A Hostel Owner From Peru Leads Her Small Business With Determination: How Ermelinda Vargas Paye is Overcoming COVID-19 Challenges

Ermelinda Vargas Paye, owner of Hostel Mary in the city of Moquegua, Peru, won’t let COVID-19 steal her spirit – or her livelihood. A lifelong attitude of determination, and business training from TechnoServe, prepared her to lead her enterprise through the pandemic.

Ermelinda Vargas Paye, 45, grew up in southern Peru on the scenic shores of Lake Titicaca. From a young age, she helped her mother put food on the table by working in the surrounding fields. 

Ermelinda and her son Luis in 1996 

When Ermelinda was just eight years old, she traveled over 200 miles from her childhood home to Tacna, a small city in southern Peru close to the Chilean border. There, she helped families with their chores while getting through school, eventually completing fourth grade. 

Despite the early challenges and limited education, Ermelinda was a natural businesswoman. At the age of 13, giving up on her formal education for the time being, she moved to the nearby town of Moquegua and began selling chuño (dried potatoes), Andean cereals, and other products at a local market. Soon after, she met her now-husband, Alejandro. 

The years flew by. 

The couple went from selling products at the Feria Moquegua’s Central Fair to Calle Grau Street, one of the main commercial streets of Moquegua, and eventually rented a store where they could offer a greater variety of products. 

Saving Money to Invest in Their Future 

For years, Ermelinda saved all their money and only spent what was necessary. Eventually, they were able to buy a small truck so that her husband could bring more products from a larger town nearby and sell them to local merchants in Moquegua.

The couple did not take holidays or vacations; they focused solely on bettering the future of their two children, Luis and Mary Isabel. They wanted to ensure that the children had enough food, a roof over their heads, and the kind of education that Ermelinda never got to have.

Ermelinda’s store was located behind the well-known Hostel Adrianella. Going to work every day, Ermelinda would glance over at the hostel and think that she’d like to have a business like that of her own day. 

Little did she know that her dream would come true sooner than she imagined.

In 2007, the building’s owner wanted to rent the hostel after the tenant retired. As soon as Ermelinda heard about the opportunity, she and her husband sold their truck; gathered all their life savings; and took out a loan from the bank. And that’s how Hostel Adrianella became Hostel Mary, in honor of her daughter, and a new life stage began for Ermelinda’s family.

But, with the family’s savings depleted, Ermelinda felt like she was starting from scratch again. 

Everyone pitched in. Ermelinda handled housekeeping and cleaning. Alejandro managed maintenance. But they were unprepared for the technical requirements of running a hostel. 

“I’ve never managed anything before,” Ermelinda says. She sought help from public resources, but found the training was complex and difficult to understand. 

Determined to Learn, Determined to Lead 

Ermelinda, small business owner in Peru, with her son in 2006.
Ermelinda with her son, Luis, in 2006 

In 2017, Ermelinda learned about the call for applications for TechnoServe’s EMERGE Peru program, which focused on personalized consulting and entrepreneurship training for small businesses. She liked the idea of being able to talk to a professional about the specific weaknesses and difficulties they had at the hostel.

With TechnoServe training, Ermelinda was able to define her customer segment, establish new business relationships, and improve her financial and marketing skills. And as her confidence grew, she grew more comfortable delegating tasks to her staff.

As Ermelinda applied her training, the hostel’s gross sales rose nearly 40%. Her family was soon able to add a new floor to their hostel, as well as adding a full restaurant to the existing cafeteria and creating four new jobs.

She was well on her way to making her business succeed – and fully realizing the future she had imagined back when she worked behind the hostel and not as its owner.

Then came the COVID-19 pandemic.

COVID-19 Creates New Challenges for Small Businesses

In March 2020, businesses across Peru were decimated by pandemic restrictions, forced to cut staff, stop paying debts, reduce costs, and apply for funding from government programs.

And it was especially hard for those that depended on the flow of travelers, tourists, and workers from other cities. Ermelinda and her team faced challenges like: 

  • A lack of liquidity to meet current costs, including new health measures
  • Limited financing for small businesses
  • Learning and implementing digital payment systems to avoid the use of physical money
  • Developing a presence in digital marketing

When the quarantine began, Ermelinda even had to temporarily close the hostel and returned to selling Andean products at the local fair.

Ermelinda, a small business owner in Peru, stands with her daughter.
Ermelinda (center) with her daughter, Mary Isabel (left) 

Thanks to TechnoServe training, they were able to correctly adapt safety protocols, restart activities according to the requirements of the state by meeting compliance requirements, and received about $10,000 from FAE-Turismo, a business support fund for small companies in the tourism sector. 

“I know we are going to overcome this,” Ermelinda says now. She even holds out hope that they will be able to open a new branch of the hostel during the pandemic as they find new ways to grow the business and visitors return.

In the meantime, another longtime goal – and the driving force behind her and her husband’s hard work – is becoming a reality. Her son Luis recently finished a degree in civil engineering, and Mary Isabel is studying business administration. 

And, after all these years, Ermelinda is now studying to get her driver’s license, meaning she didn’t have to give up her education after all.

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