Starting a Hotel Business

Summary: Hotels are lucrative business - successful hotels, that is. Perhaps the very first thing you should consider is whether you want to establish your own hotel or buy a franchise of an existing one. There are pros and cons for both choices, and you really need to weigh your options carefully because the hotel business comes with a steep price tag.

There are hotels and there are hotels and then there are more hotels.

Often, people seek the services of hotels because of the name – and yes, there are quite a number of famous hotels in the world. But people often patronize one particular hotel time and time again because of the service that they find attractive to them. Starting a hotel business is a huge risk. You are assured only that you will have competition of the greatest magnitude. If you are considering putting up such a business, this article can give you a few things to ponder on before starting. This article assumes, of course, that you have a background in hotel management, and that you have enough finances to actually set this thing up. Unlike small bed and breakfast inns, hotels need more living spaces, more staff, more security, etc. to be serviceable. You are offering hospitality services, but on a grander scale.

Perhaps the very first thing you should consider is whether you want to establish your own hotel or buy a franchise of an existing one. There are pros and cons for both choices.

If you prefer to build your own hotel name, you can make your business venture as original as you want (for example, you can make it into a theme hotel like the Hotel Diva in San Francisco or the Sheraton Safari Hotel in Florida.) With a “new” hotel, you have all the liberty to scope out your competition and offer rates that can draw in flocks of interested clients. You can make your services as personalized as possible, if that is what you are aiming for. You can also make promotions when and if you feel like your business needs it. Unfortunately, with so much competition on board, not every new hotel makes an impressionable dent in the industry. An unnoticeable hotel is almost a dead hotel – even if you spend mucho money on advertising and gimmickry. One of the worse things about creating a “new” hotel is that you literally have to wait a couple of years before you can count on any return of investment (if there are returns at all.) Besides, in order to gain foot traffic, you can only set competitive rates. This means that you regularly need to really scope out your competitions.

On the other hand, if you prefer to buy a franchise of an existing hotel, you might do better, especially if your chosen franchise has a prominent name and years of experience to back it up. An established name can help you with all the basic ground work concerning customer relations, staffing, security issues, promo packages, etc. You need not worry about advertising because the hotel name will do this on its own. If your franchise is really prominent in the hotel industry, you can set hotel rates accordingly and make a tidy profit within a year of operation. Unfortunately, this venture comes with a steep price tag, and you will be governed strictly by the ideals of the hotel name. This certainly won’t give you an avenue for your creative ideas. Also, not all franchises make a fine profit, despite the seeming promise of immediate return of investment.

The main culprit for the failure of hotels is competition. There are many, many hotels in the world vying for new customers – and yes, they all have their gimmicks when it comes to enticing new patrons to walk through their doors. They all have their blend of personalized hospitality services. They all have their take on keeping their patrons happy, satisfied and most likely to return to their doorsteps. If you are in a city or town that has a lot of visitors or tourists, and your hotel business is the only one in the vicinity, you just make fortune in a heartbeat. But we all know that this is a dream, so be prepared for a lot of competition when and if you do start your hotel business.