The subject of this thesis is the development of a project plan for opening and managing hostel. Hostels are an increasingly popular form of accommodation, and this general trend has been joined by City of Zagreb. As hostel accommodation is no longer closely related to tourism as in previous years, the market potential of the hostel is growing, so there is a realistic basis for the return on investment. But every entrepreneurial project carries a risk and uncertainty and therefore it is also necessary to evaluate the profitability and return on investment before entering into an entrepreneurial venture. The city of Zagreb is trying to impose itself as a desirable destination for continental tourism and in the accordingly, it follows trends in terms of accommodation. Hostels are everything a more popular type of accommodation, and the city of Zagreb joined the trend. This paper deals with by developing a business plan for opening a hostel, and aims to analyze the potential cost-effectiveness and cost-effectiveness of the project, without neglecting the business risks associated with this venture. Graduation work required a series of desk research based on secondary sources of information, including expert literature, statistical data sources, and online portals. The research focused on the characteristics and specificities of continental tourism, hostel accommodation and the tourist offer of the city of Zagreb.