“How to start a hotel business?” is not a question you come across every day, but when it does come up, it gives your mind a run for its money. After all, while most of us are no strangers to staying at hotels, how many of us have ever really thought of how to start a hotel business?
When we think of hotels, sprawling landscapes filled with tall buildings and brand names like Hilton and Marriott come to mind. But in truth, there are millions of hotels across the planet at this very moment, not just the few big ones we can name on our fingers, from 1-star hotels that offer incredibly affordable shelter to 5-star skyscrapers that provide a unique living experience.
As reported by the American Hotel and Lodging Association, the majority (61%) of hotels in the US currently are recognized as small businesses. But how exactly does one go about starting a hotel small business? The idea feels absurd at first glance, given the mere idea of an establishment like a hotel sounds like it would take a corporation to run. But no, hotels are a somewhat accessible industry to get into and can prove to be a very lucrative endeavor in the right hands.
However, the caveat does stand that the financial rewards will come at the cost of much time and effort. Rome was not built in a day, and a hotel business certainly can’t be either. This venture is not for the faint of heart, so before we begin illuminating how to start a hotel business in 2024, be advised that there is no guaranteed success, and competition will be incredibly tough. However, should you overcome the odds and manage to establish a foothold in the industry, the only way from there is up. With that said, let’s jump right into EA’s guide on how to start a hotel business in 2024, shall we?
Table of Contents
A Step-by-Step Guide to Starting a Hotel Business in 2024
Market Research and Pre-Planning
Before you rush ahead and start renovating a property for a hotel business on a whim, we advise you to stop and think for a moment. Just because you open a hotel does not mean it will necessarily have visitors. The hospitality industry, particularly in the lodgings sector, is incredibly competitive. You cannot just open a hotel anywhere and expect it to succeed just because you invested a lot into it.
This is why the first step to start a hotel business is research and pre-planning. Before you even think about starting the business, you need to investigate the hotel landscape in your area. What is the most popular hotel nearby, what services do they offer, how do they decorate, what makes them different from the others, and many more such questions are key to formulating a plan.
The best way that we think you should go about planning and strategizing is to picture your ideal hotel experience or the best hotel experience you’ve had. Now think about what could have made it better. What would you like from a hotel visit that you have never had?
In 2024, there is no shortage of hotels, and everyone is in a race to be seen by the crowd. Standing out is the most important aspect these days. So, you need to see what the hotels in your vicinity are lacking and come up with a novel concept. For example, imagine a hotel themed after video games. The architecture and furniture are all styled as classic retro video designs. Such a uniquely styled design will immediately catch people’s eyes, and if the experience provided lives up to the aesthetic themes, the business should be a hit.
And that’s just one generic concept we have presented off the cuff. There are an infinite number of ways you can set your hotel apart, such as promoting values like eco-friendliness and sustainability or offering incredibly affordable yet comfortable lodgings.
Whatever road you choose, the point is that you need to find a niche for your hotel business, and once you have figured out how you are going to set yourself apart and what your vision is for a hotel, it’s time to start making that dream a reality.
Selecting a Location and Securing Permission
Once you have put down your finalized plans for your hotel, and how you plan to compete in the saturated market, it’s time to get busy. The next item on the list is securing the right location. You cannot just open a hotel anywhere.
For one, there are many regulatory bodies and authorities you need to secure permits from. And for another, for a hotel to succeed, location selection is paramount. You do not want your hotel to be near many other hotels. You do not want it too far from others either. It needs to be near places that visitors might frequent, such as tourist attractions. The location must also be near supplier hubs, or be easily accessible for suppliers. All of these conditions need to be met before you invest in the location. This is a step where you will be on your own. There is no one-size-fits-all solution here, and you will need to do a lot of surveying and inquiring to find the perfect spot for your future hotel. Also, please ensure that the location is compliant with regulatory requirements, so you do not end up forced to stop later because you forgot to ask if it was okay to build a hotel there.
Once you have secured the right spot, it’s time to contact a legal professional and start securing all the necessary permits required by your local authorities before you start building or renovating.
Securing Funding
Of course, all of that planning will go nowhere if you do not have the required funding. And given the volatile housing market these days, you will be needing every last penny you can gather to fund this venture.
Personal capital will of course be a part of the investment, but securing external funding is pretty much a requirement. Bank loans will end up accounting for a good chunk of your starting capital, and instead of trying to avoid or minimize it, it’s better to embrace the reality and get the ball rolling. It would not be wise to dawdle and wait for more capital before investing, as the location could end up jumping up in price or get sold to another.
Whether you get external investors on board to fund the venture, or deal with banks, be decisive and just get things started. Have faith in your decision and stick to the project like glue. Once the hotel is up and running and revenue starts coming in, those debts will be paid off in due time. Keep your eyes on the prize and everything should be fine!
Assemble the Core Team
The next step is to assemble the core team!
A hotel is a lot of work to start, and even more to keep going. This is one of the reasons why many people never even consider the question of how to start a hotel business, given its seemingly impossible barrier to entry. But that is neither here nor there, this step is all about what to do once you have your location finalized and are ready to start the business.
A hotel team is a hard one to build, particularly because of the vast number of diverse skill sets you will end up needing. A hotel accounting professional would be first on the list, given the financial gravity of starting a hotel. Managing all that money will take a dedicated professional to make sure things stay on track. After that, you will need to hire a legal consultant to help with the paperwork and contractors. An interior designer would be a very welcome addition, to help design the hotel of your dreams. Beyond that will be a managerial team of the appropriate size according to your needs. That’s the base staff requirements you will need to get the hotel up and running.
Of course, it’s easier said than done when it comes to actually building the team. These professionals all come at a quite steep cost, and after loosening your purse strings to pay for the hotel itself, might seem like a luxury rather than a necessity. Luckily, there are other ways to fill these professional gaps without needing to go broke. For example, instead of hiring an in-house accountant, why not leverage outsourced hotel accounting services? Remote professionals are all the rage these days and have proven to be equal if not more efficient than in-house staff.
By outsourcing where possible, the costs of a core team can be brought down significantly without sacrificing the quality of service.
Once the hotel is good to go, though, you will need to start hiring for service roles. A chef if the hotel has its own restaurant, concierges, housekeeping, and the like.
Leverage Technology and Social Media
Hotel management software has come an incredibly long way, and is an absolute must these days if you plan to compete in the sector. A small investment of a few hundred dollars a month just to have a complete ERP system is a very small price to pay for the returns.
On top of management software, there’s also the fact that social media marketing is king. Building a social media presence is paramount for success. Advertise yourself, and come up with a catchy name and slogan for your hotel. Brand yourself. Do not settle for just being a humble small-town hotel. Aim to make this one small hotel into a resort or even a chain. Build up your brand and invest in SEO marketing. Commission a custom website and advertise yourself on hotel-finding websites like Expedia. If you do not get the word out yourself that you are in the market and have something to offer, nobody will.
Relegate a business phone just for social media. Register brand accounts on LinkedIn, Instagram, Facebook, X, and even TikTok. Try to get influencers to give your hotel a shot and leave a review. In 2024, this is what makes or breaks a hotel business. The question now is less of how to start a hotel business and more of how to keep a hotel business relevant.
Monitor and Adapt
Once things are up and running and you can call yourself a proud hotel owner, it’s time to optimize. Things are rarely ever static in the hospitality industry, and any external happenings, such as geo-political developments like the pandemic can happen at any time. So, instead of resting on your laurels, you need to keep your eyes peeled for changing trends. Adapting and overcoming is the name of the game and those who fall behind risk losing it all.
Stay informed and constantly try to better what you are already doing. There is always room for improvement, even without an external crisis. Enlist the aid of business process optimization services, for example, a good way to regularly improve your operations.
Conclusion
There is of course much that was left unsaid in this guide, and frankly is not something that can be taught through a guide. Entrepreneurs will have to answer a lot of questions themselves while trying to figure out how to start a hotel business. Things like the logistics of actually having a hotel built, for example, are pointless to discuss, given the varying range of laws and regulations in every state and locale.
So, for our part, we hope we managed to provide a succinct and informative answer to the query of how to start a hotel business in 2024. This is not an exhaustive guide, of course, and we encourage readers to try and read and research as much as they can before diving headfirst into the tumultuous hospitality landscape. Best of Luck!