How to run a motel and small hotel business

Owning a small hotel is the dream of many people who like to communicate and want to have their own business. However, you can’t just open the door and expect success to come naturally. This job requires you to research, manage and plan your finances carefully to achieve high efficiency in business. Keep these things in mind when planning to open your own hotel.

Table of Contents

Market research

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Decide where to open the hotel. Before worrying about finding the exact location, you will have to think bigger and decide which city or town to open your hotel in. At least you have to consider the tourism industry there. Since this isn’t a hotel chain but just a motel and small hotel, you’ll probably cater to more vacationers and visitors than business travelers. As such, you need to choose a place that many people want to visit. Search travel websites or books to find a few tourist attractions, then start looking for a good place to open a hotel. ^{[1] X Research Source}

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Decide whether to buy an existing hotel or build a new one. This is the first decision you need to make once you’ve chosen a city. You can find hotels for sale or completely new construction. These two options both have advantages and disadvantages that you need to consider carefully before deciding. ^{[2] X Research Source}

Buying an existing hotel is usually cheaper than building a new one, unless major repairs are required. You can also keep some employees, making future recruitment easier. However, if the hotel you intend to buy has a bad reputation, your profits will suffer. You would have a hard time advertising that this hotel is now run by new management.
Building a new hotel is usually more expensive. In return, you are built to your liking, which means you can design to your particular taste or to the needs of the market. Remember that if you build a new hotel, you will have to actively advertise to attract guests. You’ll also need to check to make sure it’s a planned place for hotels and motels.

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Survey other hotels, motels and inns in the area. You need to have a clear understanding of the competition you will face and how to create your own market. There are a few things you need to look for when surveying potential competitors. This will give you ideas on how to make your hotel stand out. ^{[3] X Research Sources}^{[4] X Research Sources}

Find out prices in other hotels. Survey hotels in the area and find out their room rates. However, you need to remember that price is not everything – if a hotel has cheap room rates but customer feedback is so bad then you should not try to lower prices to compete with them.
Read customer reviews online. Thereby, you can know the compliments or complaints of customers who have used the services of other hotels. So you can know what customers need to be able to meet this market.
Find out about the extra services of the hotels in the area. Do they have a restaurant? Pool? Gym? Serve breakfast?
Book a room at hotels around the area to really experience their service. A night’s stay in other hotels will give you a better look at your competitors and brainstorm ideas for your hotel.

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Understand your primary market. This will help you provide services to your target customers. Hostels and small hotels often attract tourists, and they only stay for a few nights. If your hotel is located in the countryside or a small town, you will probably find many people looking for some time away from the hustle and bustle of the big cities. If so, you should decorate your hotel with things that depict simple and peaceful life in small towns. ^{[5] X Research Sources}

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Decide what extra services you offer with your hotel room. Customers are often looking for space and comfort, so you should provide services that make them feel comfortable and private. Visitors to small hotels often want to relax, so you can create a secluded place in the outdoors for guests to rest. Small hotels often do not have services like restaurants or gyms, but you can still open these services. However, you need to remember that each additional service adds costs, including both construction and maintenance costs. You should consider your budget carefully to avoid losing money on these investments. ^{[6] X Research Sources}^{[7] X Research Sources}

Hotel financial management

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Hire an accountant. Even if you open a hotel because it is your dream, you still have to remember that it is a financial investment. Unless the hotel is too small, or you have specialized training in accounting, you usually need an accountant to help manage the finances. All hotels, no matter how small, have expenses to consider such as staff salaries, utilities, space rent, equipment costs, and taxes. An accountant will help you keep track of the complex calculations of hotel financial management and secure your financial future. The US Small Business Administration recommends the following steps to find an accountant. ^{[8] X Trusted Source US Small Business Administration Go to Source}

A referral is often the best way to find a trusted accountant. You can ask some local small business owners who their accountant is and how satisfied they are with their work. You might also notice networking events for small business owners organized by your local chamber of commerce, where you can connect with potential accountants.
Schedule appointments with potential accountants. Most accountants accept a free meeting with a potential client to introduce themselves. Once you’ve gathered a list of candidates, make an appointment to discuss their experience and qualifications and determine if they’re a good fit for your business.
Find out if they have experience working in the hospitality industry. Hospitality is a special business that requires specific knowledge. It would be ideal if your candidate has worked in a hotel, preferably a private hotel. This will ensure that the person is experienced in the situations you may find yourself in.
Determine the credibility of the candidate. In addition to the candidate’s experience, you also need an employee who can work for the long term. If that person is late, doesn’t call back, or is sloppy, even with his experience, he’s not a good partner for you. Remember that you are trying to build a good relationship with an associate who can help you grow your business.

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Make a business plan. When opening a hotel, you usually need to get capital from a bank or raise private investors. Both of these places want to see your business plan to decide if it’s worth the investment. In addition, a good business plan also helps you in aligning your goals and getting an overall picture of how to make your business successful. A hotel business plan should include at least the following points. ^{[9] X Research Source}

Services provided by the hotel. You need to highlight the points that show how those services will help your hotel stand out from other hotels. Are your room rates better? Do you offer more personalized services? Investors will want to know what makes your hotel unique.
Potential customers. Explain your audience, and why they choose your hotel over other hotels.
Future earning potential. Investors will want to see your hotel profitable. With the help of an accountant, you need to calculate what your annual income could be. You also need to estimate how long it will take before it starts to turn a profit and the position of the hotel in the following years.
Comprehensive cost breakdown. With the purchase or lease of space, repair and furnishing, it will cost you a lot to start a hotel business. You need to be as precise as possible about your total cost estimate when applying for a loan. You must also include a detailed estimate of daily operating expenses. It can take months for your hotel to start attracting enough guests to cover the cost, so you need money to stay afloat during that time.

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Find start-up capital. Once you have a business plan, present it to potential investors. With a good plan, you will be able to demonstrate that your hotel is profitable, which in turn will convince investors to contribute the money you need. You have two options for raising capital, usually a combination of the two.

Bank. You can get a bank loan with a term of a few months or a few years, depending on the type of loan. This can help you cover your hotel opening and operating expenses for the first few months.
Individual investors. They could be friends, family or other business owners interested in investing. Make sure to make it clear to investors that they are either lending you money and then paying it back with interest, or that they are actually investing in your business. You can make an agreement stating the terms and have it notarized to prevent problems later on.

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Set the price. When you open a hotel, the price of the service will determine the profit level. Room rates will vary depending on regional competition, hotel operating costs, tourist season, and a myriad of other factors. The general rule is to set prices low enough to attract customers and high enough to be profitable. There are a few things you need to keep in mind when deciding on a price. ^{[10] X Research Source}

Know your expenses. You should accurately calculate the daily operating costs of the hotel. Then multiply that to see how much it costs per month. Your income should at least cover the hotel’s monthly operating expenses, otherwise you won’t be able to sustain the business.
Find out what makes customers willing to shell out. This requires testing time. When you’re starting out with a hotel, the only guide you’ll probably rely on is operating costs. After a few months, if you notice the rooms are constantly full, you can increase the room rate. If you see few guests, lower the room rate. You can also survey your guests after their stay and ask them if they think such a room rate is reasonable.
Adjust prices depending on the season. During the winter season, you can raise the price higher because there are many people on vacation. In the less crowded season, you should lower the price to attract customers who go on off-season vacations.

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Cut costs if needed. Even with good financial management, your business will slow down at times. You should regularly analyze your expenses and decide which are necessary and which do not affect the business. When your business slows down, cut unnecessary expenses. For example, during a quiet week and only a few rooms are booked, you probably don’t need to hire someone to stand at the front desk all day. You can do this task yourself and save the salary paid to the receptionist. ^{[11] X Research Source}^{[12] X Research Source}

Manage hotel staff

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Hire the necessary staff. The staff is more or less depending on the size of the hotel. With a small motel, you may only need a few maids. Hotels with many rooms, even small ones, often require a staff to run smoothly. When recruiting employees, you should consider hiring at least the following positions. ^{[13] X Research Source}^{[14] X Research Source}

Housekeeping staff. Cleanliness should be a top priority in the hotel business. Dirty hotels will get a bad reputation very quickly and guests will not come again. Depending on the size of the hotel, you may only need one person or a cleaning crew. One housekeeping staff may be responsible for about 10 -15 rooms per day; Remember this when hiring people.
Receptionist. Even small hotels need people standing at the front desk. You can do this yourself some hours of the day, but you still need a 24-hour front desk team.
Maintenance workers. One or two maintenance workers is enough for a small hotel. They should be versatile workers who can take on many tasks: plumbing, electrical, painting, minor repairs, etc. So you can let the maintenance staff do the little things, and if they do If you can’t do something, you can hire a professional service.
Chef. If you plan to provide hotel catering, you need to hire at least one person to cook. Small hotels may only offer breakfast, so you may only need one person to cook for a few hours a day.

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Get to know every candidate. Thoroughly interview all potential employees and talk to their referrals as well. You should also do a background check on each person. Don’t forget that your staff will be able to enter the room and access the tenant’s property. You’ll have to make sure all of your employees are trustworthy before giving them this permission. ^{[15] X Research Source}

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Distribute the manual to all employees. You should set specific rules that every employee should follow. That way, you can ensure quality service to your customers. Ask all employees to read the manual as part of the training process. The manual should state exactly what you expect from each employee. ^{[16] X Research Source}

Emphasize that all customers should be treated with courtesy. Guests will not come if the service is not good, and your business will fail.
You should also state what activities are not allowed in the hotel, and specify under what circumstances the contract may be terminated.

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Schedule regular staff meetings. Weekly or monthly meetings will help you maintain good relations with employees. You should use these meetings to ask employees about anything that could be improved, and to encourage them to offer suggestions for doing so. You should also remember to praise employees when they do well so that they feel part of the team. Pay close attention to the suggestions of staff – even if you are the owner – because they may have experience in the hotel industry that you do not, and they have the ability to suggest change. ^{[17] X Research Source}

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Willing to be with the staff. Tell the staff that they can find you anytime with any problems or questions and that you will listen to them. You should be present at the hotel regularly and take an active role in the management. This will help the staff become more comfortable with you and open up. If you’re never around, you’ll seem distant and they won’t be comfortable talking to you directly. ^{[18] X Research Sources}

Hotel marketing

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Design a website. If not posted on the internet, your hotel is basically unknown to potential customers. You can design your own website, but it’s well worth it if you invest in a professional website – cheap websites are easy to spot. At the very least, your website should have the hotel name, location, contact information, and room rate. Small hotels often appeal to guests looking for privacy, so you can meet this need by including specifics on your website. No matter what information you put on the website, you need to ensure it is accurate and up to date. An out-of-date website will make your hotel appear inactive or unprofessional and can hurt your business. ^{[19] X Research Source}

Take pictures of the hotel. Customers will want to see where they will stay. Include photos of hotel rooms and surroundings.
Enter information about yourself. Personalize the website by putting your information on the website. If the employees are willing, you can also include them on the website. This will give a sense of privacy, helping to attract guests to motels and inns.
History of the hotel. Several small hotels are housed in historic houses. If so, you will attract a unique market of history-loving customers, and you can meet this demand by providing the full history of the building and its surroundings.
Any rates or special offers offered by the hotel.
List and describe nearby attractions. If the hotel is near any tourist attractions, advertise that information. This will make your hotel a convenient place to stay for tourists.

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Post ads on travel websites like Expedia, Viator, or Hotels.com. These sites are designed with people looking for hotels and tourist attractions. When you advertise on these websites, you will attract visitors from all parts of the country, even from other countries.

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Place advertising pamphlets at intercity bus stops. Most bus stops have places for brochures and tourist information. Contact those places to see if your brochure can be placed. Small hotels are sometimes in the discretion of tourists. By doing this advertising, you will attract a potential market. ^{[20] X Research Source}

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Offer incentives. Discounts for group purchases, free breakfast, and discounts for multi-day bookings are good incentives to attract customers who don’t have a lot of money. Remember to advertise all of your offers on the website. However, you also need to make sure you’re still covering operating costs when offering discounts. ^{[21] X Research Source}

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Organization of events. Events such as weddings or corporate activities will bring you many customers. If your hotel has only a few small rooms, this may seem impossible. However, even a small hotel can have enough space to hold such events. While you may not have enough space for a large conference, today many businesses tend to move several executives or management to more intimate locations to meet and relax. Small-town motels can be the ideal setting for these types of events. Advertise on your website and other travel sites that you are willing to host events and offer discounted prices to attendees. ^{[22] X Research Source}

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Partner with local businesses. Small hotels often operate near attractive destinations. Take advantage of this by asking those places to help you advertise. Contact the management of parks, historic sites, restaurants and theaters to see if they can work together. Invite them to place brochures in your hotel lobby if they recommend your hotel to visitors. In this way, you can attract tourists in the area even if they do not see your ads. ^{[23] X Research Sources}

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Make sure every guest staying at your hotel has a great experience. In addition to other advertising methods, word of mouth advertising is also very beneficial. All guests staying at your hotel can tell their friends and family, post on social media and comment on the internet. You need to do all you can to make sure it’s positive feedback. Even a single unhappy customer can hurt your business if they put it on the internet. When you make sure every customer has a great time, you’ll earn customer loyalty, and that’s great advertising. ^{[24] X Research Source}

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Take care of regular customers. Satisfied guests who come to your hotel are a great potential market. In addition to providing good service during their stay, there are many other methods you can use to entice them to return. ^{[25] X Research Sources}

Make a list of email addresses. With a mailing list, you can let your customers know about the offers you are offering. It’s better to have customers subscribe to this list instead of sending a letter to all the customers who have stayed at your hotel. Otherwise, you could annoy your customers and turn them away.
Reward patrons by offering special promotions. There are many ways you can do this. You can offer a discount for the second day a guest stays at the hotel, or give a free night after a minimum number of days. You can also top up the points system so that customers can accumulate points and redeem them for incentives.
Respond to customer feedback. Many travel websites allow hotels to respond to customer reviews. You should take advantage of this widget and respond to feedback, both good and bad. This will show customers that you value their opinion, and they are more likely to return. Thereby you also tell potential customers that you are committed to providing good service to them.

Advice

Try to find a hotel with a nice view. A place with a beautiful view is a great location for a small hotel.

Steps

Market research

Hotel financial management

Manage hotel staff

Hotel marketing

Advice

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