How to set up a hotel business

Whether you have several years of hotel management experience or an entire lifetime of experience, setting up a hotel business is a large project. Market research, finding a location and selecting the right niche market take time and money. However, forging partnerships with talented contractors, architects, designers and hospitality consultants can help you make the right decisions when setting up your business.

Get experience in the hotel industry. If you haven't worked in the hotel business before, industry experience will help you understand how to order inventory, manage and run the daily details of your hotel. Choose a niche similar to the type of hotel you would like to run. For example, if you want to open a small hotel targeting travelling families, find a comparable company to work for.

Check out hospitality programs. When opening your own restaurant, formal training in hospitality can help (see Resources). These programs provide skills in hotel management and operations, which is important when launching your own hotel business.

Conduct market research. For example, if your hotel business will be targeted toward business travellers, make sure the demand for hotel services is higher then supply. Check out similar businesses in your area, and chat with management about how busy they are. For example, the hotel may only be at 50 per cent capacity during peak season, which is a good indicator of the market potential. Also, check out hotel franchise opportunities (see Resources), which provide a more "turn key" approach to starting your own hotel. The cost of starting up a franchise ranges, from 2.5 million up to 53 million.

Choose your location. For a hotel business, location is essential to your success. For example, a hotel focusing on travelling families might choose to be located close to the freeway for easy access.

Rent or purchase a building. With a hotel business, you have two options: build a hotel or rent a suitable building. Each option is complicated, so it's important to have an architect or hospitality consultant that specialises in the hotel business on your team. They can help you with specialised tasks, such as designing and laying out your hotel. Even if you rent a location, the space will often need architectural adjustments to fit your vision.

Apply for the required permits. Don't waste any time securing permits for your hotel. If you'll be building, your contractor can assist in getting the required permits from the city planning commission. Also, the community may have to approve your hotel depending on your city's rules and restrictions. If you'll be serving food, you'll also need to secure food handling permits and a license to serve alcohol. Contact your local licensing board for more details.

Partner with a hotel supply company. Outfitting your hotel with furniture, linens and supplies is a huge job. These companies can walk you through the process to ensure you have everything needed to furnish and supply your hotel (see Resources).

Plan a grand opening event. During this event, offer discounted prices on your rooms and food (if you serve food). Reach out to your local chamber of commerce, and invite members to check out your hotel. You can also hire radio stations to report from the event, and give away free door prizes to generate interest.


Check out the Small Business Administration (SBA). They have many free tools for those interested in launching their own hotel business.


Don't forget to write a business plan. These plans cover business essentials such as marketing, financing and daily operations of your hotel. There are free online templates on business plans (see Resources).

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About the Author

Nicki Howell started her professional writing career in 2002, specializing in areas such as health, fitness and personal finance. She has been published at health care websites, such as HealthTree, and is a ghostwriter for a variety of small health care organizations. She earned a Bachelor of Science in business administration from Portland State University.

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