Opening a small hotel is a dream for many people who enjoy interacting with others and want to run their own business. Unfortunately, you can't just open the door and wish your hotel an immediate success. A successful hotel requires careful research, management and financial planning. Keep all these things in mind when planning to open your own hotel.
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Part 1 of 4: Doing Market Research
Step 1. Decide where you want to place the hotel
Before worrying about the exact location, you should think more broadly and decide in what city or region you want your hotel to be located. At the very least, you should consider what the tourism industry is like in the area. Since this is a small hotel or inn and not a franchise, you are likely to cater to tourists and travelers rather than employees who are on a business trip. Therefore, you should choose an area that many people want to visit. Check websites or travel books to find out some good destinations that tourists frequent, and start looking around the area for your hotel.
Step 2. Decide whether to buy an existing hotel or build a new hotel
This is the first decision to make when you choose a small town as a hotel location. You can search for hotels the owner is looking to sell, or build a new hotel from scratch. There are positives and negatives to each option that should be considered carefully before making a decision.
- If you're buying an existing hotel, it may cost less than building a new hotel, unless major renovations are needed to the property. You may also be able to keep some of the staff, which will simplify the search for employees later. However, if the hotel you are going to buy has a bad reputation, you may be at a loss in terms of revenue. You have to work hard to advertise information that the hotel is under new management.
- If you build a new hotel, it may cost more. But you can also build it however you want, which means you can design it according to a specific taste or market. Also keep in mind that if you are building a new hotel, you will have to work hard to advertise a major opening to bring in customers. Also make sure that when building a new hotel, the area is intended for hotels and inns.
Step 3. Find out about other hotels, inns, and bed & breakfasts in the area
You need to be able to imagine the competition you will face and how to successfully build a market for your own hotel. There are a number of things to look at when figuring out what competition might arise. This will give you an idea of how the hotel can stand out.
- Find out the fees charged by competitors. Take a look at all the hotels in the area and find out the rates per night. However, keep in mind that price isn't everything – if a budget hotel but all the reviews say it's of poor quality, don't try to lower prices to compete with it.
- Read customer reviews on the internet. This will give you an idea of the compliments or complaints the customer has given you. This way, you can imagine what visitors are looking for in the hotel they're staying at, which will allow you to meet that market demand.
- Take a look at what local hotels have to offer besides rooms. Do they have a restaurant? Swimming pool? Fitness center? Breakfast service?
- Book a room at some of the local hotels to really get a feel for what they have to offer. An overnight stay will give you the opportunity to examine competitors up close and get some ideas for your own hotel.
Step 4. Understand your main market
This will help you provide service to potential customers. Small hotels and inns usually attract tourists who only stay for a few nights. If your hotel is located in a rural area or a small town, you may find many people from the big city trying to take a break from the hustle and bustle of the city for a while. If this is the case, you should give the hotel decorations that reflect simple small town life.
Step 5. Decide what additional services you would like to provide at your hotel
Customers of this kind of service are usually looking for a great personal touch, so make plans to provide services that will make their stay more personal and comfortable. Travelers in small hotels are usually looking for relaxation, so you can build a secluded outdoor section for guests to relax. Smaller hotels don't offer things like gyms or restaurants, but you can include these amenities too. Just keep in mind that any additional services you decide to provide will incur additional costs, both for construction and maintenance. Be sure to structure your funding carefully to avoid losses in this venture.
Part 2 of 4: Managing Hotel Finance
Step 1. Hire an accountant
Even if you build a hotel because it is your life's dream, remember that it is still a financial investment. Unless the hotel is very small or you are a trained accountant yourself, you may need an accountant to help manage your finances. All hotels, even small ones, incur a lot of costs that need to be taken into account, for example for staff, general services, rental fees, taxes and equipment. An accountant can help you navigate complex hotel finances and help secure your financial future. U. S. The Small Business Administration recommends that you take the following actions when looking for an accountant.
- Personal referrals are usually the best way to find a reliable accountant. Ask other small business owners about the accountants they employ and whether they are satisfied with their work. You can also see if the chamber of commerce in your area hosts networking events for small business owners as a place to network with potential accountants.
- Schedule a meeting with a number of potential accountants. Most accountants will offer free introductory meetings for prospective clients. When compiling a list of candidates, meet and discuss their experiences and qualifications to see if they are a good fit for your hotel.
- Find out if the candidate has experience working in a hotel. Hotels are unique businesses that require specialized knowledge. It would be ideal if the candidate has worked in a number of hotels before, preferably if it is an independently owned hotel. This will ensure that he or she has experience with a number of specific circumstances that may be encountered.
- Conclude whether the candidate is reliable. In addition to experience, you need an accountant who can work on a long-term basis. If he's late for meetings, doesn't return calls, and does a messy job, he probably isn't the best partner for you, even if the experience is good. Remember, you are trying to build a long-term partner relationship with someone who will help you build your business.
Step 2. Develop a business plan
When opening a hotel, you may need initial capital from banks or private investors. Either option will need to look at the business plan to decide if your business is worth investing in. Also, a good business plan will help you to set your hotel targets and get a clear idea of how to make it a success. The hotel business plan should at least include the following.
- An explanation of the services that the hotel will offer. Explain how this will set your hotel apart from other hotels in the area. Would you offer a better rate? A more personalized service? Investors need to look at what makes your hotel unique.
- Who is your potential market? Explain the demographics you will serve, and why they would choose your hotel over others.
- Future income projections. Investors need to see that your hotel will make a profit. With the help of an accountant, calculate your expected annual income. Also state how long it will take before the hotel is expected to start earning revenue, and what your hotel will look like in the next few years.
- Describe costs in full. Between buying or renting a property, renovating it, furnishing it, it will cost you a lot of money to start a hotel. Make an estimate as accurately as possible for the total expenses when requesting a loan. Also make sure to include good estimates for day-to-day operating costs. It may take a few months for the hotel to start attracting enough customers to cover expenses, so you'll need money to keep the hotel open during that time.
Step 3. Obtain start-up capital
When making a business plan, show it to potential investors. With good business planning, you'll be able to demonstrate that hotels will be profitable ventures, which will convince investors to invest the money you need. You have two options for raising capital, and may end up using a combination of both.
- Bank. You can get a loan from a bank for several months to several years, depending on the type of loan. This can cover opening costs and operating expenses in the first few months.
- Private investors. This can be friends, family, or other business owners who are interested in investing. Make sure you explain whether these people only provide loans that will be returned with interest, or whether they bought part of your company. Drafting a contract that explains the terms of the agreement and asking a notary to work on it will be beneficial to prevent problems in the future.
Step 4. Determine the price
Once opened, hotel prices will determine your profit level. Rates per night will vary depending on competitors in the area, operating costs, season and a number of other factors. A general rule of thumb when setting prices is to keep them low enough to attract customers and high enough to allow you to make a profit. There are a number of things to keep in mind when setting a price.
- Know the costs. You have to calculate what the exact cost is to keep the hotel open every day. Then multiply this number to find out how much it costs to run the hotel on a monthly basis. Your income must at least cover your monthly expenses or your hotel won't be able to stay open.
- Find out how much customers are willing to pay. This will take a lot of trial and error. When you're just starting out, the only guideline may be running costs. If after a few months you notice that the rooms are constantly occupied, you can increase the price. If you're having a hard time getting customers, lower your prices. You should also conduct a survey of customers after their stay and ask if they think the room rates are reasonable.
- Adjust prices by season. During busy holiday seasons, you can increase your prices as more and more people want to take a vacation. In the quieter seasons, lower rates to keep attracting customers.
Step 5. Cut costs if needed
Even with good financial management, hotels almost always experience periods of low occupancy. You should analyze costs regularly and decide which costs are necessary and which can be eliminated. During times of low occupancy, eliminate unnecessary expenses to save costs. For example, if you've had a sluggish week and only a few rooms are occupied, you may not need to put someone at the front desk for a full day. Do this task yourself to cut costs and save money that goes towards paying someone to stand behind the counter.
Part 3 of 4: Managing Hotel Staff
Step 1. Hire the necessary staff
The number of staff will vary depending on the scale of the hotel. For a small bed & breakfast, you might be able to run the place with just a few assistants. Hotels with many rooms, even rooms as small as yours, usually require a team of workers to keep the hotel running smoothly. When looking for staff, you should consider at least the following positions.
- Housekeeper. Cleanliness should be a top priority when running a hotel. A dirty hotel will quickly acquire a bad reputation and customers will not want to come. Depending on the size of the hotel, you may only need one housekeeper or one team. A housekeeper can usually take care of about 10-15 rooms in a day, so keep this in mind when hiring people.
- Desk staff. Even small hotels are usually expected to have someone at the front desk at all times. You can do this task yourself in a few hours, but you will need a team to look after the desk 24 hours a day.
- Maintenance officer. One or two maintenance personnel will suffice for a small hotel. This position should be a worker with the general purpose of carrying out a broad range of tasks: plumbing, painting, repair work, electricity, etc. That way, you can let the maintenance guy do the smaller tasks and if something doesn't work, you can hire a professional to do the full job.
- Chef. If you plan to serve meals at the hotel, you will need at least a chef. Smaller hotels may only offer breakfast, so you may only need to hire a chef for a few hours a day.
Step 2. Check all applicants
Interview all prospective employees thoroughly and talk to their references as well. You should also run a background check on them. Remember, your employees will have access to all guest rooms and private property. You need to ensure that all employees are trustworthy before granting this kind of access.
Step 3. Create manuals for all employees
You must establish a specific system for all employees to follow. This way, you can guarantee a consistent level of service to your guests. Have all employees read this manual as part of the training. In the manual, accurately describe what you expect each employee to do.
- Emphasize that all guests should be treated with courtesy. Without good service, customers will not return, and your business will fail.
- Also state what kinds of activities are prohibited on hotel premises, and explain when dismissal is a possible impact.
Step 4. Hold regular staff meetings
Weekly or monthly meetings will help you to maintain a good relationship with the staff. You should also use this meeting to let staff know if there is anything that could be improved, and ask them for advice on how to improve it. Also be sure to praise good work to make your employees feel that they are part of the team. Listen attentively when employees make suggestions-even if you are the owner, employees have hotel experiences you may not have, and they are in a good position to suggest changes.
Step 5. Make yourself open to the staff
Let staff know that they can see you at any time to discuss any concerns or concerns they have, and listen if they do. You must be on site frequently and take an active role in management. This will make the staff feel more comfortable with you and they will be more willing to open up. If you are never around the hotel, you will feel distant and the staff may not feel comfortable talking to you freely.
Part 4 of 4: Marketing the Hotel
Step 1. Design the website
If your hotel is not on the internet, it is essentially invisible to potential customers. You can design your own website, but paying a professional to work on the website might be worth the cost – cheap websites are often easy to spot. At a minimum, the website should include the name of the hotel, location, contact information, and the rate per night. Smaller hotels often attract guests who are looking for a location with a more personal touch, so you can fulfill this desire by adding certain information to your website. Whatever is listed on the website, make sure the information is accurate and current. Sites with outdated information will make the hotel look inactive or unprofessional, which can cost you business.
- Building photos. Guests will want to see the location where they are staying. Include photos of the rooms, as well as any great views that may be nearby.
- Your biographical information. Make the website feel more personal by placing your personal information on the website. If the staff is willing, you can also enter their personal information. It will offer the kind of personalized service that attracts guests to bed & breakfasts and inns.
- History of the hotel. Some small hotels are located in historic homes. If that's the case, you'll be attracting a specific market of people with an enthusiasm for history, and you can cater to this market by providing a complete history of the building and surrounding area.
- Discounts or special offers offered by the hotel.
- Make a list and description of tourist destinations located around the hotel. If the hotel is near any tourist sites, advertise this information. This will make the hotel look as a comfortable place to live for tourists.
Step 2. Place ads on travel sites like Expedia, Viator, or Hotels.com
These sites and a number of others are designed for people to find hotels and travel destinations. By placing your ads on sites like these, you'll be attracting guests from across the country, and maybe even from overseas.
Step 3. Place the flyer in the interregional rest area
Many rest areas have places with brochures and tourist information. Contact the Chamber of Commerce in your area to find out how the brochure can be placed in the stack. Staying in a small hotel is sometimes a sudden decision for tourists. By advertising in this way, you will reach this potential market.
Step 4. Provide a special offer or price
Group discounts, free breakfast, and lower rates on multiple-day room bookings are great ways to attract customers on a tight budget. Make sure you advertise any given offer on your website. Also make sure you will still be able to cover all operating costs when offering discounts.
Step 5. Have an event
Events such as weddings and corporate holidays will bring you many guests. If you only have a few small rooms, this may not be possible. But even a small hotel can have enough space to host an event like this. While you may not have room for a large business conference, it's common for companies to reward executives and managers with vacations in a more intimate setting. An inn in a small town can be an ideal location for an event like this. Advertise on websites and other travel sites that your hotel is open to hosting events and will offer special rates for attendees.
Step 6. Make the place of business around the hotel as a partner
Small hotels often operate in close proximity to surrounding tourist destinations. Take advantage of this by asking tourist attractions to help you advertise. Contact the managers of parks, historical sites, restaurants, and theaters in your area and see if you can work out a deal with them. Offer to place a tourist brochure in the lobby if they recommend your hotel to tourists. That way, you can receive travelers in the surrounding area who may not see your hotel ad elsewhere.
Step 7. Make sure all guests have a great experience
In addition to advertising methods, word of mouth promotion is important. Every guest has the possibility to tell his friends and family about your hotel, share it on social media, and leave reviews about the hotel on the internet. You need to do everything you can to ensure this feedback is positive. A disgruntled guest can hurt your business if he or she shares it online. If you are committed to providing a great experience for every guest, you need to build customer loyalty that will benefit from good advertising.
Step 8. Develop reordering
Guests who have enjoyed their stay at your hotel are a good resource for future business. Apart from providing good service during their stay, several other methods can be used to attract guests to come back.
- Make a mailing list (email list). With a mailing list, you can inform past guests about special offers and prices on offer. It's better to let guests sign up to join this mailing list, rather than just emailing everyone who's stayed. Otherwise, you run the risk of disturbing people and may even keep reordering away.
- Reward rebookings by making special offers to past guests. There are many ways to do this. You can give guests a discount on their second stay, or offer one free night after the minimum number of nights. You can also implement a points system so that guests can collect points and get offers this way.
- Respond to customer feedback. Some travel sites allow hotels to respond to customer reviews. You should take advantage of this and answer both good and bad feedback. This will show guests that you take their opinion seriously and they may be willing to come back. It will also show potential guests that you are committed to providing good customer service.
