How to Start a Hotel Business - Tips and Ideas

As the year comes to a close and the holidays approach, many people are starting to think of how they can turn their dreams into reality. Whether it's starting a new business or a career in the hospitality industry, now could be just the right time to set your sights on how to start a hotel business.

This complete guide on how to start a hotel business will take you through steps, including how to plan, market, and manage a successful hotel business from the ground up. By the end of this article, you'll have a better understanding of the following:

• What it takes to become a successful hotelier, including what successful hotel businesses have in common
• How to write a detailed business plan before you start a hotel business
• Essential advice on how to market and promote your new hotel business
• Important tips for how to manage operations efficiently
• How technology can help you create a successful hotel business

Let's get started.

What type of person makes a successful hotelier?

Before we dive into how to start a hotel business, let's look at some of the qualities successful hotel owners possess. Being a successful hotelier involves having both the business knowledge and the hospitality industry skills to run your own hotel. 

A successful hotelier is someone who can understand how to manage people and resources, how to create customer experiences that keep guests coming back for more, and how to maximize profits. It also requires a good understanding of how to market and promote your hotel, create an atmosphere of quality service, train staff and handle the legal aspects of running a business.

Some essential skills that a successful hotel owner needs to include the following:

• Business acumen: hoteliers must understand how to manage finances, how to budget, how to make all important decisions, and how to use data analysis.
• Strong interpersonal skills: being able to communicate effectively with guests and staff is essential in running a successful hotel.
• Leadership: as a hotelier, you must be able to inspire your staff and create an atmosphere of quality service.
• Creativity: hoteliers need creative skills in order to come up with innovative ideas for how to market the hotel and how to create memorable guest experiences.

What makes a successful hotel?

Next up on our complete guide on how to start a hotel business is what makes a successful hotel business looks like. To create a profitable business, certain elements must be present. These include:

• Quality service: how well your staff interacts with guests is essential in creating a positive experience.
• A great atmosphere: how you design and decorate your hotel can influence how guests perceive the quality of service that they're receiving.
• Cleanliness: making sure your rooms and common spaces are clean and tidy is key to keeping guests happy.
• Unique experiences: creating unique experiences, such as unique events and activities, can draw in more guests and create positive word of mouth.
• Innovation: ensuring that your hotel stays up-to-date with the latest trends and technologies can keep your business ahead of the competition.

Types of hotels

Another decision you need to make is the type of hotel you want to run. Your choice will depend on the location, how much money you plan to invest, and how much time and effort you're willing to put in. Here are some of the main types of hotels that you can consider:

• Budget hotels: providing basic rooms at a lower cost, budget hotels are great for travelers who just need a place to stay
• Luxury hotels and resorts: these are more expensive and focus on providing high-end amenities such as spas, swimming pools, fine dining restaurants, and other services.
• Boutique hotels: usually smaller in size than luxury resorts, boutique hotels focus on unique design and providing a personalized experience.
• Serviced apartments: these are self-catered units that come with basic amenities such as a kitchenette, bedroom, and bathroom.

TIP: Check out our hotel business ideas blog for more inspiration on how to get started.

How much does it cost to start a hotel?

Your final consideration should be how much it will cost to open and run your own hotel business. The costs of starting a hotel can vary greatly depending on the size and type of hotel that you decide to open. 

According to Hotel Tech Report, The average cost of opening a small hotel in the United States is around $1,000,000 and the average cost to open a 115-room hotel is around $22,000,000 [1]. It's important to research and calculate how much money you'll need to start your hotel business before you start.

You'll need to consider how much you'll need

• To buy or rent the property
• For any renovations
• To purchase all of the necessary equipment and supplies
• For marketing and promotional costs
• For staff salaries, including overtime, health insurance, and pensions plans
• how much money you'll need to cover any legal fees

Benefits of starting a hotel

The hotel industry can be a very rewarding one. Not only will you experience the satisfaction of providing guests with an unforgettable stay, but you'll also have the opportunity to make a good living. With the right business plan and strategy in place, there are plenty of potential benefits to starting your own hotel.

• Flexible working hours: you'll be able to set your own working hours and manage how much time you spend running the hotel.
• Potential for high revenue: depending on how successful your hotel is, there's potential to make a good living from it
• Variety of roles: as a hotel owner, you'll get to take on various roles such as marketing and promotion, operations management, and customer service.
• Ability to be creative: owning a hotel allows you to be creative in decorating, designing, and promoting your hotel.

How do I create a hotel business plan?

Once you have decided how much money you need to start, it's time to create a business plan. This document outlines how you plan to run your hotel business, how you plan to market and promote it, and how you plan to make a profit.

Creating a hotel business plan can be daunting, but it doesn't have to be. Here are ten elements you'll need in your hotel business plan.

Executive summary:

An executive summary is a short overview of your business plan. It introduces the critical points you'll be discussing in more detail throughout the document. You'll want to include the following:

• How the new hotel business will be operated
• How it will generate revenue
• How it will differentiate itself from other hotels in the area, and what's your USP.

Here's an example: 

"XYZ Hotel is a 24-room boutique hotel located in the heart of downtown. We offer guests an excellent level of service and amenities, with each room featuring luxury bedding, flat-screen TVs, and complimentary Wi-Fi. Our restaurant will provide a unique dining experience with locally sourced ingredients, while our bar will feature craft cocktails and local beers. We will also offer event space for corporate and social gatherings. Our goal is to become the go-to hotel for those looking for a unique and luxurious experience."

Company analysis

Next, you'll need to provide an in-depth analysis of your company. This includes:

• Information on how the business was founded
• the mission statement and vision of the company
• details on how you plan to grow and develop the business.
• You'll also need to include information on how much money you will need for start-up costs, how much you have already invested and how much money you plan to raise.

For example: 

"XYZ Hotel was founded by John Smith and Jane Doe in 2020. Their mission is to provide guests with a luxurious hotel experience while giving back to the local community. As part of their vision for growth, they plan to open additional locations in other cities over the next five years. They have invested $500,000 of their own money into the business and are looking to raise an additional $1 million in capital from investors."

Industry analysis

You'll also need to provide an industry analysis. This includes:

• An overview of the industry you're entering and how it has evolved over time
• An in-depth look at how competition is affecting the market
• Details on how your hotel business will fit into the industry and how you plan to differentiate yourself from the competition.

Let's see this in action: 

"The hotel industry has grown steadily over the past decade, with more people traveling for business and leisure. The current market is highly competitive, with traditional hotels competing with Airbnb and other short-term rental services. At XYZ Hotel, we plan to differentiate ourselves from the competition by offering a unique experience that focuses on personalized service, luxury amenities, and excellent customer service."

Customer analysis

Who will be your customers? You'll need to provide an analysis of who you think will stay at your hotel and how they can benefit from staying with you. This includes:

• A demographic breakdown of your target customer
• An overview of their needs wants, and expectations
• Details on how you plan to attract them to your hotel.

For example: "At XYZ Hotel, our target customer is business travellers. They are typically aged between 25 and 40 and are looking for a comfortable and luxurious place to stay. They are more likely to be tech-savvy and value convenience, personalized service, and modern amenities. We plan to attract them by offering competitive rates, providing excellent customer service, and promoting our hotel through digital marketing campaigns."

Competitive analysis

You'll need to outline how you plan to compete with other hotels in the area. This includes analyzing how they're marketing their business, how they're pricing their rooms, and how they're providing excellent customer service. You'll also need to provide an analysis of how you plan to differentiate your hotel from the competition.

This will look something like this: 

"Our competitive analysis shows that the most successful hotels in our area are offering competitive rates and a boutique experience. They are marketing themselves heavily through digital channels, providing excellent customer service and offering unique amenities. At XYZ Hotel, we plan to differentiate ourselves by offering a luxurious experience with personalized touches, such as in-room spa services and complimentary breakfast. We will also focus on our online presence by creating an interactive website and engaging in social media campaigns."

Strategic plan

Once you've done some market research and analyzed your industry, customers, and competitors, you'll need to create a strategic plan. This includes details on how you plan to market your hotel, how you will price your rooms, and how you will ensure that you provide excellent customer service.

Your strategic plan should also include how you plan to grow your business in the future and how you will manage any potential risks.

For example: 

"At XYZ Hotel, our strategic plan is to focus on providing an affordable and budget-friendly experience for backpackers. We will focus on digital marketing, offering competitive rates and providing excellent customer service. We plan to grow our business by expanding into other markets and launching new services, such as a loyalty program. In order to mitigate any potential risks, we will have insurance in place and develop contingency plans should unexpected events occur."

Operations plan

An operations plan outlines how your business will be run on a day-to-day basis. This includes how you plan to manage your hotel, how you will ensure that each guest has an excellent experience and how you plan to keep your costs low. You'll also need to provide details on how you will handle any potential issues, such as a power outage or plumbing issue.

For example: 

"At XYZ Hotel, our operations plan is to focus on providing the best possible customer experience. We will have a team of trained hotel employees who will be responsible for checking guests in and out, managing reservations, and dealing with any issues that may arise. We will also use a computerized system to manage bookings and payments. In order to keep costs low, we will focus on using eco-friendly products, keeping our energy consumption to a minimum, and streamlining our operations as much as possible."

Management team

You'll next need to provide an overview of how your management team will be structured. This includes the qualifications of each member, how they will work together to manage the business, and how you plan to motivate them. By providing this information, investors will be able to get a better understanding of how your hotel business will be managed on a day-to-day basis.

For example: "The team will report to the hotel Manager and will be comprised of qualified professionals with a deep knowledge of the hotel industry, customer service, and operational management. The team will oversee operations, manage personnel, and ensure that the hotel meets its goals. We plan to motivate our team members by providing them with competitive salaries, bonuses for exceptional performance, and growth opportunities."

Financial plan

You'll need to provide an overview of how you plan to finance your hotel business. This includes how much capital you will invest, how much money you will be borrowing and how you plan to use the funds for start-up costs and operating expenses. You'll also need to provide an analysis of how much money you expect to make in the first few years and how long it will take for your business to become profitable.

For example:

"Our financial plan is to invest $250,000 of our own capital in the business. We will also be borrowing an additional $500,000 from a commercial bank at a competitive rate of interest. The funds will be used for start-up costs and operating expenses such as staff salaries, rent, utilities, and marketing expenses. We anticipate it will take three years before the business becomes profitable and expect to make $1,000,000 in revenue within that time frame."

TIP: On a budget? Check out our blog on how to start a hotel business with no money today!

Key milestones

Finally, you'll need to outline how you plan to measure your success. This includes setting short-term and long-term goals and how you plan to track your progress against them.

TIP: SMART goals (Specific, Measurable, Achievable, Realistic, and Timely) are a great way to ensure that your hotel business has clear objectives and can measure its progress.

An example includes: "We plan to increase our revenue by 10% in the next six months."

Hotel marketing tips

Once you have your hotel up and running, it's important to develop an effective hotel marketing plan to help increase awareness of your hotel and draw in customers. Here are ten tips that can help:

Use social media

Social media is a great platform for targeting potential customers and engaging with them on a more personal level. Make sure to take advantage of all the different platforms by setting up social media accounts on Facebook, Twitter and Instagram, TikTok, and Snapchat to promote your hotel.

For example, you could post pictures of your hotel, create engaging content to share with followers, and even run promotions or competitions. Remember that each platform has its own unique audience, so you should tailor your content to the specific platform.

Create a website

Having a well-designed website is essential in today's digital world. Your website should be informative, easy to navigate, and optimized for mobile devices. Some tips to keep in mind include the following:

• Having clear, organized navigation
• Incorporating high-quality visuals
• Utilizing SEO best practices to help your website rank higher in search results
• Adding interactive elements, such as online booking, fun quizzes, videos, and more

Create a loyalty program

Developing a loyalty program is a great way to encourage repeat. With a POS system, you can easily track how often customers visit your new hotel and how much they spend. You can then reward them with discounts, freebies, or exclusive offers for their loyalty.

Some hospitality and retail POS systems also integrate into popular marketing and loyalty apps. Check out Epos Now loyalty today to learn how to create a loyalty program for your hotel.

Launch email campaigns

Email marketing is a great way to reach customers directly with offers, promotions, or news about your new hotel. Your email campaigns should be:

• Engaging
• Personalized
• Segmented (into different audience groups)
• Incorporate visuals and videos
• Optimized for mobile devices
• Written in a clear, concise, and compelling manner

Advertize online

Take advantage of online advertising platforms such as Google Ads and Facebook Ads to promote your new hotel to potential customers in targeted locations. This allows you to get your message in front of the right people at the right time.

For example, you could create an ad campaign targeting people searching for hotels in your area and include special offers or discounts. Or, you could create a retargeting campaign to reach people who have already visited your website and encourage them to book their stay with you.

Reach out to influencers

Influencers, celebs, or industry experts can be a great way to reach potential customers and create a buzz around your brand. Reach out to influencers in your target market and ask if they'd like to collaborate on a project or review your new hotel.

You could also invite them to stay with you for free as part of their next trip and offer them perks in exchange for social media posts or blog reviews. This can be a great way to get your hotel noticed by its followers and build a positive reputation online.

How to manage hotel operations efficiently

Hotel operations management is a key component of running a successful hotel. Here are some tips to help you manage your hotel more efficiently:

Create clear processes and procedures

Having clearly defined processes and procedures will help ensure that everyone in the organization knows how to do their job properly and efficiently. Create detailed documents outlining how tasks should be completed, dealing with customer complaints, handling bookings, etc.

Use technology

Using the right technology can make all the difference when it comes to hotel operations management. Investing in a quality hospitality and retail POS system will help streamline processes and provide valuable insights into your hotel's performance. You'll also want to invest in a property management system that integrates with your POS to provide a single interface for managing hotel inventory, bookings, and more.

Hire the right staff

Hiring the right people for the job and investing in their training and development will greatly impact how efficiently your hotel operates. Make sure you hire people who are passionate about hospitality, have good customer service skills, and are willing to work hard.

Implement quality control measures

It's important to have a system in place to track how your hotel is performing and how satisfied customers are with their experience. Quality control measures such as customer surveys, mystery shoppers, and regular audits can help keep you informed about how you're doing.

Embrace innovation

Innovation is essential for any business to remain competitive and stay ahead of the competition. Look into new trends in hotel operations management, such as artificial intelligence (AI), cloud computing, and data analytics, that may help you improve your hotel's operations.

Monitor performance

Lastly, it's important to monitor how your hotel performs regularly. Regularly review how you're doing in terms of customer satisfaction, revenue, and expenses to ensure that your hotel is as efficient and profitable as possible.

By following these tips, you can ensure that your hotel operations are running smoothly and efficiently. With the right processes in place and the right staff, you can ensure that you provide customers with the best experience possible.

How can you use technology to improve how you manage your hotel?

In today's world, technology plays an important role in how we manage our hotel businesses. In the hotel industry, there are several ways to use technology to improve the experience for guests and staff.

For starters, you can use a property management system to streamline how you manage bookings and reservations for your hotel. This could include using online booking systems or mobile apps to allow customers to easily make bookings from anywhere. Additionally, this software can help automate how you manage guest check-ins.

You can also use an Epos Now's hospitality point of sale  to streamline how you manage payments, inventory, and customer information. This type of technology can help you seamlessly set up an integrated payment processing service, as well as keep track of sales, customer data, and more.

Finally, you can use technology to help improve how you communicate with your staff. This could include using online scheduling systems or messaging platforms to help coordinate how tasks and responsibilities are delegated within the hotel.

By using technology, you can make sure that your hotel runs smoothly and efficiently, giving customers an enjoyable experience.

Final thoughts

So there you have it. Our complete guide on how to start a hotel business.

The hotel industry is constantly changing and evolving, making it important for hotel business owners to stay up-to-date on how they manage their operations. By following the tips outlined in this blog post, you can ensure that your hotel runs as efficiently and profitably as possible. Using technology is key to staying competitive in this ever-changing marketplace.

Investing in the right processes and staff and embracing innovation are all important factors to consider when managing your hotel business. With the right strategy in place, you can guarantee that your hotel remains profitable and successful for years to come.

Good luck on your journey!

Want to know more? Check out our recent blog for more tips on how to run a hotel business successfully.