If opening your own hotel is the dream, but you’re not sure where to begin, then you’re on the right page.
Starting a hotel business requires a lot of patience, planning, and hard work. Many decisions will have to be made during this journey, such as choosing a place (building a new hotel or renovating an old one?), obtaining the right permits and hiring the right staff. Making solid decisions will ensure a successful start to your hotel business… one that you will hopefully enjoy running for many years to come.
From market research to obtaining your business finance, in this article we guide you through the five most important steps to opening a hotel.
The 5 golden tips
#1. Ask yourself the right questions as you conduct market research
Opening a hotel is a huge project that requires much thought and planning. It’s not easy to get right, which is why every year hundreds of hotels close their doors. To avoid finding yourself in this situation you need to ask yourself these questions :
- Are you motivated enough to take this project all the way through?
- Do you have the skills to run a business?
- What are your weaknesses and what can you do to make them your strengths?
- Is there anything in your personal life that might get in the way of your business goals?
After thinking about your own suitability to begin the business, it’s advisable to conduct market research to verify if your project is commercially viable and to define the optimal business strategy to put in place.
Hotel market research should include a thorough investigation into current industry trends, a detailed analysis of the competition, as well as a customer survey.
#2. Develop the concept
There are two solutions to find a good hotel concept: proposing a concept related to your history (your origins, travels, tastes, etc.) or choosing a concept that meets an unsatisfied demand (high-end hotel, atypical hotel, wellness hotel, etc.).
After outlining your idea, you need to think about several things: the name of your hotel, its location, your services, the amenities, the type of prices charged and the ambience/decor of your hotel.
#3. Write a business plan
Because many hotel companies will require external financial support, it may be a good idea to work with a professional consultant to write your business plan.
There are many organisations that help new business owners to write business plans, and can give tailored advice, but in general, your business plan should include a summary of the company’s offers, a market analysis, an operational scheme of procedures, long-term objectives and attractiveness for financial investment.
If you have visited other hotels for comparison, you can summarise how your services coincide or differ with your competitors. Things like strategies for room services, restaurant services or niche offers, should be included here.
#4. Obtain the right permits and licenses
To start a hotel as a business, you will have to apply for a certain licenses. Speak to your local authority to confirm which business licenses they will require you to have but most will include a permit to operate and licenses to sell food and alcohol.
Hotels that offer beauty spa services or a pool will have to purchase additional licenses for those services. Liability insurance is an absolute necessity.
#5. Make your enterprise stand out
After securing the location of the hotel, you will probably want to remodel and renovate the building to distinguish the business from your predecessor.
Make sure the electricity, plumbing and cables all work without problems before embarking on any change of decor. The last thing you want to find when you’ve just decorated from top to bottom is that everything needs to be ripped out to fix an underlying issue. Consider hiring an interior design company to help you in choosing colours for carpets, walls, bedding and lobby areas.
Also, remember to advertise your business. Sign up with travel agencies, travel websites, national reservation systems, and tour guides. Invite tourism professionals for a free stay in your hotel so they are familiar with what you’re offering and your best selling points.
Invest in a professional, attractive website with photos, video tours, and technology for online booking. You can also engage media personalities and influencers to advertise your hotel through social media. It really works! Don’t forget to give offers; it’s a good way to attract customers.
Enjoy your business
The hotel is now open, it is now a matter of ensuring a smooth operation by ensuring you have good management.
Security and accessibility rules
As a public-facing establishment, a hotel must meet a minimum set of standards; against the risk of fire, for optimal public alert and evacuation procedures (or to facilitate the intervention of aid). All hotels and other companies open to the public must be designed so that anyone with a disability can access all of your services.
The display of the rates charged within the hotel is mandatory, outside, at the reception desk and at the cash desk, as well as in each room.
Each client must receive a receipt detailing the identity of the business, their room number, all services provided and the total to pay, with clear and precise identification of the service-duty fee if included.
Finally, if the hotel welcomes foreign customers, it is obliged to keep a register of guests, for the police.
Taxation of the hotel
In the hotel industry, each service has a specific tax system. For accommodation, the VAT rate applied is between 10%- 20% while all other services have their own full VAT rate, except for ancillary services.
The classification “tourist hotel,” get a star
Although it is completely optional, it is possible to classify your hotel as a “tourist hotel”: After an evaluation by an approved organisation, a number of stars between 1 and 5 are awarded to the hotel according to the quality of its service. The ranking is valid for 5 years and meets specific criteria. The request is free, but the evaluation is not free.
This is just a quick guide to how to open a hotel. There is much more advice available with a bit of research. But for now, good luck with your dream and through all the hard work, remember to enjoy it!