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9 Steps To Become in Hotel Business


If you have an opportunity to visit Stellenbosch during the weekend (Fridays, Saturdays and Sundays), you will be shocked to discover that despite the huge number of hotels dotting the city, there is no accommodation space in any of the hotels. And surprisingly enough, Stellenbosch is not even among the top ten cities in South Africa (Cape Town , Johannesburg, Durban, Pretoria, Port Elizabeth, Bloemfontein, Nelspruit, Kimberley, Polokwane and Pietermaritzburg, should be in the lead); with respect to population and level of industrialization.
What this goes to show is that hotel and hospitality business is a profitable business anytime any day, as long as you are sited in a good location. Now regardless of your country of residence, you can start a hotel; whether on a large or small scale. So if you reside in South Africa, UK, United states, etc; you will find this article useful.

Starting a Hotel Business – Sample Business Plan Template

1. Decide on the type of hotel facility you want to open
First, you have to decide on the type of hotel you want to open. Hotels are categorized according to a number of factors. Some of these factors include:
  • The size of the hotel
  • Where the hotel is located
  • Type of services offered and the number of rooms available.
Some popular types of hotel include:
a. Bed and Breakfast hotels: Bed and breakfast hotels usually have about 20-30 rooms. They are usually people’s homes converted into hotel facilities. These hotels are cheaper and offer limited services. Bed and breakfast hotels are usually run by the owners of the facility who also serves breakfast to the guests.
  • Budget Hotels: Budget hotels offer cheap accommodation to guests with limited services.
  • Resort Hotels: Resort hotels usually have recreational facilities like a golf course, a beach or an island where guests can enjoy these facilities while they visit.
  • Airport Hotels: Airport hotels provide accommodation for travelling passengers to pass the night. They are usually located close to the airport.
  • Suite Hotels: Suite hotels are increasingly becoming popular in the hotel industry. Suite hotels provide guestrooms that also have an attached living room and sometimes, a kitchenette where guests can cook their meals.
  • Business Hotels: Business hotels are usually built with the business traveler in mind. They offer complimentary newspapers, internet access, business centers and fax machine services to guests.
2. Create an innovative concept
The hospitality industry is very competitive with various hotels springing up yearly. It is not enough to just start a hotel. You should come up with a concept that would make your hotel outstanding and remarkable such that when guests visit, they can’t wait to relate the experience to their friends and jump at an opportunity to visit again.
You should create exceptional services to pamper your clients. You can offer them complimentary breakfast, swimming pool, Jacuzzi, gymnasium, massage services, valet parking, and internet services. You can even offer them options of changing their rooms after one night to enjoy the different rooms you have. Your hotel building should also be constructed with warmth and serenity in mind.
3. Conduct a Feasibility Study
A hotel business is not something you can just rush into without being armed with the right amount of information. It is important to conduct a feasibility study of the area where you want to site your hotel. A feasibility study would help you to determine if it is a worthwhile business and how profitable the business would be. It would also help you find the most suitable location for your hotel.
You may conduct the feasibility study by visiting the location, hotels around, handing out questionnaires and asking questions. If you cannot conduct the feasibility study yourself, you can employ an expert or consultant to do it for you.
4. Determine your Ownership Structure
Hotel business requires a huge capital outlay hence you may need to bring in one or two investors. It is important that you decide on the ownership structure of your business before you start. Do you want to be the sole proprietor of your business? Or would you rather prefer to run it as a partnership with others?
5. Franchising
One popular way of starting a hotel business is to buy the franchise of an existing reputable hotel business. You should also decide if you want to build your hotel from the scratch or buy and refurbish.
6. Prepare a Kick-ass Business Plan
At this stage, you should have your professionally prepared business plan ready because this is what you would show to the bank or potential investors. Your business plan should be professionally prepared and include all the necessary information that would show your investors how viable the business is. A poorly prepared business may discourage investors so it is important that you put enough effort into preparing your business plan or get someone to prepare it for you. Here is a sample hotel business plan template to help you get started.
7. Secure funding or investment
You may not be able to undertake such a huge project from your savings alone, and as such; you may need to approach your bank for a loan or look for investors who would be willing to invest some money into the project.
8. Obtain necessary permit and business license
You would need to register your business and obtain all necessary permits at the licensing office. This would prevent any form of harassment from government officials for running an illegal business.
 9. Staff recruitment
If you have never worked in a hotel or if you have absolutely no idea about how to run a hotel, you should employ a manager with experience to run the business for you. This is because hotel business is technical and you may ruin the business and run into losses if you do not have the necessary knowledge and experience to manage the business excellently.
You would also need to recruit other supporting staff. It is important to conduct interviews, and train your staff adequately. Your staff must be polite and courteous to customers and they must be people that are always willing to lend a helping hand and solve problems with a smile on their faces.

Six Challenges of Starting a Hotel Business

a. The hotel business is capital intensive, as you may have to build your own structure or take a long term lease. Even after erecting the structure, you will still need a chunk of cash to get the hotel up and running (registration, operations, marketing, obtaining license, security, etc).
b. Running a hotel is management intensive. You will need hands-on manpower 24/7 to ensure a smooth operation and success of the hotel.
c. Hotels are location sensitive. What this means is that if you site your hotel in a bad location, it is already a failure from the start. Factors you must consider when locating your hotel include nearness to commercial areas, huge population, proximity to the airport, good road network, social amenities like power supply, water, etc, nearness to government agencies and institutions, etc.
d. Legal obligations for a hotel business is quite cumbersome and expensive. You will have to make sure your hotel meets regulatory standards and is covered legally. Even getting a hotel insurance cover doesn’t come cheap.
e. Hotels are trend sensitive. What this means in essence is that as new hotels with modern amenities spring up, there will be less customers to your hotel establishment. To combat, you must regularly upgrade your hotel and seek innovative ways to improve your hotel for maximum customer satisfaction. You can add a bar, night club, swimming pool, etc.
f. Economic and Political Climate: Hotel business is very sensitive to environmental and political situations. Political instability, riots, bad neighborhoods can ruin your business even before you set up. So you should ensure you locate your business in a people and business-friendly environment.
g. Lack of power supply: If your hotel is located in a country or city that is experiencing power challenges, then your operating cost may invariably be high as you would have to provide your own power supply by running on generators. However, you can reduce your gas by installing inverters and solar system in your hotel
In conclusion, I want you to know that the hotel business is a BILLION dollar industry. If you are looking for where to invest your hard-earned money and make good chunk of cash in the shortest time possible, venture into the hotel industry. It’s a lucrative one. Trust me!

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