As the old saying goes, you have to spend money to make money. How much money you have to spend is another matter.
There are literally dozens of low-cost business ideas available to entrepreneurs with a modicum of talent and ingenuity — reasonably low-hanging fruit that you can turn up in a matter of days or weeks.
Starting a hospitality company is not such an idea. Whether you’re eyeing a quaint little B&B or a boutique pad in the heart of the city, getting a hotel off the ground is serious business.
If you love spiriting folks away from the daily grind and into a new, pleasant plane of existence, the effort may well be worthwhile. But first, you need to know where to start.
Follow these six tips and best practices to control your startup costs and stay on schedule.
1. Look for High-Potential Properties.
Conserve capital by acquiring an existing hotel. Limit your search to high-potential properties that have seen better days. Commit to plowing as much sweat equity as you can muster into your eventual choice. The more you can do on your own upfront, the more cash or credit you’ll have left for whatever comes next.
2. Hold Out for the Ideal Setting.
Not all vacation towns are created equal. It’s best to bide your time in wait for a truly exception location than to force the issue and settle for a less-than-ideal setting. You’ll command higher room rates and earn plaudits from your first guests — vital for building buzz in subsequent seasons.
“When [Gull Harbour Marina] came on the market, we jumped at the opportunity,” says Manitoba-based hospitality entrepreneur David Janeson, whose lakefront inn has earned rave reviews since its 2016-17 renovation. For Janeson, generous lake frontage and a working marina sealed the deal.
3. Take on Silent Partners.
If it’s not yet clear: building or acquiring a new hotel, motel, or inn is expensive. Focus your fundraising energy on silent partners — passive, deep-pocketed investors willing to wait years to realize their returns and not particularly interested in looking over your shoulder in the meantime.
4. Recruit Hospitality Experts Early.
Don’t know much about running a hotel? Staff up early with folks who do. Recruit a general manager and business development associate before opening for business. If you can afford it, bring in an outside consultant (or your franchisor’s business coaching team — see below) for situational guidance.
5. Consider the Franchise Option.
For a whole host of reasons not worth getting into here, many entrepreneurs look down on franchisees.
They shouldn’t — at least, not in the hotel business. Launching a hospitality operation from scratch is an expensive affair fraught with risk. While buying into an existing franchise carries costs and risks of its own, it involves fewer unknowns than building a boutique from the ground up. Check out a recent list of the top North American hotel franchises for ideas.
6. Plan Amenities and Services Carefully.
Unless you have a captive audience, think twice about including a full-service restaurant at your property. Same goes for a spa, or extensive fitness facility, or any other high-end amenity you can’t see paying for itself.
You’re Making Their Memories.
Above all else, remember that you — the proud owner-operator of your very own hotel or motel or inn — are responsible for the happiness and well-being of your guests for as long as they choose to grace you with their presence. You’re making memories for them, memories that will no doubt endure long after they leave your property for the last time.
It’s on you to ensure that those memories are fond ones. And, if not, it’s on you to figure out why.