Hospitality

How To Start A Hotel Motel Business Or Hotel Franchise

Welcome Your New Income

Many consider entering the hospitality world as a hotel or motel owner. While the COVID pandemic has created havoc in the tourism industry, We anticipate that local tourism will increase in 2023. Most people in the hotel and motel business, hotel brokers, and hotel management companies have been successful irrespective of their location. However, starting a new hotel or motel business is not for the faint-hearted; it is an expensive venture, and there is also intense competition for clients. Financial success with a motel business can be slow and steady and may take several years. The critical thing to understand is that most motels’ profits don’t come from overnight stays but from other motel activities like offering rental space for weddings, conventions, etc. Read below for more information to help you understand the motel business and prepare for this venture.

Buying A Hotel Business Or Hotel Franchise

Buying an established working hotel is a safe and practical choice. Especially If you don’t mind renovating to your standards since the hotel is already running, you will have ongoing cash flow and working systems in place, know the vendors and suppliers, and know the daily operating budget.

Further, if you plan to employ the same staff, there will not be a need to retrain them, nor will you have to meet any zoning laws and legal requirements.

However, before you purchase your motel, you’ll want to know the following:

Is the location suitable for you?
Will there be continual traffic?
Is the size of the motel reasonable?
What renovations or upgrades will it need, if any?
What segment of the population will you serve?
Is the business regular or seasonal?
Why is the company up for sale?

The final thing you should check out is why this motel is on the market. If it is profitable, then why is the owner selling it? Are there some problems? Is the motel losing money? The last thing you want to do is buy a lemon property. Hence, research the parcel carefully and do not be in a hurry to sign any papers.

My Favorite Motel

Today’s travelers seek overnight stays in a motel for some of the following reasons.

Location
Services- i.e., complimentary breakfast
Size of rooms and amenities
Interior design
Nearby restaurants
Nearby events
Local attractions
Convenience
Free Pool, parking, spa, exercise gym
Free Wifi
A family-friendly place that caters to children
Allows pets

Hotel Vs. Motel

Once you have decided to purchase a running motel, it is vital that you not only view the motel that interests you in person but try a stay there for a few days. This way, you can observe firsthand how it runs, how efficient it is, how many clients remain beyond an overnight stay, and how the guests review the property. It would help to stay both on weekdays and weekends to determine its busy period. Drive around to see any competing motels and hotels in the vicinity. Finally, talk to people in the area to determine the motel’s reputation.

Running A Small Motel?

Running any motel is hard but operating a smaller motel is harder. Because of limited human resources, you will have to do many tasks yourself to save money. In most cases, you will need help from a family member or friend to run the motel’s critical parts (e.g., finances). Some of the things that are required to run a small motel include the following:

Accepting reservations
Answering phone calls
Checking guests in and out
Marketing the property
Replacing supplies
Calling the maintenance people for any necessary work
Make sure that the cleaners are doing their job
Ensuring breakfast is ready
Bookkeeping
Reviewing guest complaints and compliments
Keeping track of inventory

Hotel Business Plan

It is crucial to create a plan if you want to enter the hotel/motel business. A plan will help you understand what you are getting into, the problems you will face, the costs, and future issues. Plus, most lenders will ask to see your plan when reviewing your loan application; rest assured that you will probably not be successful without one. Your business plan should contain the following:

What are the startup costs?
Cost of building a hotel
Where will you open your motel?
Will you build from scratch, buy an older motel, or join a franchise?
How much do hotel owners make
Who is your competition?
What appliances and furniture will you need to run a motel?
How big will your motel be?
How many employees will you have?
Do you need a permit and license to operate a motel?
Who will manage the motel?
What are your rates?
What other services will your motel provide?
What renovations are usually required to upgrade an old motel?
Are you a ‘people’ person?
Do you like to work long hours?
Do you have local knowledge of the area?
Do you have a reliable family member or friend for support?
Are you a risk-taker?

Motel Business Plan

If you want to enter the motel business, you have three choices: 1) build one from scratch, 2) buy a running motel, or 3) join a franchise. Building a motel business from scratch is costly, and there is no guarantee that it will succeed. The best option for first-timers might be to buy a running motel from someone who is retiring or tired of running the place. There are many working motels for sale in almost every state, and they usually cost a minimum of $650K. Franchise motels are also practical, and the costs can vary from $300K to $3 million. However, you also have to pay a franchise fee between $30K-$45K. In this article, we provide information on purchasing an already existing motel.

Here is a list of services advertising hotel development, hotel franchise for sale, businesses for sale

Running A Hotel Business

If you want to succeed in the motel business, it is essential to know how the company operates, the challenges, and the daily issues that crop up from time to time. Today’s clients are very demanding. They will always be on the lookout for discounts or freebies- so it would help if you knew how to deal with them without causing any bitterness. We highly recommend taking a course in the hotel/hospitality industry, especially for those with little to no experience in the hospitality industry. Or, better still, do an internship at a local motel and get some practical experience.

There are some handy services available online

Some business plan templates that you should consider include:

If you have not made a business plan before, some websites can help.

BizPlanBuilder: The most user-friendly
Business Plan Quick Builder (has many accessories)
Business Sorter: Best for internal plans
Entrepreneur Business Ideas – Tools & Tutorials (comprehensive)
GoSmallBiz.com: Most extra features
LivePlan: Best overall
Wise Business Plans: Best professional service

How Much Is A Motel?

Some of your motel startup costs include the following:

Commercial Insurance
Furniture
Maintenance
Marketing
Office equipment
Rent/mortgage- the most expensive
Staff salaries- the second most expensive
Supplies (linens, cleaning products, etc.)
Utilities

The average cost of operating a motel in the US varies from $650K to $1.2 million for a motel with 100 rooms.

Here is a list of some standard insurance companies

Biberk
Three Insurance (Berkshire Hathaway Company)
Next Insurance
Thimble
Geico
Insureon
Mercury Insurance
Allstate
Chubb
CNA
Farmers Insurance
Huckleberry
State Farm https://www.statefarm.com/
Hiscox
Nationwide
The Hartford
Travelers-Business Insurance
Liberty Mutual
Progressive Commercial

Best Places To Get Small Business Insurance

Hotel Financial Statements

If you are considering buying an existing motel, you must ask for financial statements for review, including tax filings for the past 2-3 years. It would help if you sat down with an accountant to assess these documents for operating expenses, occupancy information, and available cash.

Here is a list of some popular commercial real estate companies:

Hotel Business Loan

Once you have the financial data and have determined that this is the motel you want, make an offer, and learn how to negotiate. At this point, it would help to bring along a real estate financial broker who can suggest a reasonable request. The offer should include a clause that states’ subject to an inspection.’

Here are a few of the standard business banking options available online

Hotel Inspection Before Purchase

It would be best to inspect the entire property before purchasing the hotel or motel. A professional should inspect the property to assess the plumbing, electricity, and foundation, and whether the building is functioning and safe. Are there any shortfalls? The inspector should provide you with an estimate for the repair costs. The seller should then make the repairs before the sale deadline.

Marketing My Hotel

For a regular flow of clients through your motel, your marketing plan should include the following:

Provide a map on your webpage; Post photos on your webpage
Point out tourist attractions, or events in your area
Offer discounts for weekday stays
Offer complimentary breakfast on special days.
Be active on social media.
Be flexible with check-in and check-out times.
Offer shuttle service to and from the airport.
Offer package deals: You may want to combine with other attractions and offer discounted packages for the motel stay and visit the attraction
Partner with travel agents
Improve the entrance to your motel since first impressions are critical
Offer a kids menu or permit children under 12 to eat for free.
Keep the motel immaculate at all times.
Teach staff to be courteous and friendly
Always have extra supplies on hand.
Use apps that allow guests to make reservations check in and check out, make payments and contact you.
Share guest experiences on your webpage and social media.
Encourage guests to leave feedback and correct all negative things

Build Your Own Hotel Website

Your hotel or motel domain name protects your website address on the internet. You can register a domain name with any hosting company you choose.

Some of the common domain registrars include:

Here is a list of options you might choose when building a regular website.

Here is a list of drag-and-drop page builders for WordPress.

Hotel Staff

Staffing agencies that you may want to use:

Hotel Motel Appliances And Supplies

Motels need many types of appliances and supplies that, include:

Hotel Uniforms

Furniture

Beds
Bedside tables
Chairs
Closet with locker facility
Dressing table
Magazine holder
Luggage rack

Bedding

Baby crib
Bedsheet and cover
Blankets
Mattress
Pillow and pillowcases
Quilt and quilt cover

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Here are a few hotel and motel wholesale supply companies

Hotel Renovations

Just because you buy an operating motel does not mean it doesn’t need upgrades or renovations. You need to weigh the pros and cons of renovations carefully. If the place looks run down, your guests may prefer a newer-looking motel with more facilities. Some of the things that you need to consider before upgrading include the following: