Jugaadus’ financial details

One of the common questions we encounter is why Jugaadus is more expensive than hostels in cities like Jaisalmer, Dharamsala or Manali. I (Sanjay) would like to clarify our business model and some reasons associated with why Jugaadus charges what it charges and where the money is going.

  1. Real Estate: The real estate prices in Amritsar are higher than cities like Jaisalmer, Dharamsala and Manali, this means we have to pay higher rent. The rent of the place is about ₹42,000 a month, for which we can rent double/three times space/rooms in those cities. Jugaadus has been one of the cheapest place in Amritsar for about two years now and continues to try to be the cheapest place with no compromise on services.

  2. Taking care of the staff: We try to pay staff better wages than the city as they work hard. Also we give our staff about 6 days off in a month which is much more than the local norms. The salaries come to around ₹40,000 a month. This care reflects in our staff rating which is one of the highest in Hostelworld and other websites.

  3. Running the community kitchen: The Donations based kitchen has most food of the highest quality either preferably organic local farmers acquired. The expenses vary depending upon people eating and donations. Typical price for a meal including staff to cook comes ₹70 or more.

  4. Being environment concious and hiring locals: We have to neglect a lot of cheap options because of their harm to the environment. We have tried to be an eco-concious place always keeping in mind the Environment vs budget perspective. We try to avoid chemicals as much as we can. This ends up being more expensive than being just budget friendly. A lot of accomodation businesses end up hiring non-local cheap labour to save prices. We believe locals should work in local hospitality to show the true culture of the place.

  5. Agent commissions and free nights Around 15% is the average commission charged by online booking agents like Hostelworld and Booking.com (which can be avoided by booking directly through our website).

  6. Free nights : Our average price comes out to be around ₹50 lower than prices we charge because we incentivize long stays.

A normal hostel business plan includes paying the bills with 30% occupancy. Jugaadus expenses are covered at around 45-55% occupancy so we try to make a balance between what you pay and what we can do for that. If you need details of these, I(Sanjay) do accounts with software and you can ask for the balance sheet for any period. We would be happy to share all the information. As of Aug 2016, Jugaadus goes in profit some months and lose in some and mostly pays for itself.