In this article, we have compiled a few tips to help you starting your hotel business successfully to ensure continued profits.
If you are looking to start a hotel business, you are definitely not alone. The Hotel industry is expanding at a rapid pace. Hospitality & Tourism industry has been one of the fastest-growing sectors in almost all countries.
So, hotels are set to grow and that is evident from the growing number of hotel rooms every year.
It is lucrative and tempting but starting a hotel business is like fishing in deep water.
You need to be extremely careful. Let’s get on with it then.
1. Brainstorm for some hospitality business ideas | and background research
This section lists some of the many Business Ideas in the Hospitality sector.
Yes, you can look for different kinds of businesses in the hospitality industry.
We have listed a few of the ideas here just for the brainstorming to start.
And please make sure that you are absolutely clear and focused on your desired area of the hospitality business. These hospitality business ideas would certainly give you ample scope to expand your thought process for an entrepreneurial venture in the hospitality industry.
- Start a Hotel business (Hotel or Resort)- Need to have a huge budget.
- Looking for a trending hospitality business idea- Get into Ecotourism.
- Car rental is an idea which is popular but is quite competitive now.
- The boutique hospitality business is trending and appealing to a lot of startup founders.
- SaaS for hospitality is another trending area to get into for entrepreneurs of hospitality.
- Lease a food outlet and start a restaurant business- A very popular business ideas these days.
- Open a Travel website or get into a Travel photography business
- Start a Hospitality Events company.
- Invest in a Quick service food outlet- It can cost less than $10,000 to open one in developing countries like India as displayed in the picture by POSist below (in Tier 2 Cities). In developed countries like the USA, the investment can well be in excess of $100,000 and even millions depending on the franchise, location, interiors, land and more.
Just to elaborate this further, opening a quick-service McDonald’s in the USA can be quite expensive as displayed by Balancesmb in the infographic below. That’s over $550,000 of investment.
However, it can be quite a good business idea to experiment with a quick-service restaurant in developing countries.
The below image displays key expenses for opening a quick-service restaurant in India. Have a look!
You can become an event planner. That’s a business idea close to your heart beating for hospitality.
This option is also closely connected with your major at your hotel school. You must be knowing a bit about events and must have managed a few during your studies.
And that is when your skills come in handy.
You can organize and plan the time of your luxury clients.
Once you have zeroed in on a perfect and sustainable hospitality business idea it’s time to move on to some research.
It is crucial to start with the correct foundation to ensure the success of your hospitality business.
Proper background research is thus a must.
For your background research on the hospitality industry, it is important to have an in-depth knowledge of the hospitality industry.
If you are planning to open a hotel, do some research on the below key things:
- How big is the Hotel Market in general?
- What is the growth of the hotel industry?
- Is there a demand in the area where you want to open up a hotel?
- How much is the competition?
- Which are the key segments of the hotel market and which segment you would target?
- Are the barriers to entry high or low?
- Are the other hospitality businesses in the area profitable?
and similar questions.
We have a resource article on Hotel Industry analysis, Segments, statistics and more. We have also done a blog post on the SWOT analysis of the hotel industry. Feel free to check them for any support on the background research.
2. Create a Business Plan for your Hotel Business
Image by- Business Town
It is important to be ready with a sound and rounded business plan.
Consider this as one of the most important tips for starting and managing a hospitality business successfully.
Key points to consider in a sound business plan are:
- Vision and Mission Statements
- The idea and the Strategy for executing the idea
- Human Resources
- A Sound Hospitality Marketing Plan
- Finances- Expenses and returns (proposed, estimates and projections)
- Products and services on offer
- Future projections
- SWOT analysis
and more depending on the nature of your hospitality business.
There are various Business plan templates, both free and paid, at your disposal on the internet. Just search the desired template on Google and you will be spoilt for choices.
3. Check legalities and permits – Hire Hospitality consultants
Opening a hospitality organisation can be a legal nightmare.
Consider the below permit requirements and more for opening a hotel.
- Fire safety permit
- Wine and Bar License
- Business Registrations
- Tax registrations (VAT, Service Tax, GST etc)
- Police and Security Licenses
- Food Quality License
- Environmental Regulations
and so on.
It would be in your best interest to take the advice of experts in the same.
From finding the right location to checking all regulations, there are hospitality consultants who can take care of everything.
One of our posts lists some of the best hospitality consulting firms in the world. Have a look at them and hire one based on your budget and requirements.
4. Financial Analysis and Capital Management
The hospitality business can be extremely seasonal and is dependent on a lot of external factors.
Thus, it is crucial to keep tight control of finances and the capital management of hotels.
It is important to have proper financial analysis or feasibility studies in order to start a hotel or restaurant business successfully.
The feasibility study can include but is not limited to the following:
- Location analysis
- Projected rates of products and services
- Occupancy estimates
- Investment and expenses projections
- Sales projections
- Return on Investment projections
Capital Management is again a crucial thing to consider to be able to open and run a hospitality business successfully.
Consider the factors below for successfully running a hospitality business.
- Raw materials required
- Money trapped in the process
- Finished supplies
- Debt collection / credit facilities
- Cash supplies
5. Explore Best Locations and Markets
This is crucial as you need to get to that sweet spot.
The location has to be decided on the basis of several parameters like competition, the existence of a suitable market, profitable demand of the product and services, cost and return on investment projections, legalities, timelines and more.
6. Create a Website and initiate basic promotion
In the current technology era, a business doesn’t exist if it doesn’t have a website.
It is crucial to have a well designed and mobile-friendly website. If you are planning to open a hotel then consider this as the most important management tip to attain and retain competitive advantages.
7. The hiring of Top Management
Once the above 6 steps are completed, it is crucial to have a great management team in place to run the show for you and hire more team members.
8. Pre-opening phase is crucial for hospitality businesses
The pre-opening phase is a crucial phase especially in the case of opening of a hotel.
Did you know that a lot of projects fail during the pre-opening? A lot of loss-making ventures perform terribly in terms of executing this crucial phase.
Be wary of major failure points in pre-opening of hotels like
- Lack of communication
- Licensing issues
- Time management issues
- Supply chain issues
- Recruiting issues
- The conflict between owners and operators
It is not very uncommon for hotel projects to get delayed due to the poor execution of this stage.
Key areas to focus during the pre-opening phase of a hospitality business are:
- Smooth transition of power between owners and top management
- Licensing and permits
- Purchasing/procurement of pieces of equipment, furniture etc.
- Repair, maintenance of fixtures
- Recruiting and training of staff
- Sales and reservation processes to be in place
- Booking systems, information systems in place
- Soft launch on the hotel (selected guests)
- Feedback and advice
9. Press Release and Promotion
Once you have the establishment, plan and team sorted, it is important to do three crucial things. The three crucial things are promotion, promotion and promotion. Yes, a rather old analogy but works even today.
Press releases, launch parties, social media influences, advertisements, coupons, paid promotions and more. They are all crucial. It is important to create the right buzz in the market and that too a positive noise among the potential customers.
10. Technology in place is a must before the Launch
This is again one of the most crucial tips of managing a hospitality business successfully.
Technology can lead a hotel business to make or break situation.
Check out our resource of Top hospitality technology insights for more pointers towards successfully using technology for success in the hospitality industry.
Do you want to open a hotel or run your restaurant in a better way and trigger growth using the ideas of other award-winning managers? This post had some hospitality business ideas and tips to start a hospitality business successfully.
Out another article on managing hospitality business successfully would further equip you with strategies to ensure that you run your organisation profitably.
Hope, the hoteliers would find the given tips in this article useful and interesting. And, we wish you the best for your new hospitality venture.