The first question that came to my mind was Why to start a Hotel Business and then How to start Hotel business. Now here’s a reason why, Hotel industry generated around $150 plus billion dollars last year in the United States only, so just think about other tourist places around the world. There are around 50 billion employees working in the hotel industry in the USA. Above all growth rate is around 5%, what you need more with booming economies around the world, the middle class is coming out for vacations as they have more money to spend now.
Now here are few important points that will be useful for someone planning to start a hotel. We will try to explain industries fundamentals, along will try to explain how revenue and profits are generated and How to start Hotel business:
1.Key financial metrics: Key financial metrics and costs for Hotel business are Profit, Purchases, Wages, Rent, Utilities, Miscellaneous expenses. Now Profit is important for all businesses, in this particular industry average profit is around 16%, which is pretty good. But to maintain this kind of profit consistently, and to do that we need to pay attention to the other factors mentioned above.
If we talk about purchases it mainly includes room supplies and meals served in particular hotel. One must do proper research to source best quality material with minimum cost as your cost will directly affect your profits.
In the hotel business, people follow three strategies for employing labor and management staff. A 7th Edition for Hotel, Restaurant, and Travel Law is also available to know easy ways to start Hotel Business. A common way is to employ directly on regular basis, second way out is to hire on a part-time basis, but as constant recruitment is required in the latter case, now the industry has come up with the third solution of hiring from the third party or outsourcing.
Rent and Utilities are the monthly expense which we need to manage properly and try to save cost in every possible way. For rent, we may negotiate with the landlord to increase rent at the minimum rate and for utilities, we should try to avoid wastage.
2. Deciding Location for your Hotel: Location plays an important role in the success of hotel business. Starting new hotel at a place full of competitors means lesser chances of being successful, on the other hand opening a hotel at a place where there is huge demand expected in future means a good option.
Your business plan should be simple and clear about the location so that you may initiate required licenses and permits from the selected areas authorities.
Similarly, your location will also affect your plan for capital as the price of land and labor varies according to the area you select for your business.
Your price strategy will also be affected by the area you choose for your business, as you can’t offer high price services in an area expecting lower spending clients and similarly you can’t offer cheap substandard services to high profile clients. You can also know that How to Buy and Run Your Own Hotel.
3. Your Marketing Strategy:
Your marketing strategy includes both online and offline marketing strategies. As more and more customers are searching online for hotels, so you need to have good e-commerce strategy in place for your hotel. Good online strategy means your website should have good visibility, should focus on sales, and most important part is offering online booking will change the whole scenario in your favor.
For offline marketing strategies, you may hire a full time marketing executives for bringing in new clients form corporates and other tourist related industry. Advertising on local news channels and even at the places from where you expect your clients will be helpful.
You need to invest in strategic Marketing plan focusing on long-term strategies for long-term success.
You need to structure smart pricing strategy to increase the occupancy rate of your hotel. With good marketing research and main pricing factors like staffing costs, room categories, time and length of stay, reducing maintenance cost and above all studying your competitor’s pricing, you can definitely take your hotel business on the top.
4. Quality Management : Another important point that needs consideration is Quality Management. If you are offering good quality services and are able to maintain them consistently there are good chances of your surviving this highly competitive world. Pay attention to the quality of service you are giving to your customers and most important is to pay attention to employee satisfaction because if your employees are satisfied they will be able to give their best service to the customers.
Finally, let’s summarise from above points that How to start Hotel business, right from the first step of developing hotel business plan to finally delivering best services via happy staff, needs hospitality mindset, after all in hospitality business end of the day we need happy well-served customers.