Smart Tips for Buying a Hotel Business
Buying a hotel can have many advantages. For one, you’re investing in income-producing real estate. It also gives you the opportunity to quit the corporate world and enjoy a home business in a relaxing vacation destination. However, there’s a lot to learn before you can operate a success hotel, motel, bed and breakfast, or any other type of lodging business.
Before You Buy: What To Look for in a Hotel Business
Do you envision yourself running a charming B and B for couples as a family business? Does a high-profile downtown hotel with chic flair sound more appealing? Buying something that fits your expectations is key to enjoying yourself. In turn, businesses you really love tend to thrive.
What should you consider when buying a hotel? Here are a few essential factors for success:
- Solid revenue stream: Look for a hotel that already has financial success. This tells you that the business is valuable and has customers who support it, which is likely to continue after changing hands. Revenue is vital for making loan payments and financing hotel operations.
- Affordable price: There’s no point in getting excited about the perfect hotel if you can’t afford it. Before approaching sellers, know exactly how much you can spend and what investors or banks will lend you for the business acquisition.
- Property that’s in good condition: Always request a property inspection by a trustworthy contractor — to look for mold or other structural problems — before signing any purchase agreement.
- Desirable location: A hotel’s location is closely linked to the amount of potential guests available. Good locations may include attractive scenery to draw in tourists, convenience for sleepy travelers in search of rest, or close proximity to important city destinations.
- A strong local market: Look at competitors in the area to evaluate their rates. This will give you a sense of the local hotel economy and the type of rates you can charge. If your bed and breakfast caters to a certain niche, such as newlyweds, make sure area demographics or national trends guarantee consistent occupancy.
- Room for growth: To stay healthy, all businesses need to grow financially. Does the hotel provide ways to increase value, either by appealing to a higher level of customer or through physical expansion?
- Comfortable owner’s residence: If you’re planning to live at the property, don’t forget to look for attractive owner’s accommodations. After all, the whole point of acquiring any kind of business is to enjoy the rewards of your investment.
After You Buy: How To Operate a Successful Hotel Business
The hospitality industry is alive and well. According to the Professional Association of Innkeepers International, the bed and breakfast market alone is worth approximately $3.4 billion. As more and more people view travel as an important avenue of personal expression and essential relation, hotels are primed to benefit. The key to success is adapting to modern trends:
- Integrate technology: Modern technology has made a huge impact on hotel revenue over the years. Social media, travel marketplaces and Google local are a great way to win over potential guests by sharing gorgeous images, an easy-to-use website that allows for online reservations and friendly content. Regular social media posts give your hotel a warm reputation and a loyal following of happy customers.
- Surpass your competitors: Keeping a constant eye on the competition helps you learn valuable strategies that can be acted on quickly and adjusted to meet local market conditions.
- Focus on customer satisfaction above all else: Five-star reviews on Yelp or social media are worth their weight in gold. Negative reviews hurt your bottom line. Keeping customers happy should always be a priority, since the long-term benefits far outweigh short-term costs.
- Be unique: Give your hotel personality. Make it stand out locally or nationally, either by offering all-inclusive services, personalized guest experiences or focusing on specialized markets. If yours is the only bed and breakfast to offer horseback rides in the countryside, for example, you have an important advantage.
- Hire the right personnel: This relates back to customer satisfaction. The people who work for you need to make guests feel happy and cared for from start to finish. Friendly, knowledgeable and hard-working employees are worth investing extra in.
- Create loyalty programs: Millennials love loyalty programs. Whether you offer perks to loyal customers or a point-based system that lets them stay free from time to time, this is an important trend.
The Secret to Staying Competitive in any Market
The most important consideration when it comes to purchasing the ideal hotel is whether it meets your own lifestyle. A potential hotel needs to be a good fit for your personality, short-term and long-term goals; it should suit your lifestyle and your business dreams.
It can be pretty thrilling to find an attractive hotel opportunity, but resist the urge to go full throttle with the first hotel for sale you discover. Take the time to research the market and analyze the company’s financials. Entering into a new purchase with eyes wide open can produce great results that ensure your business is still going strong for decades.
The hotel market has changed over the years, as customers choose to focus more and more on personalized experiences. Simply put, Millennials love their power to choose, and trust peer ratings more than flashy promises. From the very start, your hotel should stand out with a distinctive location, unique personality and incredible service. To begin your search for the perfect hotel or bed and breakfast, view BizBuySell’s hotel and lodging businesses for sale.
Sources:
“The B&B Industry”, Professional Association of Innkeepers International, http://www.paii.com/About-the-Industry. Accessed May 2019.