Thanks so much for that. It looks like the market is becoming more liquid in Australia so that will help me convince him that BTC will be worth him trying.
This is the proposal I will put to him - what do you think?
It will be done a trial basis at first until he is convinced he can "get his money back".
He will accept a maximum of USD $100 worth of bitcoins per day - presently 6 BTC or so per day.
The will be no commissions on accepting bitcoins during this trial period
The rate you will get is the Mt Gox rate * the gx.com AUD/USD midrate
It wont be automated on the website in the trial period - you email him for a quote which will be valid till close of business in Sydney.
You can make a part payment so long as it is over 50% - with the rest to be paid in AUD cash on arrival.
For the time being, bitcoins will not be accepted as payment if you are already at the hostel in person.
He will sell bitcoins for cash at the front counter after 11am - before then it is too busy.
Buyers might like to contact him first to make sure he has some to sell or risk a wasted trip.
There will be a 2.5% commission on bitcoins for cash sales.
If all this goes well it will start to be integrated on the hostel website.
I will see what he thinks of this. If he agrees it will be in place very soon, and you can add another real business to the bitcoins list.
It will be a particularly pertinent addition because it is a wholly legitimate family owned business which was turned down by PayPal because they were not incorporated.