A Step-By-Step Guide on How to Start a Hotel That Thrives

illuminated hotel signage

Hotels play an important role in our lives. When you're on vacation or traveling for business, you'll likely spend your nights in a hotel room. If you're an entrepreneur looking to host a conference or other corporate event, a hotel will provide you with conference facilities.

It's for such reasons the hotel industry is always booming. According to IBISWorld, there are over 91,000 hotels and motels in the United States, which collectively generate over $194 billion annually.

Looking to start your own hotel and have a piece of the pie?

In this article, we're telling you how to start a hotel that thrives.

Understand Industry Dynamics

The first step to starting any business is to conduct an in-depth industry research.

As such, you have to gain an intricate understanding of the hotel industry in the country. Identify industry trends. Are hotels recording increasing levels of profitability or sales have been on a decline? What about professionals who pursue jobs in the industry? Is there enough talent in the labor market?

Are there industry disruptors? Airbnb, for instance, is a popular technology that's disrupting the hotel industry. You must establish how such innovations will affect the industry in the long-term, and find ways to leverage their power.

Spot the Best Location

Location is one of the biggest contributors to the success of a hotel.

Look, if you develop a 5-star hotel in an insecure area, nobody is going to come to the hotel. Well, a few people will, but if the insecurity persists, you'll go out of business pretty quickly.

Besides the security of a location, consider the following factors;


Are there other hotels in the location you've your eyes on?

To start with, don't be too eager to start your hotel in a location that doesn't already host any other hotel. There probably is a reason no entrepreneur is finding the place attractive.

An ideal spot should have 2 or 3 established hotels. This shows the area is vibrant and attractive to people. However, do a competitor analysis to determine the market share the present hotels hold. Do you have a good chance of breaking into the market and grabbing a share of the market?

Ease of Doing Business in the Location

The laws and procedures of starting and running a hotel vary from state to state. County and city governments also create and enforce laws that affect the operation of the hotel.

Before choosing a location, consider how the existing business laws and procedures will affect your hotel. What, for instance, are the requirements for getting a hotel license?

Generally, you don't want to start a hotel in a location where authorities make it difficult for new investors to start a hotel business.

Draw a Business Plan

A business plan is your hotel's blueprint for success. It proves a short description of your hotel, from the name, the services it will offer, the amount of capital you'll need to get it started, the organizational structure and much more.

Even if you don't plan to ask other investors to pump money into your hotel, a business plan will guide your operations. It's also common for hotel regulatory authorities to review your business plan before granting the relevant licenses.

Get the Capital Ready

Hotels are capital intensive businesses.

Depending on the size of the hotel you want to establish and whether you want to build it from scratch, you could need millions of dollars.

Do you have the capital ready?

If you do, good! Proceed to the next step. If you don't, it's time to get funding.

Depending on the amount you need, you can approach equity investors or get a loan from a bank. You can also borrow from family and friends.

Click here for more information on hotel financing.

Get the Interior Planning and Design Spot On

Hotels are as much about the experience as they are about the food and drinks.

If you don't know much about interior design, it's time to hire interior designs to paint, decorate and arrange the space so that it's inviting. The designers will also help you choose the furniture and other vital pieces of furniture.

Find Suppliers

It's crucial to have a sound supply chain for your hotel. You need people who will deliver groceries and other essentials the hotel needs to keep meeting the needs of its guests.

Before your hotel begins operations, be sure to find reliable suppliers and strike supply deals. You can publicly advertise tenders so interested suppliers can make bids, or you can use your connections to find and handpick the best suppliers.

Hire Hotel Staff

There are businesses you can run as a one-man show. A hotel business isn't one of them.

You must hire a hotel manager, store managers, customer service managers, chefs, servers, waiters and waitresses, and several other hotel workers.

If you have no staffing experience, it can be difficult to get it right. The good news is you can always outsource the task to a hotel staffing agency, which will evaluate your facility and fill all the necessary positions.

Once the hotel manager is hired, the job will become easier. He will be responsible for working with the chefs to develop the menu, as well as setting prices for the meals, accommodation, and other services.

Host a Launch Ceremony

With the relevant licenses acquired, staff hired and everything set, you're ready to open for business.

However, don't just open your doors and hope customers will notice a new hotel and start streaming in. You have to invest in marketing and branding, and one of the best ways to do to that is to host a launching ceremony.

During the ceremony, offer free or highly discounted meals and drinks. This will give your target customers an opportunity to sample your offerings and rate your hotel. If they like the experience and the meals, you can count on them to come back - with their friends.

That's How to Start a Hotel

A good hotel can provide a solid return on investment. But to build a good hotel, you first need to know how to start a hotel, right?

We have given you all the information you need to establish a hotel business that will thrive, and now the ball is in your court.

As you do that, don't forget to keep tabs on the business section of our blog.


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