren. “The global recession had begun, but we weren't feeling its effects yet in Barcelona. Young, budget travelers were visiting at unprecedented levels, and guests who may have never considered hostels in the past were turning to us as a good wallet-friendly option.”
The hostel segment is often overlooked by Americans.
They’ve since moved their operations from Spain to the U.S. Because the hostel segment is extremely under-developed and overlooked by Americans, they’ve been able to carve out a comfortable niche in the market with limited competition. Also, the hospitality industry has changed post-pandemic as many hotels are becoming more "hostel-like" with expense structure and amenities, including limited housekeeping and middle management positions that allow budget hotels and economy hotels to survive downturns better because fixed expenses are quicker to recover.
Lolo Pass has experienced issues hiring team members since they opened a year ago. As things began to reopen last year, the number of job openings compared to job seekers was massive. That supply/demand imbalance is creating upward pressure on wages, which means having to offer more to attract candidates. They also are finding that a lot of hospitality employees are leaving the industry. They have hired some former restaurant workers who are fed up with the pay structure and culture of restaurants. A very busy summer season means that there is a lot of hard work ahead of the team but Lauren and Lee look forward to an injection of optimism and fresh energy that they expect to come from Lolo Pass guests.
New York City tourism is beginning to rebound.
In the short term, their goal is to recover to and perhaps surpass pre-pandemic status. “There have been so many stories about travel booming in the US, but unfortunately, that recovery is lumpy,” says Lauren. “Drive-in, outdoor recreation and more rural destinations may be booming, but urban centers are still not fully back to pre-pandemic occupancies. In Portland, our inbound airline traffic is only about 75% of what it was in 2019, and international arrivals are lagging further behind. Business, group and convention travel are still majorly down. New York City is faring a little better, but we have yet to see travel normalize to where it was in 2019.”
Lauren adds, “In the long term, we'd like to bring this adapted model of hostelling to other major markets in the U.S. within the next five years. We think travelers to cities like Austin, Denver, Nashville, Seattle and San Francisco would value what we offer, budget friendly accommodation without sacrificing the things that matter most to our demographic – cleanliness, warm hospitality and inclusivity, unique design sense and quality food and beverage. Our aim would be to finance the acquisition of unoccupied office properties or underperforming assets in a few city centers to convert to the Lolo Pass model.”
