Becoming a Hotelier: How to Start a Hotel Business

Thinking about stepping into the world of hospitality? There’s never been a better time to start a hotel business. The global hotel market bounced back in 2023, growing by 7% thanks to a few key trends.

International travel took off as countries relaxed restrictions. The “revenge travel” phenomenon also played a big role, with people eager to splurge on long-overdue trips and leisure experiences. Plus, stricter rules on short-term rentals in major cities limit entire-home listings, funneling more guests back to traditional hotels, giving the industry an extra boost.

In this guide, we’ll break down everything you need to know to run a successful hotel business—from securing financing to crafting memorable guest experiences. Plus, we’ll show you how hotel management software and technology

can streamline your operations. Whether you’re a first-time entrepreneur or someone with a passion for hospitality, we’re here to help turn your dream of becoming a hotelier into a reality. Let’s unlock the doors to your hotel business together!

Key takeaways on how to run a hotel business

Starting and running a hotel business requires a blend of strategic planning, market insight, and the right tools to streamline operations. Here’s a quick recap of the most important steps:

• Create a Detailed Business Plan: Think of your business plan as your hotel’s roadmap. It’s essential for guiding your decisions and keeping you on track. Get detailed about your market research, financial forecasts, and operational strategies to steer your journey in the right direction.
• Design Your Concept: Your hotel concept is the heart and soul of your business. Whether you aim for cosy charm, upscale elegance, or a playful twist, ensure it’s evident in every detail. After all, guests are seeking a memorable experience that reflects your brand.
• Conduct Thorough Market Research: Staying informed about the competition is like keeping an eye on the neighbours. Discover what they do well and where there’s room for improvement. This insight can help you carve out your unique spot in the market.
• Use Essential Technology: In the hotel industry, tech isn’t just a luxury; it’s a must-have! Smart hotel management software streamlines everything from bookings to payments, making your life easier and your guests happier.
• Focus on Guest Satisfaction: Guest satisfaction is your ultimate goal. Think of your guests as your partners in success. Personalising their experience and addressing their needs quickly is how you build loyalty and get those glowing reviews.

What is a hotel business?

At its core, a hotel business is a service-oriented establishment that provides accommodations and amenities for travellers. It’s not just about offering a bed for the night; it’s about creating a welcoming environment where guests can feel at home.

Whether you’re thinking about opening a hotel or have already started, the diversity in the industry offers various types of accommodations to suit different preferences and budgets. From boutique hotels that focus on unique design and personalized service to resorts that provide a complete vacation experience and budget hotels that prioritize affordability, each type of hotel caters to a specific market.

How to start a small hotel business

Starting a small hotel business begins with a clear vision and a solid business plan. A well-crafted business plan serves as your roadmap, outlining your goals, strategies, and the steps you’ll take to achieve success.

Whether you’re wondering how to start your own hotel from scratch or thinking of buying an existing one, your approach should reflect the type of experience you want to deliver.

Here are some key components to consider:

Step 1: Create a solid business plan

Think of your business plan as your hotel’s blueprint. It doesn’t have to be super formal, but it should cover the basics: what you want to achieve, who your guests will be, and the type of property you want to run—whether it’s a cosy boutique hotel, a family-friendly resort, or a budget-friendly inn.

Key Components of a Hotel Business Plan:

• Market Research: Understand your local competition, target demographics, and industry trends. Thorough research will help you position your hotel uniquely in the market.
  
• Operational Strategy: Consider your staffing needs, operational workflows, and guest service protocols. Will you need a full-service staff, or will your hotel have a more self-service model?
• Financial Projections: Budgeting is crucial for long-term success. Include startup costs, expected revenue, operational expenses, and a timeline for reaching profitability.

Step 2. Identify your target market and niche

To create a hotel that stands out, it’s essential to know exactly who you’re catering to and what makes you unique. Identifying your target market and defining your niche will help you tailor your services and attract the right guests.

• Know your guests: Are they budget travellers seeking affordability, families looking for fun, or luxury seekers wanting pampering? Understanding their preferences will help you tailor your services and amenities to meet their specific needs.
• Find your niche: What sets you apart from other hotels? Maybe you focus on eco-friendly practices, offer unique local experiences, or provide luxury spa services.

By honing in on your niche, you’ll be able to create a compelling marketing strategy that resonates with your target audience and attracts the right guests to your property.

Design your hotel concept

When it comes to starting your hotel business, creating a distinctive hotel concept is vital. This is where your vision takes shape and reflects what makes your hotel unique. Here’s how to get started:

Define your aesthetic:

Consider the overall look and feel you want your hotel to convey. Will it be modern and minimalist, cosy and rustic, or luxurious and elegant? Your aesthetic should resonate with your target audience and set the tone for their experience.

Create an experience:

Think beyond just the physical space. What kind of experience do you want to offer your guests? This could involve themed rooms, unique amenities, or personalised services that align with their expectations and desires.

Focus on branding:

Your hotel’s design and experience should reflect your brand identity. Choose colours, logos, and design elements that represent your hotel’s personality and values. A cohesive brand image will not only attract guests but also foster loyalty.

Consider practicality:

While aesthetics are important, remember to design with functionality in mind. Ensure that the layout and amenities meet both guest needs and operational efficiency. This includes considering flow, safety, and accessibility.

Engage with the community:

Incorporating local culture and elements can enhance your hotel’s charm. This could mean featuring local artwork, offering regional cuisine, or creating partnerships with nearby businesses, helping your hotel feel like a true destination.

4. Conduct thorough market research

Market research is essential for any new business, and running a hotel is no exception. Understanding the industry dynamics and your target market will help you make informed decisions on pricing, marketing, and service offerings.

Market Research Checklist:

• Identify competitors: Research the local hotels in your area. What are they offering, and at what price points? Look for gaps in the market where your hotel could provide something different.
• Analyse demand trends: Use industry reports, online booking platforms, and travel agencies to assess demand trends. Are there specific seasons when occupancy rates peak? What’s the average price per night in your area?
• Understand guest preferences: Look into competitor reviews to determine what guests are looking for in terms of amenities, service quality, and overall experience.

Conducting thorough market research will better equip you to position your hotel competitively and meet guest expectations.

How to open a hotel business

Setting up your hotel is an exciting phase in your journey to becoming a hotelier. Let’s break down the key steps to ensure you get it right from the start!

1. Choosing the right property: Buy or Lease?

Deciding between buying or leasing a property is one of the first big choices you’ll face. Buying gives you long-term security and potential appreciation, but it comes with high upfront costs and maintenance responsibilities.

Leasing, on the other hand, may lower your initial investment and allow for more flexibility, but you’ll need to factor in lease terms and potential rent increases. Consider your budget, your long-term goals, and the property market in your chosen location to make the best decision for your business.

2. Plan your financial strategy

Whether you’re launching a new hotel or taking over an existing property, having a solid financial strategy is essential for success. While crunching numbers might not be the most thrilling task, it’s essential for building a stable foundation for your business.

If you’re wondering how to start a hotel with no money, consider exploring creative financing options, such as partnerships, grants, or crowdfunding. Building relationships with local businesses can also provide support without heavy financial investments.

Here’s a handy checklist to help you get started:

Startup Expenses

• Property Acquisition: Are you buying or leasing? Factor in all related costs.
• Business Registration: Don’t forget the necessary permits and licenses.
• Legal Fees: Setting up contracts and agreements can add up.
• Marketing Launch: How will you promote your new venture?
• Insurance: Protect your investment with the right coverage.
• Renovations: Budget for any upgrades or remodels needed.
• Utilities Setup: Initial costs for phone, internet, and electricity.
• Website Development: Create a professional online presence.
• Initial Inventory: Stock up on essentials for operations.
• Office Equipment: From computers to check-in kiosks, factor it in.
• Signage and Branding: Make your hotel visible and appealing.
  

Ongoing Expenses

• Lease or Mortgage Payments: Regular payments for your property.
• Salaries and Benefits: Keep your staff happy and motivated.
• Utilities: Monthly costs for electricity, water, and internet.
• Cleaning Services: Essential for maintaining a welcoming environment.
• Maintenance: Budget for repairs and upkeep.
• Marketing and Promotions: Keep attracting new guests.
• Technology Costs: Website upkeep and hotel management systems.

Revenue Projections

• Market Analysis: Research to set realistic revenue expectations.
• Room Availability: How many rooms can you offer?
• Average Room Rate: What will you charge per night?
• Expected Occupancy Rate: Estimate how often your rooms will be filled.
• Additional Revenue Streams: Consider food and beverage sales, events, or spa services.

Setting up your hotel

1. Crafting your marketing strategy

As you prepare for your hotel’s launch, it’s essential to develop a marketing strategy that extends beyond your business plan. During the pre-launch phase, focus on building brand awareness and generating excitement about your opening.

Some effective marketing goals and strategies in these early days might include:

• Collecting initial online reviews: Encourage early guests to share their experiences to kickstart your reputation.
• Collaborating with influencers: Partner with social media influencers or popular booking sites to widen your reach and attract attention.
• Utilising Google Hotel Ads: Advertise your hotel on Google to capture potential guests actively searching for accommodation.
• Engaging in social media marketing: Create engaging content and connect with your audience on platforms like Instagram and Facebook to establish your brand identity.

Setting up your hotel involves many moving parts, but don’t worry—we’ll guide you through the process every step of the way!

2. Launching your hotel

Your grand opening is an excellent opportunity to create excitement among guests, stakeholders, and the local community. Make sure the event reflects your hotel’s brand and values.

Will it be an elegant, high-end celebration for a luxury hotel? Or perhaps a cosy, intimate gathering that showcases your eco-friendly approach? Whatever the style, don’t miss the chance to build some buzz. Reach out to local media and encourage your attendees to share the event on social media to spread the word.

3. Attracting guests

With a well-executed marketing plan and a successful launch, your doors should already be welcoming guests. But how do you keep that momentum going?

A few key strategies include:

• Setting the right pricing to match demand
• Streamlining front desk operations
• Enhancing your online travel agency and review site rankings
• Optimising your hotel SEO to capture more bookings
• Expanding international guest reach
• Sending out targeted, engaging email campaigns

How to operate a hotel business successfully

Running a hotel can be an exciting journey, but let’s face it—new hoteliers can feel overwhelmed with the countless decisions to make and processes to manage. One area that can significantly impact your success is technology.

Getting this right from the start can save you time, money, and a lot of headaches down the road. If you want to run your hotel smoothly and offer an exceptional guest experience, investing in the right tech tools is essential.

Your hotel’s website: The first impression that counts

Think of your hotel’s website as your digital cover image or that all-important first date—it sets the tone for everything that follows.

Just like you wouldn’t show up to a first date in sweatpants, your website needs to look sharp and inviting to make a great impression on potential guests. After all, in a world where everyone is searching for their next getaway online, you want to stand out and say, “Pick me!”

1. First point of contact: Your website is often the first place potential guests will learn about your hotel. Make sure it reflects your brand’s personality and values, providing a welcoming and informative experience.

2. Showcase your unique offerings: Highlight what sets your hotel apart—whether it’s unique amenities, special packages, or local experiences. A captivating website can entice visitors to choose you over competitors.

Booking engine: Attract bookers

Think of your booking engine as the front door to your hotel. It’s often the first impression potential guests have, and you want to make it count. A reliable and user-friendly booking engine is essential for attracting guests and ensuring they choose your hotel over competitors.

1. First impressions matter: Your booking engine should be simple to use. A simple and easy-to-use booking process keeps guests engaged and encourages them to book directly with you instead of looking elsewhere. Remember, the easier it is for them, the more likely they are to book!
2. Increase direct bookings: By providing a straightforward and efficient way for guests to make reservations, you’ll encourage more direct bookings, saving you from hefty commission fees associated with third-party platforms.
3. Flexibility and control: A dedicated booking engine gives you more control over your pricing and availability, allowing you to easily manage promotions and special offers that appeal directly to your target audience.

Property management systems (PMS): Your hotel’s backbone

Think of a Property Management System (PMS) as the central nervous system of your hotel. It keeps everything connected and running smoothly, allowing you to focus on what matters most—your guests.

Centralised operations: A good PMS streamlines everything from reservations and check-ins to guest communication. This means fewer mistakes and a more organised operation. Trust us, you don’t want to be juggling multiple spreadsheets or dealing with double bookings!

Channel manager: Maximising online visibility

When you open a new hotel, you want everyone to know about it. Just like you might join a few dating apps to maximise your chances of finding the right match, you’ll want your hotel listed on multiple online travel agencies (OTAs) to attract a wide range of guests. This is where a channel manager comes in—it’s your secret weapon for visibility.

1. Preventing double bookings: A channel manager allows you to manage all your listings from one central platform. This means you can easily update your availability and promotions across all booking channels, avoiding the awkwardness of double bookings. It also ensures that your rooms are only sold once, giving you peace of mind.
2. Dynamic rate management: Just like adjusting your profile to attract the right dates, a channel manager allows you to tweak your rates based on demand. This flexibility helps you maximise revenue opportunities.
3. Streamlined operations: With a channel manager doing the heavy lifting, you can save time and focus on what really matters—creating memorable experiences for your guests. No more juggling multiple platforms; everything is streamlined and easy to manage.

Your Journey as a Hotelier Starts Now

Congratulations, soon-to-be Hotelier! You’re about to dive into the exciting world of hospitality—think of it like buying your first car—thrilling and with endless possibilities ahead.

The secret? It’s all in the journey, ensuring every guest’s experience is smooth sailing.

As you hit the road, don’t forget to pack the essentials. RoomRaccoon is here to help you navigate the twists and turns of your new business, ensuring you stay ahead in this competitive market.

So buckle up, and let’s get this journey started!