For many, starting your own hotel is a dream come true – perhaps the realisation of a long-held ambition and the chance to escape a humdrum existence. Others, while working at someone else’s establishment, may have vowed to have their own hotel one day.
It’s a superb life style choice and one that, done well, can provide job satisfaction and financial security. There are, of course, many things to consider before embarking on your new life. In our many years of providing finance to the sector, we’ve seen it all and thought we’d share some of our insight. Here are a few basic yet important tips for anyone who is thinking about owning a hotel for the first time.
1. Have experience in the industry
Just because you’ve stayed in hotels doesn’t mean you can run them; to give your venture the best chance of success, it’s absolutely crucial that you have a thorough understanding of working in a hotel. This means gaining experience of every aspect – there shouldn’t be a single job that you wouldn’t do yourself, in the event that one of your employees is ill: wash up in the kitchen, clean the rooms, serve late night revellers at the bar and work reception overnight. This will help you understand and comply with the various legalities and responsibilities that come with running a hotel – fire regulations, health and safety, alcohol licensing, food hygiene, employment law, marketing, appropriate applications to the council, etc. (the VisitEngland Pink Book provides a lot of essential information on this).
Clearly relevant experience is important from an operational point of view, but also as it enables you to determine whether the hotel business really is for you. Having that knowledge will certainly go in your favour when applying for a hotel mortgage.
2. Like people!
It may sound like a stupid thing to suggest, but a huge part of being an hotelier is dealing with people – from the all-important guests to vital employees, from suppliers to influential local contacts. Hence liking people is a must. Hoteliers need to be outgoing, patient, resilient and able to provide a service with a smile, no matter what time of the day or night. If the thought of fetching a second pillow for that demanding guest in room seven at 03:28am on a Tuesday morning fills you with frustration, then perhaps this isn’t the vocation for you. No one wants a Basil Fawlty hotel manager.
3. Have the right type of hotel
Research into the hospitality industry is a given when thinking about opening a hotel. However, researching what type of hotel to open is equally important. Small, but well-kept two-stars can be just as successful as expensive city hotels, if they’re right for the area. Some of the questions you might think about include:
– What kind of hotel would offer you the best return?
– What could you and your team physically manage?
– Where does your experience lie?
– Who are your guests likely to be and will you be able to attract them?
– What is your unique selling point?
– Is anyone else doing it and if so, how are they performing?
Another thing to remember is to think about what you don’t want or the area doesn’t need – learning from others’ mistakes can help push you in the right direction.
4. Choose the right location and know the area
One of the most crucial factors that can contribute to the success of a hotel is its location. You need to make sure you are in the right town, let alone on the right road. Research, of course, is vital. You should examine the local market, suss out the competition, and determine what might attract your target market to the area. In short, do your homework.
Bear in mind that your search could take a long time and you’ll need to have patience. It may be a while before a suitable property goes on the market in your chosen location, but it’s better to wait than rush into something just for the sake of it.
Once you have settled on an area, you need to ensure that you know it upside down and back to front. You should become a font of knowledge for all things local and know the nearest vegan restaurant, the late night chemists, the most exciting children’s park, the best value taxi firm, etc. You also need to know the stops on the train lines, which night club stays open past three, when high tide is, etc. – because you will be asked. It helps if you love the surroundings yourself and can convey your passion to guests.
5. Get help with your hotel finance options
Financing your new endeavour is a huge consideration, as is funding it once the hotel has opened. For a hotel finance lender to take you seriously, you must write a solid business plan which details a cost breakdown and how you think the enterprise will work over several years.
Appealing to the bank is a daunting task when you go it alone; there has been an increasing demand for hotel mortgages in recent years, meaning that you need to demonstrate more than ever that your business won’t be a risk. A deposit of typically around 35 per cent or better, a good credit history and proof of relevant experience are a few elements which can boost your case. Better still is to speak with an experienced hotel finance broker that can give you advice up front and then source the best loans and or mortgages deals on your behalf.
6. Be sure it’s what you want
For many people, the thought of a complete life change is one of the biggest attractions of becoming a hotelier. However, it’s vital to give this aspect due consideration, as this exciting lifestyle can have quite an impact on your personal life. In his blog for bizjournals.com, Curtis Kroeker says that it’s important to ask this one question: “Will owning this business lead to a lifestyle that makes me happy?” Having a realistic ‘grasp on how it will affect your life’ is crucial.
For those who thrive on hard work, being busy and not having a 9-5 routine, it could be the perfect occupation. So too could it be ideal for those who like to share their space and are not precious about their privacy. What we’re saying is, do your research first and make sure you understand the enormity of what you’re taking on.
Yes, there are many considerations to make, but bearing the above in mind could really help you launch a hotel business which is profitable, enduring and most of all, enjoyable.
If you would like to find out how we could help you realise your dreams of owning a hotel, please get in touch with one of our friendly experts on 0845 272 400 or send us a message.