How to Start a Hotel as a Business

Starting a hotel as a business can be a challenging but profitable undertaking. Whether you’re envisioning no-nonsense accommodation for business travelers, high-end boutiques or a comfortable bed-and-breakfast, you’ll want to spend ample time researching and planning before taking the plunge because there’s plenty of competition. In 2008, the Bureau of Labor Statistics reported 64,300 establishments providing overnight accommodation in the U.S.

Step 1

The options for starting a hotel can be overwhelming, so decide early on what type of hotel accommodation you’ll offer: upscale, affordable or budget. Decide whether the hotel business will provide rooms-only service, or whether additional amenities including a restaurant, conference hall, swimming pool, beauty spa or fitness center will be included. This is also the time to make decisions about location. Some states, including New York, Florida, Hawaii and California, are home to the country’s top tourist attractions, according to The Traveler’s Zone, but hospitality competition may be stiff.

Step 2

Write a business plan. Because many hotel businesses will require initial outside financial backing, it might be a good idea to work with a professional consultant when composing your business plan. The Small Business Administration recommends that business plans include a summary of the company’s offerings, market analysis, operating procedures outline, long-term goals statements and an appeal for financial investment. If you’ve visited competitor hotels and can summarize how your services will coincide or differ with their strategies for room amenities, restaurant services or niche offerings, include this information here.

Step 3

Apply for permits and licenses. To start a hotel as a business, you’ll need to apply for a business license and tax identification number. Many cities have additional permitting requirements, including a permit to operate, manager’s license for the person working behind the front desk and licenses for selling food and alcohol. Hotels offering beauty spa services or a swimming pool will need to acquire additional licenses for those amenities. Liability insurance is a must.

Step 4

Remodel and refurbish. After securing your hotel location, you’ll likely want to remodel and refurbish the building to distinguish the business from its predecessor. Make sure that electricity, plumbing and cable function seamlessly. Consider hiring an interior design firm to assist in color choices for carpet, walls, bedding and lobby areas.

Step 5

Advertise and market. Register with travel agencies, travel websites, national reservation systems and tour leaders. Invite travel professionals for a courtesy stay at the hotel business so that they’re familiar with your offerings. Invest in a professional, attractive website with photos, video tours and technology for booking rooms online.

Things Needed

Tips

It’s possible to get started in the hotel business by buying into a well-known franchise.This can be less expensive than starting from scratch, but will still require yearly franchise fees.
The hotel industry attracts a high number of immigrant workers, according to the Bureau of Labor Statistics. When hiring staff, ensure that all employees hold appropriate work permits.

Warning

Hotel owners may not see any return on their significant financial investment for several years or during poor economies, according to hotel industry writer Robert Mandelbaum in a Hotel Online article. Have promotional plans in place to generate foot traffic early on, and set money aside as a safety net during the start-up years.

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About the Author

Bettina Drew is a California editor and writer specializing in news, travel, community features and the arts. She's written for the "Los Angeles Times," the Scripps Howard News Service in Washington, D.C. and a number of literary publications since 2000. Drew holds a Bachelor of Arts degree from the University of California, San Diego.

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Thursday, June 27, 2013