THESIS FINAL

BUSINESS MODEL FOR A SUSTAINABLE HOSTEL IN PHILADELPHIA
A Thesis
Presented to the Faculty
of Philadelphia University
in Partial Fulfillment of the Requirements for the Degree of
Master of Science in Sustainable Design
By
Jonathan R. Vehlow
May 2016

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ACKNOWLEDGMENTS
First and foremost I would like to thank Professor Robert Fryer and Professor Rob
Fleming the cornerstones of this MSSD program, for their continued guidance over these
past two years. They encouraged debate and discussion pushing us to question the status
quo and make a difference.
For my friends and classmates both domestic and international. The support and
comradery we shared and continue to share will last far longer than our short tenure here.
For my Aunt Dolly and Uncle Steve, my east coast touchstones who always had an open
door (and a cocktail) to distract me from school when it became overwhelming.
And finally for my parents Sue and Pat Vehlow, who gave me the confidence to believe
in myself. Who always had a shoulder to lean on or an ear to bend. For their patience
and understanding and pushing me when I needed to be pushed. I owe you more than
one. Keeeses.

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TABLE OF CONTENTS
ACKNOWLEDGMENTS ............................................................................................................... ii
TABLE OF CONTENTS................................................................................................................ iii
LIST OF FIGURES ......................................................................................................................... ii
INTRODUCTION ...........................................................................................................................1
CHAPTER 1: THE IMPACT OF TOURISM .................................................................................2
GLOBAL WARMING IN THE MALDIVES.............................................................................4
CHAPTER 2: WHY A SUSTAINABLE HOSTEL? ......................................................................6
TOURISM IN PHILADELPHIA ................................................................................................7
EMERGING MARKET STUDIES .............................................................................................8
CHINESE TOURISM..................................................................................................................9
SWOT ANALYSIS ...................................................................................................................11
HAWTHORNE HOSTEL .........................................................................................................17
COMPETITION ........................................................................................................................19
CHAPTER 3: NEIGHBORHOOD................................................................................................24
FISHTOWN...............................................................................................................................24
SITE...........................................................................................................................................27
1775 FRANKFORD AVENUE.................................................................................................28
FOOD, ENTERTAINMENT, & CULTURE ............................................................................29
TRANSPORTATION................................................................................................................30
DEMOGRAPHICS....................................................................................................................31
GENTRIFICATION & AUTHENTICITY................................................................................32

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CRIME.......................................................................................................................................34
CHAPTER 4: BUSINESS CANVAS............................................................................................36
VALUE PROPOSITION...........................................................................................................37
CUSTOMER SEGMENTS........................................................................................................38
CUSTOMER RELATIONSHIPS..............................................................................................39
KEY RESOURCES ...................................................................................................................40
KEY PARTNERS......................................................................................................................41
CHANNELS ..............................................................................................................................42
REVNUE STREAMS................................................................................................................43
COST STRUCTURE (USD) .....................................................................................................44
PROFORMA .............................................................................................................................45
CHAPTER 5: SUSTAINABLE STRATIGIES .............................................................................46
CHAPTER 6: CONCLUSIONS ....................................................................................................50
SOURCES .....................................................................................................................................51

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LIST OF FIGURES
Figure 1.1 Carbon Emission Breakdown in the Tourism Industry ..................................................2
Figure 1.2 Why Tourism Matters.....................................................................................................3
Figure 1.3 Coral Bleaching..............................................................................................................5
Figure 1.4 Beach Erosion.................................................................................................................5
Figure 2.1 Visitors to Philadelphia...................................................................................................7
Figure 2.2 Influence in Choosing Accommodation Based on Sustainable Strategies .....................8
Figure 2.3 International Visitor Spending in the US .......................................................................9
Figure 2.4 Travelers Most Likely to Stay in Environmentally Friendly Accommodations...........10
Figure 2.5 SWOT Analysis............................................................................................................11
Figure 2.6 International Tourist Arrivals .......................................................................................14
Figure 2.7 Importance of Online Reviews.....................................................................................15
Figure 2.8 Hawthorne Hostel.........................................................................................................18
Figure 2.9 Hawthorne Sustainability Awards................................................................................18
Figure 2.10 Current Hostel Locations in Philadelphia...................................................................19
Figure 2.11 Apple Hostel in Center City .......................................................................................20
Figure 2.12 Old City Philly House in Center City.........................................................................21
Figure 2.13 Philadelphia House in Center City .............................................................................22
Figure 2.14 Chamounix Mansion in Fairmount Park ....................................................................23
Figure 3.1 Big Fish Mural on Frankford Avenue ..........................................................................24
Figure 3.2 Location of Pennsylvania in the United States.............................................................25
Figure 3.3 Location of Philadelphia in Pennsylvania ....................................................................25
Figure 3.4 Location of Fishtown Neighborhood in Philadelphia...................................................26
Figure 3.5 1775 Frankford Site Location.......................................................................................27
Figure 3.6 View of the West Facade..............................................................................................28
Figure 3.7 Front Door ....................................................................................................................28
Figure 3.8 View of the South Facade.............................................................................................28
Figure 3.9 Establishment Map .......................................................................................................29
Figure 3.10 Public Transportation Points ......................................................................................30
Figure 3.11 Fishtown Age Demographic.......................................................................................31
Figure 3.12 Philadelphia Hipsters..................................................................................................33
Figure 3.13 Percentage of Crimes Committed in Fishtown...........................................................34
Figure 3.14 Crime in Northern Liberties/Fishtown 3/20-4/19.......................................................35
Figure 4.1 Hostel Shackamaxon Business Canvas ........................................................................36
Figure 4.2 Basuc Room Prices in Sustainable Minded Establishments.........................................37
Figure 4.3 Hostel Reviews.............................................................................................................39
Figure 4.4 Hostel Shackamaxon Daily Room Rates by Month .....................................................43
Figure 4.5 Bike Rental Prices ........................................................................................................43
Figure 4.6 Projected Occupancy, Expences, and Profits ...............................................................45

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INTRODUCTION
This thesis concentrates on developing a business model for a sustainable hostel to reduce
the footprint of tourism and provide a low budget eco-friendly accommodation to
tourists.
As the tourism industry continues to grow, so does its carbon footprint. In Philadelphia
currently there are no accommodations of this option for guests to choose from. There is
a marketability to this idea, customers are more considerate of green alternatives with
their purchases. The proposed Hostel Shackamaxon will fill this void within
Philadelphia.
As an alternative neighborhood Fishtown with a strong community atmosphere and
vibrant restaurant and nightlife scene it is an ideal location for travelers seeking an
authentic Philadelphia neighborhood experience. The target market would be geared
toward younger travelers who are looking to discover places that are off the beaten track.
One of the main tenants of Hostel Shackamaxon would be to maintain strong
relationships with both our customer base and surrounding community. This can be
accomplished by partnering up with neighborhood and city organizations as a means to
engender community and Philadelphia.

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CHAPTER 1: THE IMPACT OF TOURISM
Tourism is a growing industry. According to a 2015 study by the United Nations World
Tourism Organization (UNWTO) the tourism industry has had a steady growth rate of
approximately 4-5% for the past ten years with the exception of 2009 due to economic
recession. The industry itself contributes to 5% of worldwide carbon emissions
(UNWTO, 2016, p. 3). As a result the carbon footprint of tourism is a growing concern.
With rising tourism numbers there are a myriad of opportunities to curtail tourism’s
carbon output. The majority of tourism’s emissions are due to both air and ground
transportation. The accommodation comes in third at 21% of tourism’s Carbon
emissions as seen in Figure 1.1 below.
Figure 1.1 Carbon Emission Breakdown in the Tourism Industry
Source: (UNWTO, 2015)

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There is currently a push within the hospitality industry for more green measures. “Hotel
industry business owners seeking to be environmentally responsible, both for economic
and financial efficiency, and to satisfy their own personal ethics are introducing green
building practices” (Tzschentke, Kirk, & Lynch, 2004, p. 122). While the intentions are
not entirely altruistic there is a rising trend in “going green”. There is no doubt that
implementing sustainable strategies are both economically and environmentally
beneficial to owners.
Tourism as an industry accounts for approximately 10% of the global GDP as seen in
Figure 1.2 below. According to the World Travel & Tourism Council’s 2016 Economic
Impact Summary “Travel & Tourism’s total contribution to the global economy in 2015
was US7.2 trillion (2015 prices), which equates to 9.8% of total GDP. In terms of
employment, in 2015 the Travel & Tourism sector supported 284 million jobs, or 1 in 11
jobs in the world” (WTTC, 2016, p. 2).
Figure 1.2 Why Tourism Matters

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GLOBAL WARMING IN THE MALDIVES
The effects of tourism can be economically beneficial to a destination it can also
negatively impact the very places tourism attracts. There are a variety of problems that
global warming is creating such as reported by the UNWTO Climate Change and
Tourism Study:
 Rise of sea level – will eventually submerge small islands and coastal regions.
Regions depending on tourism are under threat.
 Desertification – making regions less hospitable for both local communities and
tourists.
 Deforestation and harm to biodiversity – affecting both the ecosystem and
directly reducing the global carbon sink, while also discouraging demand for such
destinations.
 Melting of snow and glaciers – one of the causes behind rising sea levels, and
also affecting mountains and ski resorts, resulting in the shift destination
demands, depending on the most attractive climate conditions.
Source: (UNWTO, 2016, para.1)
The Maldives are a good example of climate changes effect on a strong tourism based
economy. The island nation located southwest of India in the Indian Ocean is one of the
world’s lowest lying countries with an average elevation of five feet above sea level
(Mellino, 2015 para.1).
Being a nation built of many islands, The Maldives tout an impressive number of beaches
that draw a large amount of international tourists. Their local economy has been built
around tourism as a major source of employment and national income. “The tourism
sector has grown in importance since then (1980s) and is now the key sector of the
economy, contributing 27.7 of GDP directly” (Marcu, Stoefs, Belis, & Tuokko, 2015, p.
2). The country’s GDP is built upon the very industry that is contributing toward its
destruction. As the sea level continues to rise the very beaches that attract tourists are

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now eroding into the sea and being replaced with sea walls (Figure 1.4). The destruction
of the ecosystem not only impacts the tourism industry but the other major economic
pillar in the Maldivian economy fishing. As seen in Figure 1.3 below, the vibrant reef
habitat around the islands is dying out. “Bleaching is akin to coral cancer. It occurs when
corals are stressed by change in conditions such as temperature, light or nutrients”
(Casey, 2015, para. 9).
Figure 1.3 Coral Bleaching Figure 1.4 Beach Erosion
Source: (Nature, 2016) Source: (Aosis, 2016)
The reefs are a delicate ecosystem with the coral being the foundation of the habitat.
Loss of the reefs not only impact the Maldivian tourism industry but their fishing industry
as well. As global warming and ocean acidification continues to accelerate the marine
life suffers. This is seriously detrimental to the Maldives both environmentally and
financially.

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CHAPTER 2: WHY A SUSTAINABLE HOSTEL?
“Hosteling enriches your travel experience and it does so without breaking your bank”
(Kelly, 2015, para. 4).
As previously noted tourism continues to be a growing industry. As the sustainability
movement continues to grow, consumers are becoming more discerning with the products
they are purchasing and businesses they frequent. “Four out of five people say they are
still buying green products and services today – which sometimes cost more” (Nastu,
2009, para. 9). As it stands, Philadelphia has a market gap for sustainable budgeted
accommodations. There is opportunity to fill that gap by opening a sustainable hostel.
According to a study US and Canada Green City Index sponsored by Siemens
Philadelphia ranks 13th
out of 27 as one of the greenest cities in North America (Siemens
AG, 2011, p. 6). Philadelphia itself has a variety of “green” initiatives as it becomes a
more eco-conscious city. The City’s current sustainability programs include:
 Solar Energy – Making solar technologies cost-competitive
 Local Food – Under Target 10: Bringing local food within 10 minutes of 75% of
residents
 Tree Planting – Reduce air pollution, storm water runoff, and heat island effect
 Energy Benchmarking – Assisting building owners to reduce energy use
 EnergyWorks – A program to provide energy solutions to home, commercial, or
industrial building owners. (Phila Gov, 2015).
As a city that is becoming more eco-friendly, a sustainable hostel can be an asset to
Philadelphia as a means to champion their “greener” vision.

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TOURISM IN PHILADELPHIA
More and more people are coming to Philadelphia. Since 1997 Philadelphia has been
experiencing steady growth in annual tourist arrivals. There has been a 90% increase in
overnight leisure visits (Figure 2.1). As more tourists come to the city there is
opportunity for growth in the accommodation industry.
Figure: 2.1 Visitors to Philadelphia
Source: (Visit Philadelphia, 2016)
There is a chance to appeal to more sustainably minded tourists by providing them the
option for accommodation.

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EMERGING MARKET STUDIES
Mensah & Mensah’s state in their study International Tourists’Environmental Attitudes
Toward Hotels “the majority of consumers are more likely to book with a hotel that has
a responsible environmental attitude” (Mensah & Mensah, 2013, p. 1) A Nielsen study
concluded that “66% of global respondents say they’re willing to pay more for products
and services that come from companies that are committed to positive social and
environmental impact, up from 55% in 2014, and 50% in 2013” and “(Millennials)
continue to be the most willing to pay extra for sustainable offerings – almost three-out-
of-four respondents” (Nielsen, 2015, para. 1)
Figure 2.2 Influence in Choosing Accommodation Based on Sustainable Strategies
(Mensah & Mensah, 2013)
In figure 2.2 above, the use of certain sustainable strategies can influence the
accommodation they choose to stay at. The research concludes that location and
cleanliness are most likely to influence patronage. Having a clean establishment is one of
the easiest ways to garner good reviews

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CHINESE TOURISM
“Chinese people tend to prefer traveling around Asia when they first set
foot outside the country, but lately they’ve become more adventurous
and are going further afield. Europe and the U.S. are popular options.
Older travelers prefer organized group trips, but the Internet-savvy
younger generation prefer to strike it out on their own” (Petroff, 2016,
para. 8).
As of 2015 China is the largest tourist market in the world. (UNWTO, 2013) “This
populous nation now controls almost 10% of the market share” (Mahfood, 2014, para.
13). Due to rapid urbanization, increasing disposable incomes, and relaxed governmental
travel restrictions more and more Chinese citizens are traveling internationally (Cripps,
2013, para. 6).
Other than Canadians, Chinese tourists spend the most amount of money in the United
States as seen in Figure 2.3 below. In 2014 Chinese tourists spent 24 billion dollars
exclusively in the US.
Figure 2.3 International Visitor Spending in the US
Source: (OTTI, 2016)
26.3
24
18.7 17.7
13.5 13.4
9.8
7.8 7.4 6.2
0.
5.
10.
15.
20.
25.
30.
Billions(USD)
International Visitor Spending US
(in billions)

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Director of Tourist Market Trends Program at UNTWO John Kestor stated “China has
been growing as a tourism source market with “double digit growth” every year since
2014 and this growth was repeated in 2015” (Xinhua, 2016, p. 1) This is a market that
could be tapped in the future. Tweaking designs to make Hostel Shackamaxon more
amenable toward future Chinese tourists.
In a poll done by Agoda (Figure 2.4), the results concluded that Chinese tourists were the
most likely to choose an environmentally friendly accommodation. With rising numbers
and a higher consideration for sustainable accommodations there is a niche presented that
Philadelphia currently lacks.
Figure 2.4 Travelers Most Likely to Stay in Environmentally Friendly Accommodations
(Agoda, 2014)
China, 79, 14%
Philippines, 76,
14%
Vietnam, 74,
13%
Macau, 68,
12%
India, 67, 12%
Israel, 43, 8%
Australia, 42,
8%
United
Kingdom, 38,
7%
Netherlands,
35, 6%
Denmark, 35,
6%

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According to a press release by GfK “half (50 percent) of China’s outbound travelers are
aged 15-29 years old – the “millennials” group – while over a third (37 percent) are aged
30-44 and 10 percent are 45-59” (Martin, 2016, p. 2) This rising number of millennial
tourists is a market opportunity for Hostel Shackamaxon.
SWOT ANALYSIS
In order to better understand the business of opening a new hostel a SWOT analysis is
necessary. An example is in the Figure 2.5 below.
Figure 2.5 SWOT Analysis
Source: (Vehlow, Graph, 2016)
Strengths:
Innovative Culture – Hostels are generally a sociable atmosphere bringing together
travelers from all over the world. There is a kinship that the hosteling culture engenders.

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“The modern backpacker is arguably an integral part of the postmodern
“new world order of mobility’. Backpackers are to be found in every
corner of the globe, from remote villages in the Hindu Kush to the
centres of London or Paris. They carry with them not only their
emblematic physical baggage that gives them their name, but their
cultural baggage as well” (Richards & Wilson, 2005, p. 1).
Hostels are a veritable salad bowl of international cultures. They are a gathering place for
global travelers to share and exchange experiences and unique perspectives. This is a
strength that can be used to market the hostel.
Alternative Neighborhood -The up and coming neighborhood of Fishtown is off the beaten
track for tourists. Located northeast of Center City it is currently experiencing an influx
of new and hip businesses, restaurants, and galleries.
Affordable - Hostels are a budget accommodation, appealing toward a more financially
conscious traveler.
Weaknesses:
High Maintenance – Cleanliness is next to godliness in the accommodation market. Shared
living spaces can quickly become dirty. It is important to keep spaces well maintained and
facilities in working order to keep guests satisfied.
New Business - According to the Small Business Association Office of Advocacy “About
half of all new establishments survive five years or more and about one-third survive 10
years or more.” (SBA, 2014, pp. 2,3) The first year of a business can be the most difficult.
Competitive Market - As far as budget accommodations go, there are four hostels currently
in the city of Philadelphia:

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 Old City Philly House
 The Philadelphia House
 Apple Hostels of Philadelphia
 HI Chamounix Mansion
With the emergence of Airbnb as an alternative source of accommodations, questions have
been raised whether or not they will be the end of hosteling. Shannon McMahon addresses
this in her article Will Airbnb Be the Death of Hostels? stating “Many happy travel
memories have been born through encounters at hostels: joining bunkmates on a pub crawl
or meeting interesting people while waiting for a turn to use the kitchen sink.” (McMahon,
2015, para. 5) While Airbnb offers a wider variety of accommodation, they also lack the
diversity and social atmosphere that many travelers still look for. While a variety of
competition exists in the industry, there is still a market for hostel accommodations.
Opportunities:
Emerging Market – Currently there is no sustainable hostel accommodation located in
Philadelphia. Sustainable accommodations are an emerging market as more people are
making environmentally conscious decisions.
Niche Accommodation – Correlates with the emerging market for sustainable
accommodation. Hostels are a niche market in the accommodation industry.
Local Experience – Fishtown is an up an up and coming alternative neighborhood with a
hearty mix of blue collar and the new younger transplants. The emerging culinary and art
scene in Fishtown coupled with the colorful locals creates a more authentic travel
experience, allowing tourists to discover rather than be led.

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Threats:
Bad Economy – When the economy is down the tourism industry suffers. People tend to
eschew luxury purchases and vacations as a means to reduce spending. This occurred in
2009 when “the U.S. labor market lost 8.4 million jobs, or 6.1% of all payroll
employment. This was the most dramatic employment contraction (by far) of any
recession since the Great Depression” (Mishel, Bivens, Gould, & Shierholz, 2012, para. 1).
Reduced tourism numbers are trouble for the accommodation industry. As displayed in
figure 2.6 below, international tourism arrivals were reduced during the economic crisis in
2009. While it’s not impossible for a hostel to succeed during a recession it can make the
first few year more difficult.
Figure 2.6 International Tourist Arrivals
760
809
851
911 929 894
949
995
1,035
1,087
1,133
0
200
400
600
800
1,000
1,200
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
InternationalTourismArrivalsinMillions
International Tourist Arrivals
2004 - 2014

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Poor Online Ratings – In the age of information the internet gives everyone a voice.
Customers are able to better research purchasing decisions by reviewing their peers’
experiences. These online reviews can hurt a business. “In a poll of 1,000 decision
makers, 51% said they had experienced unfair reviews or been targeted by “trolls”. They
range from posts on review sites such as Yelp or TripAdvisor to unfounded attacks on
social media such as Twitter and Facebook.” (Burn-Callander, 2015, para. 2) These
negative reviews whether real or fabricated can influence potential customers.
In Figure 2.7, the majority of business owners acknowledge that online reviews are
becoming more important.
Figure 2.7 Importance of Online Reviews
Source: (Burn-Callander, 2015)

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High Staff Turnover – Tim Zenderman who is the Co-Founder of BananaDesk which
provides property management software for hostel owners addresses this:
“The higher turnover is probably due to lower wages, and the fact that at
many hostels staff are international and they eventually leave or go work
somewhere else in your city. And if they are nationals, they’ll probably
want to move up the ladder which would mean opening their own hostel or
getting into something else” (Zenderman, 2012, para. 3).
The problem with hostels is there is not much opportunity for career growth. The lack of
upward mobility is a negative aspect of the hosteling industry. It’s more of a job than a
career (Lean, 2015, para. 3). Hostels generally have a small full time staff and use part
time international travelers work in exchange for room and board. Zenderman goes on to
say “Normally, requirements for working at a hostel are something along the lines of
multilingual, young, cool, responsible, and adaptable. Smaller hostels (15-50 beds) will
only have one person per shift during most of the year.” (Zenderman, 2012, para. 7)
While staff turnover is high, it is important to choose the right people to represent the
hostel.

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HAWTHORNE HOSTEL
Located in Portland, Oregon the Hawthorne Hostel has been in business for 32 years.
They have been an industry leader in their commitment to implementing sustainable
strategies. They have been awarded as a Gold Green Leader through TripAdvisor (Figure
2.9) and are recognized through the City of Portland’s Sustainability at Work leaders.
(Portland Hostel, 2016)
Sustainability Features:
Green Building
 Trex Decking
 Recycled Denim Insulation
 Salavaged Windows and Doors
 Recycled Paint
 Green Cleaning Supplies
 Onsite Vegetable Garden
Energy Conservation
 100% Electricity Offset
 Energy Star Appliances
 Solar Attic Fan
 Push Mower
Water Conservation
 Low Flow Fixtures
 Rainwater Harvesting
(Portland Hostel, 2016)
The Hawthorne Hostel can be used as an example for sustainable strategies in the
development of a new sustainable hostel. Site restrictions, location, and design may
hinder some implementations but others may be easily integrated into new hostel
developments.
Waste Reduction
 85% Recycled Waste
 Onsite Composting
 Recycled Paper Products
 Recycled Printer Ink in
Printers
Storm Water Management
 Four Eco-Roofs (1,050 square feet)
 516 square foot Bioswale
 110 square foot Permeable Wall
 Xeriscaping and Native Plant
Landscaping

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Figure 2.8 Hawthorne Hostel
Source: (TripAdvisor, 2016)
Figure 2.9 Hawthorne Sustainability Awards
Source: (TripAdvisor, 2016)

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COMPETITION
As of 2016, there are four hostels located in Philadelphia. Three are located in the Center
City neighborhood of Old City and one located in the northwest area of Fairmount Park
(Figure 2.10).
Research shows that these hostels are all rated above average through various hostel
rating websites but they are not without flaws. While there are already existing hostels in
the Philadelphia area none of them are marketed as a sustainable accommodation.
Figure 2.10 Current Hostel Locations in Philadelphia
(Vehlow, Google Maps, 2016)

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Apple Hostels
Figure 2.11 Apple Hostel in Center City
Source: (Cloudinary, 2016)
Neighborhood: Old City
Rates: $33.00 – $95.00
Pros:
Location
Cleanliness
Nightly Entertainment
Free Drinks
Overview:
A popular hostel located in the thriving neighborhood of Old City. Guests were
especially impressed with the free drinks, entertainment amenities, and location. One
main problem guest had with Apple Hostel was the noise pollution caused by a night club
that currently resides across the street disrupting the quality of guests sleep.
Cons:
Noisy
Cramped Rooms
Over Priced

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Old City Philly House:
Figure 2.12 Old City Philly House in Center City
Source: (hwstatic, 2016)
Rates: $32.00 – $36.00
Pros:
Location
Good Value
Helpful Staff
Clean Bathrooms
Overview:
The Old City Philly House is also located in the Old City neighborhood. Guests were
pleased with the value of the rooms and the accommodating staff. The main detractor of
this old converted carriage house was the narrow stairways and lack of ventilations that
can sometimes be problematic in older buildings.
Cons:
Lack of Ventilation
Slow Check In
Narrow Staircase

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Philadelphia House:
Figure 2.13 Philadelphia House in Center City
Source: (amazonaws, 2016)
Rates: $30.00 – $52.00
Pros:
Location
Proximity to Night Life
Friendly Staff
Free Beer
Overview:
The third hostel located in Old City, The Philadelphia House is another highly rated
hostel. Guests are drawn to the location and free beer the hostel provides. Concerns
were raised over layout and security. Some private rooms can only be accessed through
dorm rooms.
Cons:
Room Layout
Room Security
No Breakfast

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Chamounix Mansion:
Figure 2.14 Chamounix Mansion in Fairmount Park
Source: (Hidden City Phila, 2014)
Neighborhood: Fairmount
Rates: $22.00 – $25.00
Pros:
Quiet Location
Good Value
Spacious
Pancake Breakfast
Overview:
The only hostel in Philadelphia not located in Old City, The Chamounix Mansion is
located northwest of Center City in Fairmount Park. Guests enjoyed the seclusion and
value but had issues concerning access to and from the city and their five hour daily
lockout policy.
Cons:
Location
Proximity to Public Transportation
Daily Lockout

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CHAPTER 3: NEIGHBORHOOD
FISHTOWN
The neighborhood of Fishtown has gone through a renaissance over the past 10 years.
Located in the state of Pennsylvania (Figure 3.2) in a northeast neighborhood of
Philadelphia (Figure 3.3). Fishtown (Figure 3.4) is home to a burgeoning artist’s
community, vibrant nightlife scene, and up and coming foodie paradise.
The name Fishtown is derived from the Shad fishing industry the area used to support.
As industry left the area Fishtown the neighborhood went into decline. “Poverty settled
in during the 70s, attracting some government money for unsuccessful economic
development. By the 1990s groups could count 1,100 parcels of “dirty, filthy” lots in 1.5
square miles” (Von Bergen, 2016, para. 30). New businesses have been a breath of fresh
air to the neighborhood reinvigorating the housing market and putting Fishtown as an
appealing destination to both live and work
Figure 3.1 Big Fish Mural on Frankford Avenue
Source (Visit Philadelphia, 2015)

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Figure 3.2 Location of Pennsylvania in the United States
Source (Vehlow, Google Maps, 2016)
Figure 3.3 Location of Philadelphia in Pennsylvania

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Figure 3.4 Location of Fishtown Neighborhood in Philadelphia

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SITE
The best suited site for the proposed Hostel Shackamaxon is 1775 Frankford Avenue. It
is a corner lot located on the intersection of Frankford Avenue and East Montgomery
Avenue. The building built in 1925 was once the former Methodist Episcopal Church in
the area. In recent years it had been converted to four rental units that are still in use. It
is 6,200 square feet with an adjacent lot of 880 square feet (Figure 3.5).
Figure 3.5 1775 Frankford Site Location
Source: (Vehlow, Google Maps, 2016)
The building is two floors with an open basement that is currently being used as an art
studio. The current rental units are located on the first and second floors. Construction
will need to take place for conversion but the 6,200 square feet afforded will be ideal for
a 56 bed hostel.

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1775 FRANKFORD AVENUE
Figure 3.6 View of the West Facade
Source: (CDN, 2016)
Figure 3.7 Front Door Figure 3.8 View of the South Facade
Source: (Weichert, 2016) Source: (Brey, 2016)

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FOOD, ENTERTAINMENT, & CULTURE
In Figure 3.9 there is a map of all the entertainment spots (purple), restaurants (blue), and
drinking establishments (orange) in the surrounding area of Hostel Shackamaxon (green).
Fishtown has many varied establishments that make it unique to the area. From artist co-
ops, music venues, organic restaurants, local distilleries, and dive bars there are many
different businesses for guests to enjoy during their stay at Hostel Shackamaxon.
Figure 3.9 Establishment Map
(Vehlow, Google Maps, 2016)

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TRANSPORTATION
The site is near public transportation points both regionally and locally. The Market
Frankford Lind (MFL) can be accessed by Berks Station or Girard Station for easy access
to Center City. The SEPTA airport line is located east 1.2 miles away at the Temple
University Station. This is a good access point for tourists who are flying into
Philadelphia looking to use public transportation to get to the hostel.
Figure 3.10 Public Transportation Points
Source: (Vehlow, Google Maps, 2016)
The 5 and 25 buses located near the site both go to the Frankford Transportation Center
which is a depot for many additional bus lines for access around the city and surrounding
areas.

31
DEMOGRAPHICS
There has been an emergence of younger people moving to Fishtown. In Figure X below
you can see that there is a large amount of young people that reside in Fishtown.
Described as “This thriving artistic community is packed with restaurants, bars, live
music, galleries, and of course, more coffee shops per capita than one hyped-up 22-year-
old could hope for. The cost of living is right about the middle here, but that’s okay,
because so is the median income.” (Grigson, 2016, para. 3)
Figure 3.11 Fishtown Age Demographic
Source: (City-Data, 2016)
More and more young people are being drawn into Fishtown by innovative restaurants,
thriving nightlife, and artistic spirit. While the neighborhood is changing the blue collar
edge that makes Fishtown authentic is still prevalent.

32
GENTRIFICATION & AUTHENTICITY
With the massive influx of new residents and businesses is the neighborhood now
considered authentic? The danger of neighborhood gentrification is not the gentrification
itself but the income-homogeneity that comes with it. When property values and taxes
surpass the very residents that make the neighborhood authentic. While the
neighborhood may not be the same as it was twenty years ago, progress is not always a
bad thing.
“The Fishtown district of Philadelphia was known as a tight-knit Irish
Catholic enclave – and a place to score drugs. Set along the Delaware
River in the northeastern part of the city, the area was the former home
of a Stetson hat factory and a Schmidts beer plant, before its brick
warehouses and shad markets were abandoned.
But these days artist easily outnumber fishermen and heroin addicts.
Thanks to a recovering waterfront and spillover from gentrifying
neighborhoods like Northern Liberties, Fishtown is joining the ranks
of warehouse districts nationwide that have undergone a renaissance.
Young professionals and creative types are moving into renovated
apartments and luxury condos. Upscale restaurants, galleries and
high-end shops have followed” (McCuan, 2008, para. 2,3).
New business has reinvigorated a neighborhood that was once known as a “place to score
drugs”. As neighborhoods grow and change there are positive and negative aspects.
While some of the “authenticity” may suffer there is also a benefits. In the article
Fishtown: A Block of United Friends and Families lifetime resident Charles Valentine
understands the benefit of gentrification stating:
“I love the neighborhood. I feel safe here. I feel like I am part of it
because I know everybody and everybody knows us. The parents
move here and get to know each other, and their kids play and go to
school together, and it goes through generations” (Ciabattoni &
McArthur, 2010, para. 29)

33
The key is integrating the old and the new residents. This is happening in Fishtown
through community run events such as “Meet the Neighbors” barbeque ran by the
Fishtown Neighborhood Association where “Area residents new and old met for food an
entertainment but more importantly, a chance to communicate with each other on how the
neighborhood could be make better” (Stairiker, 2014, para. 3)
While the new residents (Figure 3.11) may seem different than the established, there is a
common ground to share ideas and get to know each other forming a tighter knit
community.
Figure 3.12 Philadelphia Hipsters
Source: (Otte, 2014)

34
CRIME
Customer safety is a priority. In a study done by Natalie Grigson, she ranked the safest
neighborhoods by analyzing:
 Number of violent crimes per person (estimate)
 Number of property crimes per person (estimate)
 Number of total crimes per person (estimate)
Her findings concluded that Fishtown was one of the 10 safest neighborhoods in
Philadelphia coming in at 9th
place. (Grigson, 2016, para. 1)
Figure 3.13 Percentage of Crimes Committed in Fishtown
Source: (Data Inquirer, 2016)
8%
3%
8%
81%
Crime Breakdown
Auto Assault Burglary Thefts

35
As noted in both Figure 3.12 & 3.13 Fishtown has a high amount of non-violent crime
and a low number of violent crime. Customers of Hostel Shackamaxon can explore the
neighborhood with little fear for their own well-being.
Figure 3.14 Crime in Northern Liberties/Fishtown 3/20-4/19
Source (Data Inquirer, 2016)

36
CHAPTER 4: BUSINESS CANVAS
Figure 4.1 Hostel Shackamaxon Business Canvas

37
VALUE PROPOSITION
The hostel’s value proposition is to provide a comfortable, healthy, budget friendly,
sustainable accommodation option in Philadelphia. Currently there are no sustainable
hostel options in Philadelphia. This fulfils a gap in the marketplace for a niche
accommodation.
According to Allison Stadd’s article Sustainable Philadelphia there are five hotels in
Philadelphia that employ sustainable strategies. (Stadd, 2011, para. 2-6)
 Hotel Palomar Philadelphia $260/night
 Courtyard Philadelphia Downtown $234/night
 Hyatt Regency Philadelphia at Penn’s Landing $190/night
 The Independent Hotel Philadelphia $169/night
 Sofitel Philadelphia $278/night
Figure 4.2 Basuc Room Prices in Sustainable Minded Establishments
Source: (Vehlow, 2016)
$260
$234
$190
$169
$278
$32
$0
$50
$100
$150
$200
$250
$300
Hotel Palomar Courtyard Hyatt Regency The
Independent
Sofitel Hostel
Shackamaxon
Price/Night
Hotel Palomar Courtyard Hyatt Regency The Independent Sofitel Hostel Shackamaxon

38
While this is a step in the right direction, research indicates the cost per night of a basic
room at the most economically priced sustainably minded hotel costs approximately five
times as much as a bed in the 12 person room of Hostel Shackamaxon as shown in Figure
4.2.
CUSTOMER SEGMENTS
The target market for Hostel Shackamaxon is geared toward millennials (adults between
the ages of 18-34). Millennials represent 20% (200,000,000) of all international
travelers. (Mohn, 2013, para. 2) That makes up approximately 7 million of the 34.9
million visitors that travel to Philadelphia for a leisure vacation. That number only seems
to be rising. If trends continue as that the current growth rate, Millennials will be a force
to be recognized within the tourist industry. “In 2012 $217 billion of the $1.088 trillion
tourism “spend” worldwide came from young travelers, and increase that vastly
outstripped that of other international travels” (Mohn, 2013, para. 3). That is a significant
amount of money millennials are contributing toward the world economy. Millennials are
looking for an individually authentic experience. Head of global real estate at auditing
firm EY bring up the point that“(Hostels are) catering more for what millennials want,
like and need in terms of accommodation versus traditional baby boomers,” (Callanan,
2015, para. 8)
Even hotel chains like the Hilton are in the works of rebranding themselves in an attempt
to appeal to the millennial tourist. “Hilton’s chief executive Chris Nassetta said the new
chain would offer younger customers “urban flair” and stripped-back services for lower
prices. It comes as global hotel chains scramble to attract younger customers to attract
younger customers, many of whom have ditched traditional hotels for Airbnb and other

39
online accommodation services” (Neate, 2016, para. 2) The market research indicates
that millennials are looking for a more personal and interactive experience where they
can socialize with a culturally diverse crowd.
CUSTOMER RELATIONSHIPS
Being a service industry with a heavy online presence, it is vital to keep customers happy.
If a good relationship is built then there is more opportunity for advertising through word
of mouth and positive on-line reviews. Every customer concern should be acted upon
immediately within reason in order to have their stay to be as pleasurable as possible.
There are a multitude of variables that customers’ value but research of over 300 reviews
brought up key problems that garnered negative reviews such as:
 Cleanliness of facilities
 Dismissive Staff
 Lack of Security
Figure 4.3 Hostel Reviews
Location
15%
Staff
20%
Cleanliness
15%
Wifi
2%
Alcohol
8%
Security
11%
Activities
9%
Atmosphere
15%
Breakfast
5%

40
KEY RESOURCES
Maintaining a good relationship with not only our customer base but the community.
One of Hostel Shackamaxon’s guiding principles is to be a member of the community
rather than just another business within it. That means attending neighborhood meetings,
offering venue space for neighborhood events, and continuing a strong relationship with
neighbors and community leaders. Hostel Shackamaxon will in conjunction with
neighbors and businesses to strengthen the neighborhood and community.
Guiding Principles:
Promote quality oriented, socially responsible and environmentally sound experiences for
customers
Focus on maintaining healthy community and neighborhood relations
Educate guests on sustainability through both active and passive means
Demonstrate honesty, care, and integrity in all relationships
Provide guests a safe comfortable atmosphere

41
KEY PARTNERS
 Fishtown Neighbors Association: Comprised of neighborhood residents and
business owners the FNA looks to promote community, civic involvement, and
smart growth of the neighborhood. They also hold events to clean up the streets,
build community, and bring resources to the neighborhood.
 City of Philadelphia Mural Arts Program: Utilize public and private spaces to
promote beautification of Philadelphia neighborhoods through murals.
 Fishtown Area Business Association: A non-profit organization that promotes and
builds up local Fishtown businesses.
 Sustainable Business Network: The SBN mission is to build a just, green, and
thriving economy in Philadelphia by growing a broad base of local, independent
businesses.
 My Milkcrate: Promote local businesses that care about their impact on people,
the planet, and profit.
Working in conjunction with these groups will not only demonstrate Hostel
Shackamaxon’s enthusiasm for community and the local neighborhood but benefit us as
well to promote patronage to our business.

42
CHANNELS
Hostels are predominately booked online. Travelers can book through third party
websites such as:
 Hostelworld.com
 Hostelbookers.com
 Hostels.com
 TripAdvisor.com
These websites are important tools for travelers as they also contain accommodation
reviews and provide recommendations and ranking systems. Therefore it is important to
maintain healthy guest relationships in order to garner positive reviews.
Another channel for brand exposure is social media. Guests can recommend Hostel
Shackamaxon through:
 Facebook
 Twitter
 Snapchat
There is opportunity through social media to reach segments of a customer base that does
not want or like being advertised to. Providing incentives (discounted tours, free bike
rental, free beer) for guest to promote the hostel (e.g. #shackamaxon) could prove
valuable in the long run.

43
REVNUE STREAMS
Figure 4.4 Hostel Shackamaxon Daily Room Rates by Month
Bike Rental
Figure 4.5 Bike Rental Prices
$0
$10
$20
$30
$40
$50
$60
$70
12 Person Dorm 8 Person Dorm Individual Room
Room Rates
Dec, Jan, Feb,March, April, Oct May, June, July, Aug, Sept
$5
$10
$18
$24
$0
$5
$10
$15
$20
$25
$30
1 Hour 3 Hours 6 Hours 24 Hours
Rental Prices
Time

44
COST STRUCTURE (USD)
Property (1775 Frankford Avenue)
 Loan: $800,000
o Property: $659,000
o Construction Costs: $100,000
o Startup: $41,000
 Safety Net: $100,000
Loan
 Amalgamated Bank
 30 Year Jumbo Mortgage
o 20% Down Payment
 $160,000
 Interest Rate: 3.516% APR
 Monthly Repayment: 3,592/month
With down payment, startup funding, and safety net for the first year of business
approximately $260,000 would need to be raised through independent investors. The
estimated construction cost to redevelop the inside of the building would be
approximately $100,000 - $150,000. The estimated safety net of $100,000 is in place to
cover costs for the first year of business while the hostel is establishing itself in the
market. During the building development phase there will be pre-booking available in
order to have guests in beds upon opening.

45
PROFORMA
Figure 4.6 Projected Occupancy, Expences, and Profits
This estimation in Figure 4.6 shows the projected Gross Operating Profit for the first 10
years of operation. The first year’s profits are much lower taking into account startup
costs, permits, lower occupancy rates, and initial costs. The profits themselves will most
likely be reinvested right back into the business.

46
CHAPTER 5: SUSTAINABLE STRATIGIES
There are a myriad of sustainable strategies to be used in the Hostel Shackamaxon in an
effort to reduce waste, water usage, and energy consumption. In a study done by Agoda
(Figure 4.7) ranks hotel practices that guests most appreciate. The highest ranking being
use of green cleaning products and recycling. Both of these practices are incredibly easy
to implement.
Figure 4.7 Environmentally Friendly Hotel Practices Appreciated by Guests
(Agoda, 2014)
37.3
36.8
36.1
35.7
32
25.4
24.9
23.1
0. 5. 10. 15. 20. 25. 30. 35. 40.
Green cleaning products
Recycling
Green design and construction
Waste reduction
Pollution prevention or reduction
Conservation of water
Conservation of electricity
Reuse of towels/sheets
Environmentally-friendly hotel practices most appreciated by travelers
worldwide as of March 2014

47
Energy:
Real-time Energy Dashboard:
A monitoring system will be installed to display the real-time energy usage of the hostel.
Lighting:
The building will use all LED lightbulbs as a way to minimize energy consumption.
They have a longer life than typical incandescent and have “an estimated energy
efficiency of 80%-90% when compared to traditional lighting and conventional light
bulbs” (LED Luxor, 2013). With an establishment that runs 24/7 efficient lighting is a
must in order to reduce energy. Installing lighting timers and occupancy sensors are an
efficient way to save energy for guests who can be forget to turn off the lights.
Appliances and Electronics:
In order to provide a comfortable and convenient atmosphere, appliances such as
microwaves, refrigerators, and laundry machines must be accessible to the guests. Using
Energy Star rated appliances and electronics are a simple means to reduce energy usage.
Improved Insulation and Windows:
Making sure that the building is properly insulated as a means to keep hot or cold air
inside the building where it belongs.
Water:
Real-Time Water Dashboard:

48
A monitoring device will be fitted to the water main in order to keep real time track of
our water usage to be displayed at reception.
Low Flow Fixtures:
Installing low flow fixtures in the bathrooms and kitchens are a simple way to save water.
Rainwater Harvesting:
Utilizing rooftop harvesting into above ground cisterns located in the garden. This grey
water can be reused in the lavatories and garden irrigation as a means to reduce water
usage.
Raingarden:
Allocating space in the adjacent lot as a rain garden as a means to reduce storm water
runoff into the sewer system.
Recycling & Waste:
Compost:
The Hostel will practice on site composting in the lot adjacent to the building. The
compost will be utilized in the garden.
Recycling:
There will be clear labeling on waste receptacles to ensure proper disposal of materials.
In addition to typical recycling receptacles (glass, plastic, paper) a food waste receptacle
will be made available for onsite composting.

49
Paper products:
Hostel Shackamaxon will only buy recycled paper products. All transactions and
bookings will provide paperless receipts through email in order to reduce paper waste.
Materials:
The furniture and beds will be made of recycled pallet wood that has been heat treated.
Pallet wood is an inexpensive material that can be reused in a myriad of ways as shown
in the figures below.
Figure 4.8 Pallet Wood Furniture
Source: (1001 Pallets, 2016)

50
CHAPTER 6: CONCLUSIONS
In conclusion, while Philadelphia is enjoying rising tourist numbers it is important to
remember the fact that the tourism industry contributes 5% of global carbon emissions.
It’s through innovation and adaptation that we can attempt to mitigate this problem.
While one small sustainable hostel won’t do much in the grand scheme of things it’s a
step in the right direction in the tourism industry.
There is opportunity to positively impact customers and show them an alternative way of
living. Promoting sustainability actively by recommending local sustainable businesses
and the use of public transportation, or passively by displaying energy and water usage
and harvesting rainwater.
With many consumers actively considering eco-friendly alternatives and rising number of
Millennial travelers who prefer a social atmosphere there is most definitely a market in
Philadelphia for the Hostel Shackamaxon.
The next steps would be to secure private investors in order to acquire a suitable property
to begin development.
Future researchers looking to develop their own sustainable hostels should first look at
alternative neighborhoods that have a large influx of millennials moving in such as Point
Breeze or Francisville.

51
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