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How to Open a Boutique Hotel

So your thinking of getting into the hotel business? Sure, why not? But where do you start, and what actually is required financially and logistically? What is the history of the hotel business? So many questions, let's see what we can find out.

A hotel is an establishment that provides paid lodging on a short-term basis. Facilities provided inside a hotel room may range from a modest-quality mattress in a small room to large suites with bigger, higher-quality beds, a dresser, a refrigerator and other kitchen facilities, upholstered chairs, a flat screen television, and en-suite bathrooms. Small, lower-priced hotels may offer only the most basic guest services and facilities. Larger, higher-priced hotels may provide additional guest facilities such as a swimming pool, business centre (with computers, printers, and other office equipment), childcare, conference and event facilities, tennis or basketball courts, gymnasium, restaurants, day spa, and social function services. Hotel rooms are usually numbered (or named in some smaller hotels and B&Bs) to allow guests to identify their room. Some boutique, high-end hotels have custom decorated rooms. Some hotels offer meals as part of a room and board arrangement. In Japan, capsule hotels provide a tiny room suitable only for sleeping and shared bathroom facilities.

The precursor to the modern hotel was the inn of medieval Europe. For a period of about 200 years from the mid-17th century, coaching inns served as a place for lodging for coach travelers. Inns began to cater to richer clients in the mid-18th century. One of the first hotels in a modern sense was opened in Exeter in 1768. Hotels proliferated throughout Western Europe and North America in the early 19th century, and luxury hotels began to spring up in the later part of the 19th century.

Hotel operations vary in size, function, complexity, and cost. Most hotels and major hospitality companies have set industry standards to classify hotel types. An upscale full-service hotel facility offers luxury amenities, full-service accommodations, an on-site restaurant, and the highest level of personalized service, such as a concierge, room service, and clothes pressing staff. Full-service hotels often contain upscale full-service facilities with many full-service accommodations, an on-site full-service restaurant, and a variety of on-site amenities. Boutique hotels are smaller independent, non-branded hotels that often contain upscale facilities. Small to medium-sized hotel establishments offer a limited amount of on-site amenities. Economy hotels are small to medium-sized hotel establishments that offer basic accommodations with little to no services. Extended stay hotels are small to medium-sized hotels that offer longer-term full-service accommodations compared to a traditional hotel.

What type of person should you be to thrive in the hotel business?

It goes without saying that hotel owners need to have the mindset of an entrepreneur, but to be successful, hotel owners require something extra: a desire to serve.

This is because the hospitality industry is known as the industry that most understands customer service, and for your hotel to thrive, you need to be someone who relishes serving others naturally.

While you may not directly interact with your guests, your attitude filters down through your top management, right to the ground staff.

A successful hotel is always born from the culture of its top management, and the culture of top management is always born from the hotel owner.

What specific qualities do owners of successful small hotels usually possess?

  • A desire to serve

  • A need to delight guests

  • Good leadership abilities

  • Tenacity

  • Hard-working

  • Physically fit and healthy

  • Ability to juggle jobs, especially in the early years when you may not be able to afford all the staff you need.

How to start a hotel business on a budget:

  1. As a prospective hotel owner, start by booking out a room in your own home. The key to making this work is to either make students your primary market so that affordability attracts them, or to offer a unique experience. For example, if you live in a rural area that has been in the news, like Soweto in South Africa, then you can offer a room in a house there, with a Unique Value Proposition(UVP) of something like, “experience Soweto first hand”. Once you begin making money by booking out a part of your home, you can begin to grow, offering more services as you expand, and eventually, setting up a full-fledged hotel.

  2. Try the Air BnB way of instant hotelliering. Hire out your home or other property you own; when it gets booked, move yourself to cheaper accommodation so that you still make a profit. Make sure the pictures of your home are appealing. Once you start making money from regular bookings, you can work out an alternative solution. The key is just to get started.

  3. Hire a business capital broker who has networks of contacts and investors.

  4. If you have some money, find cheap land in a good location, like 19 and 21-year-old brothers Lucas & Travis Boychuk did in 2008 in order to build an action sports resort in 2014. Today, Surf Ranch is a 19 condo action sports resort, with a restaurant, swimming pool plus island and swim-up bar, and is known as the largest skateboard park in Nicaragua.

What Makes a Successful Hotel?

  • Location: Travelers are looking for something convenient – either close to top attractions or travel hubs like airports and the interstate.

  • Amenities: Hotel amenities play a huge role in the success of the business. Depending on the hotel’s target customer personal, this could be things ranging from a pool, complimentary breakfast, dog-friendly rooms, wine-tasting hours, business amenities, and more. Not only do great hotel amenities lead to recurring guests and positive customer experiences, it gives marketing teams weapons to promote their hotel and sales team new channels for ancillary revenue.

  • Cleanliness: A basic but crucial component of a hotel’s success is general hygiene. A dirty and unclean room is a hotel’s PR nightmare.

  • Friendliness: Small things go a long way for guests. Remember, your customers are here for a vacation or business trip – and want to feel at home. Hiring the right team members to staff your hotel is the first step to creating a foundation of friendliness in your business.

  • Safety: Similar to location, the area around the hotel plays a role in the safety of your customers.. If guests are worried about what else might be going on in the area, it will make it harder for them to relax. Nothing ruins a vacation more than trying to fall asleep to the sound of oncoming police sirens.

What is the Average Cost of Opening a Hotel?

The average cost of starting a hotel in the US ranges from $750,000-$1,000,000 for a small motel, to the national average being around $22,000,000 for a hotel with around 115 rooms, and much higher for luxury and high-rise hotels

How to Open a New Hotel in 9 Steps 1. Start with a Plan All good businesses start with a plan. You need to have an idea of what market you’re entering before making any significant commitments. If you’re not familiar with working at a hotel, start by diving deep into learning as much as you can about the hospitality industry as possible. Learn the ins and outs of what makes a hotel successful, figure out what the best hotels do well and what the bad hotels did poorly. Learn about your target markets and identify what your audience looks like. You should know what type of people will stay in your hotel and consider what you can do to attract them to your business. Consider how you will attract clients to your business. A marketing plan will help bring your clients into the door to keep your rooms booked. Marketing is an ongoing process, but as you develop your initial business plan, you will need to add a marketing plan to bring awareness to your opening.

2. Choose Your hotel Identity There are many types of hotels. Depending on what style of hotel you decide on, some of your business decisions will be different. Boutique hotels are smaller and often have a unique characteristic to them. They may be in a historic building or may have been converted from another business. Family hotels are focused on what they have to offer the entire household. These hotels typically have larger rooms, extra beds, and swimming pools, and are often located close to family attractions, like theme parks. Budget hotels have lower rates on their rooms, but with that comes a lower quality of stay. The build quality of budget hotels isn’t always the greatest, and guests might be able to hear noises between the walls. Budget hotels typically scale back the amenities to pass the savings on to the customer. On the opposite end of the spectrum, luxury hotels are the four and five-star hotels that have high price tags. However, in exchange for the hefty rates, guests receive top-notch service and access to conveniences that aren’t generally received at lower value hotels. Luxury hotels will typically have room service, spas, a concierge, anything to make a stay feel closer to home. Picking the style of your hotel will impact the rest of your business decisions. It isn’t very easy to transition from one type of hotel to another, so do plenty of research before you commit to a decision.

3. Form Your Business Status

The best way to protect yourself is to form a business entity, such as an LLC. When you establish a business entity, you protect your personal assets from your business obligations. While nobody wants to think about failure, if the worst-case scenario of bankruptcy occurs, your personal assets cannot be taken to pay for your business debts.

4. Decide If You Want to Build or Buy a Hotel

Building a hotel allows you to customize and build with the materials that you think will be best for your hotel. However, building a hotel can cost $22 million for an average 3-star hotel.

Purchasing a hotel is an option for those looking to save some money. Depending on the quality of the hotel, some can be bought for as little as $3 million. It’s important to remember, though, that purchasing a used hotel will likely require renovations, which will add additional costs to the purchase price.

5. Obtain Hotel Permits and Licenses

There’s always red tape that needs to be addressed for any business. Different permits and licenses are required depending on the local government of where your hotel is, so be sure to research your local regulations.

6. Secure Funding

With a well thought out plan and strategy, it shouldn’t be hard to secure the funding needed to start your hotel. There are many options in doing so that can help you get cash flow to help you build your dream.

A business loan will likely be the first start of your funding. This can be tricky and will have many factors that the bank will consider. If you’re unsure of your qualifications, it would be recommended to have some professional guidance on the best ways to get approved for a loan.

While loans aren’t the only option, they will probably be your best bet for getting funding. However, if you’re exploring other options, it might be worthwhile to look into venture capitalists, angel investors, crowdsourcing, and even pitching in some of your own money. If you’re determined and have a great plan, there will be a way to obtain funding.

7. Hire and Train Staff

You won’t be able to run your business all by yourself. Running a hotel takes a team of employees to manage the day to day duties while you’re busy making the big picture decisions. Your staff will need to work at the front desk, clean the rooms, valet parking (if you plan to offer it), room service, concierge, and other managers to oversee the employees.

Remember to look for employees that you think exemplify the traits that you feel are most important to your hotel. Your employees are a reflection of your brand and will be the ones interacting with customers on a day to day basis. They must portray the company in a way that you think is best.

8. Create a Hotel Marketing Plan

Once you have everything else set up, it’s time to promote your business. As part of your business plan, you should have developed a hotel marketing plan. This plan will be what you will use to advertise the opening of your hotel.

Some potential marketing ideas to explore are:

  • SEM and PPC Advertising

  • Content Marketing

  • Video Marketing

  • Social Media Marketing

  • Print and Traditional advertising

  • Partnership Marketing (think booking sites, such as

  • Hotel Review Sites

Be creative and brainstorm how you can make your business stand out. If you’re struggling, there is an abundance of agencies and consultants that are always willing to assist you in reaching your marketing goals.

9. Open Your Hotel

Opening day is here, and after all of the hard prep work, you’re ready for business. Running a company is tough work, but if you’re prepared for the challenge, you’ll have no trouble getting started.

Seems easy enough, right? Not so easy, or for anyone without a lot of knowledge about this industry. But someone has to do it, so why not. Need a few suggestions? Give us a shout, we can HELP!

Cheers, and have a prosperous, successful and positive day!

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