The hospitality industry certainly took one of the biggest hits of any sector in 2020, thanks to the COVID-19 pandemic. Fortunately, the year 2022 saw things go back to normal, with the hospitality industry recovering significantly. In light of this, if you’re seeking to start a hotel business, 2023 is as good a year as any.
Nevertheless, there are a lot of factors that determine whether a hotel business would be successful beyond trends in the hospitality industry. Similarly, establishing a hotel is more than just getting a building with rooms and charging people. Considerations such as location, pricing, and target market greatly impact how well a hotel business does.
This article examines some important steps you should take if you are starting a hotel business. Let’s dive right in:
Have a plan
A quality plan is necessary when starting any business, irrespective of the specific industry. To come up with an excellent plan for your hotel business, it’s crucial that you understand how hotels are run.
As such, you should conduct thorough research on the nitty-gritty of hotel operations. This would help determine the factors that make hotels like Walt Coulston successful as well as the situations that cause hotels to perform poorly.
Coming up with a comprehensive and well-thought-out plan might not guarantee that your hotel business will succeed, but it certainly increases the chances.
Identify a market need
The next step is to carry out extensive market research in order to understand if there is a market need you can satisfy. This would help you tailor your hotel with characteristics that make it likely to succeed. To do this, however, you must pay attention to questions such as: what customers are underserved? What location is ideal? Where is there more demand than supply?
The answers to these questions would enable you to determine what type of hotel you should establish as well as the ideal size, amenities, and location. Importantly, conducting market research and identifying an underserved market need helps you determine the target customers of your hotel business.
Also, this step helps you identify your competitors and what competitive advantages can help you create a niche for your hotel business within the market.
Secure appropriate funding
Depending on the type of hotel you decide to open, you will require varying levels of funding. Clearly, a budget hotel won’t cost as much to build or purchase as a luxurious hotel, although factors like location may also come into play. Needless to say, regardless of the type of hotel you are establishing, you will have to secure funding in some way.You can do this by exploring business loans through platforms like CreditNinja. Of course, the amount of funding you can generate through debt is dependent on certain qualifications, such as your credit score and the quality of your business plan.
Alternative ways of generating capital include venture capitalists and angel investors. Each funding source has its pros and cons, so you should carefully evaluate these before settling on one.
In determining how much capital should be invested in your hotel business, it might help to crunch the number with respect to room pricing, revenue per room, vacancy rates, and operating costs.
Obtain the required licenses and permits
It’s essential to satisfy all regulatory and legal requirements to open a hotel in your desired location. You may have to obtain certain paperwork from the local government. In addition, you may require licenses and permits to serve food and alcoholic beverages as well as permits to build and renovate structures. It is important to consult with professionals through this process.
Hire and train your staff
Another aspect of starting a hotel business that you can’t afford to overlook is the staff. Your hotel business can only operate optimally if you have competent employees. As such, you pay serious attention when hiring staff, especially for executive and departmental positions. Similarly, there should be in place a comprehensive training program to integrate employees effectively. You might also find it beneficial to look into talent acquisition tips and strategies to help with your recruitment process. As long as you have a plan in place, you can find people that fit into your company culture.
Final Thoughts
Undoubtedly, the hotel business is not an easy one to delve into. However, with the steps highlighted in this article, you can make more informed decisions when opening a new hotel.