Opening a hotel is not for the faint of heart.
Successfully opening a hotel take much more than money. So, what can steps can you take to help ensure your opening is grand? It’s all about planning, researching and creating a strategy in order to have the best chance at success.
We offer 6 things to do before you invest time and money
1. Find the best location.
By location, we don’t just mean a street address or part of town. Start by scouting out the best city or town that will allow you to make the most money. Research the best available rates for the type of hotel you want to open in the cities you are considering. If the rate is too low for you to reasonably make money, then that city is probably not the best choice. Why does room price matter? A hotel like Holiday Inn Express offers pretty much the same room, furnishing, food choices, and amenities whether it’s in New York or North Dakota. If you’re able to charge a higher rate for a room in City A versus City B, that can make a big difference to your bottom line.
2. Decide what amenities and level of service you want to offer.
This really comes down to what type of hotel you want to open. Keep in mind that each additional amenity you add will increase the complexity of the construction. It will also be that much harder to manage once the hotel is open. For example…what if you plan to include a full service restaurant? “You’re launching not one venture (a hotel) but two (with that restaurant), maybe three (if there’s a lounge), and it acquires that many more degrees of complexity. Meetings and banquets? Make it four. A spa? One more. A resort location? The possibilities are endless,” according to Forbes.
Whatever you decide to offer, keep in mind that the hotel needs to make money, for you and your investors. You need to be able to make up for the added operational costs, which means high occupancy rates and/or higher prices.
3. Do your homework.
Now that you’ve chosen a location and type of hotel, it’s time to do some careful market research. Competitive analysis is one of the most important things you can do as a business owner. You have to know what your competition is doing.
Ask the following questions:
What are similar properties in the area doing?
What kind of amenities and services do they offer?
What do they do well?
What are their strengths and weaknesses?
Once you have that information, determine how you can stand out. What can you offer in order to be competitive and successful?
4. Identify your target audience.
Another key to success in this business (or any business) is figuring out who your target market is. What type of customers (guests) do you want to attract? Urban professionals or families? Tourists or business travelers? Those looking for luxury or those who want to get back to nature? Come up with a profile of your ideal guest, including age, income level, marital status, gender, occupation, geographic region, lifestyle, personality, likes and dislikes, the type of entertainment they enjoy, etc. Get as detailed as possible. Once you have determined your target audience, channel your marketing efforts toward them.
5. Know what are you willing to spend.
You can’t spend the money – or recruit investors to help fund your project – without a plan for how you will get a return on investment. Determine now how much you can spend to start, and then on a monthly basis. You want to keep track of where money is going and how fast. This will also give you an idea of how long it will take to earn your money back and start making a profit.
6. Create a management plan.
The success of your hotel will ultimately come down to how well it is managed. You can build a beautiful property with amenities galore, but if the place isn’t run correctly, none of that will matter. Decide now how your hotel will be run. What will the management structure be like? How will the business aspects be run? Who will be in charge of each area? How will staff be assigned and who will oversee them? These are all questions you need to answer.
These 6 suggestions are just the tip of the iceberg when it comes to opening a hotel. Beachwood Custom is expert in providing beautiful custom furniture the hospitality industry, and we’ve been a part of countless hotel openings. Contact us to see how we can help you turn your next hotel opening into a great success.