9 Steps To Become in Hotel Business

Hotel Business

If you visit Stellenbosch during the weekend (Fridays, Saturdays, and Sundays), you will be shocked to discover that despite the vast number of hotels dotting the city, there is no accommodation space in any of the hotels. Surprisingly enough, Stellenbosch is not even among the top ten cities in South Africa (Cape Town, Johannesburg, Durban, Pretoria, Port Elizabeth, Bloemfontein, Nelspruit, Kimberley, Polokwane, and Pietermaritzburg, should be in the lead); concerning population and level of industrialization.
This shows that the hotel and hospitality business is profitable anytime, any day, as long as you are situated in a good location. Now, regardless of your country of residence, you can start a hotel, whether on a large or small scale. So, if you reside in South Africa, the UK, the United States, etc, you will find this helpful article.

Starting a Hotel Business – Sample Business Plan Template

1. Decide on the type of hotel facility you want to open

First, you must decide on the hotel type you wish to open. Hotels are categorized according to several factors. Some of these factors include:
The size of the hotel

Where the hotel is located

Type of services offered and the number of rooms available.
Some popular types of hotels include:
  • Bed and Breakfast hotels: Bed and breakfast hotels usually have about 20-30 rooms. They are usually people’s homes converted into hotel facilities. These hotels are cheaper and offer limited services. Bed and breakfast hotels are typically run by the facility owners, who also serve breakfast to the guests.
  • Budget Hotels: Budget hotels offer cheap accommodation to guests with limited services.
  • Resort Hotels: Resort hotels usually have recreational facilities like a golf course, a beach, or an island where guests can enjoy these facilities while they visit.
  • Airport Hotels: Airport hotels provide accommodation for traveling passengers to pass the night. They are usually located close to the airport.
  • Suite Hotels: Suite hotels are increasingly becoming popular in the hotel industry. Suite hotels provide guestrooms with an attached living room and, sometimes, a kitchenette where guests can cook their meals.
  • Business Hotels: Business hotels are usually built with the business traveler in mind. They offer guests complimentary newspapers, internet access, business centers, and fax machine services.

2. Create an innovative concept

The hospitality industry is very competitive, with various hotels springing up yearly. More is needed to just start a hotel. You should develop a concept that would make your hotel outstanding and remarkable such that when guests visit, they can’t wait to relate the experience to their friends and jump at an opportunity to visit again.
You should create exceptional services to pamper your clients. You can offer them complimentary breakfast, a swimming pool, a Jacuzzi, a gymnasium, massage services, valet parking, and internet services. You can even offer them the option of changing their rooms after one night to enjoy the different rooms you have. Your hotel building should also be constructed with warmth and serenity in mind.

3. Conduct a Feasibility Study

You can rush into a hotel online business if you are armed with the correct information. Conducting a feasibility study of the area where you want to site your hotel is essential. A feasibility study would help you determine if it is a worthwhile business and how profitable it would be. It would also help you find the most suitable location for your hotel.
You may conduct the feasibility study by visiting the location and hotels, handing out questionnaires, and asking questions. If you cannot perform the feasibility study yourself, you can employ an expert or consultant to do it for you.

4. Determine your Ownership Structure

The hotel business requires a considerable capital outlay; hence, you may need to bring in one or two investors. You must decide on the ownership structure of your business before you start. Do you want to be the sole proprietor of your business? Or would you instead prefer to run it as a partnership with others?

5. Franchising

One popular way to start a hotel business is to buy a franchise of a reputable hotel business. You should also decide whether to build your hotel from scratch or buy and refurbish it.

6. Prepare a Kick-ass Business Plan

You should have your professionally prepared business plan ready at this stage because this is what you would show to the bank or potential investors. Your business plan should be professionally prepared and include all the necessary information to guide your investors on how viable the business is. A poorly prepared business may discourage investors, so you must put enough effort into preparing your business plan or get someone to prepare it for you. Here is a sample hotel business plan template to help you get started.

7. Secure funding or investment

You may need help to undertake such a massive project from your savings alone, and as such, you may need to approach your bank for a loan or look for investors willing to invest some money into the project.

8. Obtain the necessary permit and business license

Register your business and obtain all necessary permits at the licensing office. This would prevent any form of harassment from government officials for running an illegal business.

9. Staff recruitment

If you have never worked in a hotel or have absolutely no idea how to run a hotel, you should employ a manager with experience to run the business for you. This is because the hotel business is technical, and you may ruin the business and run into losses if you do not have the necessary knowledge and experience to manage the business excellently.
You would also need to recruit other supporting staff. It is essential to conduct interviews and train your staff adequately. Your staff must be polite and courteous to customers and always willing to lend a helping hand and solve problems with a smile on their faces.

Six Challenges of Starting a Hotel Business

  • a. The hotel business is capital intensive, as you may have to build your own structure or take a long-term lease. Even after erecting the structure, you will still need a chunk of cash to get the hotel up and running (registration, operations, marketing, obtaining a license, security, etc).
  • b. Running a hotel is management intensive. You will need hands-on manpower 24/7 to ensure the hotel's smooth operation and success.
  • c. Hotels are location sensitive. It is already a failure if you site your hotel in the wrong location. Factors you must consider when locating your hotel include nearness to commercial areas, colossal population, proximity to the airport, good road network, social amenities like power supply, water, etc., and nearness to government agencies and institutions.
  • d. Legal obligations for a hotel business could be more convenient and affordable. You must ensure your hotel meets regulatory standards and is covered legally. Even getting hotel insurance coverage isn’t cheap.
  • e. Hotels are trend-sensitive. With modern amenities springing up, there will be your combat; you must regularly upgrade your hotel and seek innovative ways to improve your hotel for maximum customer satisfaction. You can add a bar, nightclub, swimming pool, etc.
  • f. Economic and Political Climate: Hotel business is susceptible to environmental and political situations. Political instability, riots, and bad neighborhoods can ruin your business before you set it up. You should ensure you locate your business in a people- and business-friendly environment.
  • g. Lack of power supply: If your hotel is located in a country or city experiencing power challenges, your operating cost may invariably be high as you would have to provide your own power supply by running on generators. However, you can reduce your gas by installing inverters and solar systems in your hotel
  • In conclusion, the hotel business is a billion-dollar industry. If you are looking for where to invest your hard-earned money and make a good chunk of cash in the shortest time possible, venture into the hotel industry. It’s a lucrative one. Trust me!

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