How to Start a Hotel Business in 2023
Hotels are commercial buildings that offer room for a customer to stay in for a fee. These buildings can range between a regular one with multiple rooms to a luxurious villa. The most common type of people that patronize hotels are travelers that need a safe place to rest when they get into a new city. However, since there is no shortage of travelers, hotels are continually generating revenue for their owners. Consequently, doing business in this area is lucrative, and in the year 2016, hotels worldwide made an estimated amount just shy of $200,000,000.
Now that you have conjured up an impressive idea, the next logical step would be to devise a plan of bringing it to life. Ordinarily, the first thing to do would be to get your business registered in the state you will be operating in. This is to ensure that you do not get fined or put out of business for operating illegally and evading tax. When registering your hotel business, you will need a good name. Check out Technasite for some good business name ideas.
What Will It Cost to Start-up and Maintain the Hotel?
Before any entrepreneur can start up a business, there has to be capital invested. In the case of the hotel, the land has to be acquired, the building will be constructed, the erected structure would be furnished, and license (which would incur some fees) will be obtained. Furthermore, staff will be employed, and some money might go into advertising.
The amount needed in this initial stage is substantial but is mainly dependent on the cost of obtaining land in the area the hotel is set up and the quality of materials used to build the hotel. While there is no average amount that can be said to be used to open a hotel, owners should expect to spend around $4,500,000 to get the business off the ground.
Additionally, some money will be required to keep the place running from day today. These expenses cover things such as the salaries of the staff, insurance, advertisement, repair or replacement of worn-out furniture (beds, curtains, dressers, doors, etc.), internet, toiletries (towels, soaps, etc.). Owners should include a few hundred dollars every month for this purpose. However, the actual amount needed depends on how many rooms the hotel has, how many members of staff are employed, how large the hotel is, and so on.
A regular maintenance staff such as the cleaners, technician, or a receptionist can earn an amount ranging from $10 to $25 every hour. A higher-level employee – such as the hotel manager, ad manager, accountant – make in the range of $35,000 to $60,000 in a year. The internet bill for the entire hotel can be as high as $100 every month. It costs around $250 to create and display ads every month for hotel monthly.
Who Are the Target Customers?
When setting up the hotel, this is a significant factor to consider because the customers are the people bringing in the money and making you a profit. However, your target clients could be locals in the area looking to spend a night away from home or tourists from around the world that need a place to settle in.
Hotel owners develop their hotels and set prices depending on who they want to patronize their business. A hotel might be luxurious because it wants to cater to top-level company executives of companies that desire comfort when traveling for a business trip. In another case, it might be for people on a budget that need a place to stay for the night.
Ways Hotels Owners Generate Profit
Before deciding how much money to assign a room, the amount planned to be made as profit at the end of the year would have been pre-determined. Ordinarily, owners take a fixed amount of money from the hotel monthly or annually and reinvest any other proceeds back into the business for it to grow.
A regular hotel room costs an average of $100 a night, and luxury suites can demand around $50,000 to book for a night. However, the price of a room needs to conform to the demand for hotel service in that area. Building a luxury hotel and setting room prices at astronomical prices in an area that an average resident cannot afford it is counter-productive and not advisable, notwithstanding how comfortable the hotel is. If the hotel is a place tourists seem to visit, it would be wise to raise the fees for rooms in the holiday period. In all, prices should be set according to what potential customers are ready to pay.
Regardless of how successful the hotel seems to be, there is always room for more profit. A fabulous idea would be to open more branches which would generate more money to develop even more branches. Although a hotel has the potential for making more than a million dollars a year, it can also make just a few hundred thousand if the steps to grow the business and customer satisfaction is not accounted for.
Legalizing the Developed Hotel
A successful hotel should be franchised and should have a website where people can easily make inquiries and find out the cost of their services. The hotel should be insured to reduce the impacts of losses that could occur as a result of unfortunate situations. Taxes should also be registered for and paid regularly.
A bank account and credit card specifically for the hotel should be opened and kept separate from personal uses. This is to avoid personal losses or limit the chance of spending funds needed to grow the business on personal interests.
Work to Satisfy and Retain Customers
People like to revisit places where they feel welcome and genuinely cared for. You should take advantage of this and train your staff to be friendly to visitors to your hotel. All the issues people face in the hotel face should be addressed quickly. Every part of the hotel should be kept clean, and there should be an investment in aesthetics to make the hotel environment appealing.
Before venturing into the hotel business, it would be helpful if you care about hospitality because you would be responsible for the comfort of thousands of people. Furthermore, the need to adapt to the tones of voice and demands and numerous travelers and customers cannot be avoided. Additionally, every decision you make should be made while considering what people – other than you – want.