DNQ Ep. 10: Greg Dawson on Setting Up A Hostel in Korea

For the tenth episode of the DNQ interview series, I’d like to welcome Greg Dawson, owner of Bridge Backpackers guesthouse in Seoul, Korea. While I was in Korea, I stayed in a private room there for about a month. The owner of the place was Greg Dawson, who moved from Australia and started this business with his wife. Greg was super nice, greeted me by name every time he saw me, and I even hung out with his wife and her friends one random night during my stay.

I’ve always been interested in setting up an AirBnB listing or guesthouse/hostel. And their hospitality made me feel comfortable enough to ask Greg if he would be willing to participate in a DNQ interview! In this DNQ interview Greg teaches us about setting up a hostel in Korea.

Greg Dawson on Setting Up A Hostel in Korea

I decided to do a video interview this time. I apologize for my awkwardness! Below the video is a transcript so you can read along (with some edits so it is smoother to read).

Sharon: Tell us about yourself!

Greg: My name is Greg. I’m Australian. I’ve been in Korea now for 14 years. I originally came over here during the World Cup football in 2002. I was just planning to stay for a year or so and have a look around, do some teaching (teach some English). I liked the place, I liked my job, I met some good friends, and stayed around. I met my wife, and got married. And so I’ve been here for almost a decade and a half. We’ll probably be here for at least the next 5 years and will head back to Australia in the long run. But yea, we’ve just started the business in the last few years.

Sharon: So when you move back are you going to keep the business?

Greg: Quite possibly. We’ll have to figure all that out. We may be able to keep it running, and just get someone else to keep an eye on things.

Sharon: When and why did you get the idea to start your hostel, and how did it happen?

Greg: I’ve taught English for a number of years at one of the schools over here. My wife was working and we kind of after a few years were looking at business opportunities. We lived in this area and we saw this place was available. There was a big boom in this area of guest houses and we thought that this place looked pretty good. They just recently put in an airport railway line so it was an easy and convenient place to set up a hostel.

So my wife looked into it and decided to give it a go. As you obviously know there’s a guest house upstairs and we’ve got a little English bar down here.

Sharon: Are the guest houses targeted to tourists or locals?

Greg: Tourists. Technically, Koreans aren’t really meant to stay in guest houses – the reason I would imagine being to avoid people from other parts of the country coming up to Seoul and then finding what would be cheaper accommodations. If Koreans flooded the markets (there are 50 million people in the country), people outside of Seoul could take advantage of that, which might make it more difficult for international travelers to find a place. Which kind of sounds like a bit of reversed discrimination, but I think it makes sense to make sure there are places for people who want to come check Korea out. As I’m sure you are aware, the tourism industry seems to be booming over here, and there are a lot of travelers coming in from all around the world.

Sharon: Did you have this idea before you walked by this place?

Greg: I’ve walked past this place hundreds of times. We used to live just around the corner. It never enters your mind that you might end up starting a business there, so I never really particularly noticed it much. And then I remember – when we first started looking at this, I thought “oh right, I kind of remember that area”. We liked the architecture & the set up of the place. It is two stories inside with an internal staircase, which makes it a nice sort of group house type of feel. And we have a rooftop as well. It’s nice to get up there and have barbecues.

Sharon: What was the process like? How long did it take? 

Greg: My wife did almost all of the arrangements. It took a few months of course. To the best of my knowledge, setting up a business like this back in Australia obviously has a lot of bureaucratic red tape, etc., to set up as I imagine using in most parts of the world. The impression I got is that here in Korea, it is a little bit easier and a little bit cheaper than it is back in Australia (I’m guessing America also). One thing I’m aware of is the liquor licensing certificate. Back home it is really expensive. Here – not that much. You may already have figured that out because you can buy alcohol everywhere – convenience store, side of the road… whereas back home there are very strict regulations.

Sharon: If you wanted to leave and travel longer term, would you be able to hire a property manager to manage it?

Greg: That’s a very good question. We have traveled a few times. We’ve had this set up here for a bit over 3 years. During that time we’ve moved back to Australia a few times, and we’ve been able to get friends and long term guests to keep an eye on things.

Sharon: Do you find this provides a full-time income?

Greg: Well it does. Obviously you need to factor in the costs and profit margins. If we got someone else and paid them it would make the profit margin tricky.

Sharon: What are some obstacles you faced when setting up?

Greg: Something we did to start with through AirBnBs: With any hostel or guesthouse you need reviews and ratings. People want to check. I actually used couchsurfing.com, and I was just completely upfront putting up a thing saying “Hi, we’ve just opened a guest house and we need people to come in to check it out. We’d love if you’d be able to write some reviews for us.” We got some people through couchsurfing.com to put reviews for us on other booking sites. I just rearranged the bookings and the payments and got them onto the sites so they can put on some initial reviews. There was no pressure to write, and they could write anything they wanted. It was good to just get the ball rolling a bit.

Sharon: What sites beside AirBnB are you listed on?

Greg: A few: hostelworld, booking.com…there are a few others but to be honest with you, they are providing very little business to the point where AirBnB has actually started dominating so much. We still have bookings from hostelworld.com and bookings.com, but they would be 1 in 20 or 1 in 30. Maybe less. Almost everything is through AirBnB, to the point where AirBnB is making the guesthouse full most of the time. To be honest with you, I obviously need to get on and adjust the availabilities etc. If a couple of bookings come in within a few hours of each other, a few times we’ve been overbooked and it has caused a few hassles.

Sharon: You mentioned the first marketing method of getting those free reviews through couchsurfing.com. I was wondering if there are other methods you have tried for the café or for the hostel in general.

Greg: I’ve used Facebook to advertise stuff down here. I’ve also got into Instagram and Tumblr. Even through couchsurfing.com and meetup.com to promote events. It recently has been quite successful. I think marketing is so much online-focused these days. We do a bit of offline marketing – we have a little blackboard outside of what’s going on in the café. And we’ve got fliers, and occasionally we get people to put the blackboard outside and stand around and hand out some fliers to just promote a bit of stuff. It brings a few people in. Obviously it is location specific, whereas online stuff can be anywhere. I think any wise person trying to get the business up and going will do as much as possible online and offline.

Sharon: Do you feel like the social media is actually working? Or which one is working better?

Greg: It depends. The social media stuff – we get quite a few Koreans but we also get a lot of international travelers, especially through couchsurfing.com events. That is a bit seasonal obviously. In the summer months there are heaps of people. Some of the barbecue nights have been completely packed out with people spilling out onto the streets, which is when the online stuff is really going strongly. But the offline stuff definitely brings in people. So they both work okay.

Sharon: You mentioned couchsurfing.com not just for getting reviews. How are you using it now? 

Greg: You can put events on couchsurfing.com. I started using meetup.com which is also pretty good. I also find couchsurfing.com gets more people. Definitely more travelers. Meetup.com gets probably more Koreans which is good for my language classes (the English classes I have). But couchsurfing.com seems to get a lot of travelers looking for things to do.

Sharon: So it’s mainly the events that it works for?

Greg: That’s right.

Sharon: How long did it take to save for purchasing this property in Korea?

Greg: We didn’t save up all the money together (we’re paying for loans, etc.) Obviously my wife and I are a little bit older and we’ve been working for whatever it is. So we had some savings and some other stuff. If you were younger and looking to get started, I think you’d be looking at trying to get $30-50k or something before you really can have much chance for banks to start listening to you, unless you have other assets which you can use as collateral.

Sharon: Would you recommend real estate investment or doing the hostel thing as a means of making money?

Greg: I would. To separate the things, with real estate from time to time bubbles burst and things go bad. Traditionally real estate is a pretty safe investment, but you obviously want to be a little bit aware of the situation in terms of the housing market. But generally speaking, real estate is a pretty stable asset. In terms of getting ahead, I mean people just stash their money away in a bank and work for years and think that that’s the way to make money – they’re probably being a little naïve. You probably want to start getting your money working for you somehow. And there’s a range of pretty clear options – like stocks, which is probably a bit more of a gamble. Real estate is considered a bit more reliable. Just in terms of setting people up for their future lives, you kind of need a place to live and you don’t want to be paying for rent your whole life. So I’d actually recommend for everyone – as early as they can – and within realistically the first few years of having a job, I think you’d be best advised to looking into options and actually getting some assets behind you. Get some property if you can. You don’t want to tie yourself too much to a massive bank loan, and I highly recommend traveling, obviously. But at some stage when you’re looking for a bit of stability, real estate is a pretty good start.

Sharon: As someone who’s very interested in this route, what would you recommend for a beginner like me? 

Greg: In terms of setting up a hostel, I think having a strong local connection is good if you are doing it overseas. Doing it in your own country of course is much easier. But obviously make sure you know what’s required, what costs will be incurred, which was easy for me cause my wife did it all…

It’s a good way of life and you can live in your own hostel. Even if you set up a small guest house (and it’s allowed), it’s probably not a bad way to get it up right.

Sharon: I do have a question about vacancy. Is it quite seasonal?

Greg: A year ago I would have said yes, it was quite seasonal. But in the last 6 months we seem to be fairly busy. A lot of the travelers coming to Korea are going to be Chinese or Japanese. (the two closest and most populated nations in this area). We didn’t get a particularly high percentage, we had some Japanese and Chinese guests but more English speakers. Lots of Europeans and obviously people from native English speaking countries. In the last 6 months, once we started getting a few travelers from those countries and they started writing reviews in their native language, I think they provided a bit more confidence for people seeing those reviews. And these days we have more travelers from East Asia. There are far more people traveling from nearby East Asia nations than the rest of the world combined.

Sharon: Do you have further goals with the business?

Greg: We could…not other countries at this stage. I’ve got a few ideas with my brother back in Australia to set up some stuff down there and maybe get some travelers from Korea and other places to go down there for guest stay. Maybe even set up a kind of a study abroad to get people working and studying. That would be the international connection with my family back home. No immediate plans to expand in Korea. We sort of just run it ourselves, no franchising at this stage.

Sharon: Any last words?

Greg: Being aware of all the new technology but not having really grown up entrenched with it all, I just love the fact – it doesn’t surprise me as much as it used to – that people now have the option to just leave and travel while working. Obviously there are so many online working opportunities. It strikes me as wonderful, everyone wants to travel, and it is hard to keep traveling permanently unless you’ve got some money. And if you just make money wherever you are, the idea of just opening up your laptop wherever you happen to be working is just brilliant. This sort of perhaps cliché image I get when I think of this is – being on a beach in Fiji or the Philippines or something – and just working up in a lovely little hut looking over the ocean and just doing a few hours of work…it might be hard to motivate yourself to work that much but just having that option is just brilliant.

Conclusion

It was an absolute pleasure talking with Greg. I learned more about how to set up and market a business like this, and I’m definitely keen on exploring this route in the near future! Thank you again – and if you are interested in staying at Bridge Backpackers, here is the link to Greg’s AirBnb profile! You can see his listings there. I would highly recommend it.