Starting a Hotel Business from Scratch

Opening a Hotel Business: Essential Steps and Tips for Success

Launching a hotel business is a lengthy and demanding process that requires careful preparation and planning. Here are some steps you need to take to open a hotel business from scratch:

1. Define the Concept of Your Hotel

Develop a unique concept that sets your hotel apart from others. Determine your target audience and the services you want to offer them.

The concept begins with defining the typology of your hotel:

  • Resort Hotel: Located in a resort area, these hotels are designed for tourists seeking relaxation and entertainment. They often have extensive grounds, a beach, swimming pools, restaurants and bars, as well as sports facilities and entertainment programs.

  • City Hotel: Situated in urban areas, city hotels cater to business travelers or tourists who want to explore the city's attractions. These hotels are usually located in the city center, close to transportation hubs and shopping districts.

  • Business Hotel: Targeting guests on business or educational trips, business hotels are typically located in business districts or near major corporate offices. They often feature modern meeting and conference facilities.

  • Boutique Hotel: These small-sized hotels have unique designs and offer personalized services to guests. They are often housed in historic buildings or located in city centers.

  • Aparthotel: Providing guests with apartment-style accommodations for long-term stays, these hotels are popular among families and business travelers staying for extended periods.

  • Eco Hotel: Built on the principles of environmental sustainability, eco hotels are usually situated in natural settings, offering guests an opportunity to immerse themselves in an eco-friendly atmosphere, enjoy the beauty of nature, and savor healthy cuisine.

2. Find the Right Location for Your Hotel

Consider various location options, taking into account accessibility to public transportation, proximity to tourist attractions, and other important factors.

The choice of location should be based on several factors:

  • Target Audience: Determine the type of guests your hotel will cater to. Will it be family vacations, business trips, or tourism? This will help you decide on the location of your hotel.

  • Competition: Study the market and identify competitors in the same area. Avoid opening a hotel in an area saturated with numerous hotels. Instead, choose a location where there is a demand for hotel services.

  • Safety: Select a location with good safety conditions. This could be an area with low crime rates or one equipped with reliable security systems and surveillance.

  • Accessibility: Choose a location that is easily accessible by both car and public transportation. It is also important for your hotel to be close to major tourist sites and attractions.

  • Infrastructure: Pay attention to the availability of infrastructure in the area where you plan to open your hotel. It is important to have nearby shops, restaurants, cafes, and other amenities.

  • Costs: Don't forget to consider land and construction costs. Choose a location where land and construction expenses are more affordable to reduce building and maintenance costs.

  • Permits: Make sure to obtain all the necessary permits and licenses from local authorities, ensuring that the chosen location complies with all requirements and regulations.

3. Choose the Type of Hotel You Want to Open.

Consider factors such as the number of rooms, hotel category, and the availability of a restaurant and other amenities.

Types of Hotels:

  • Boutique Hotel, also known as a small hotel, offers 3 to 15 rooms for guest accommodation. An apartment hotel is a type of hotel that provides rooms of different categories with kitchen facilities and a full bathroom.
  • Motel is a hotel that is usually located on the outskirts of a city and has parking facilities for travelers who are driving.
  • Resort, lodge, country hotel, and park hotel are types of hotels that offer more than 15 rooms. They are typically located outside the city and provide guests with recreational services, as well as amenities for relaxation and dining.
  • Tourist Base is an accommodation facility located in places for active recreation, offering more than 15 rooms. Guests are provided with the opportunity to cook and do laundry.
  • Serviced Apartment is situated in a residential building and provides guests with cooking facilities. The entire unit is rented to guests, and separate room rentals are prohibited.
  • Hostel is an economy hotel where the room size is at least 4 square meters per bed (single or bunk), with a distance of at least 75 cm from the top of the bunk bed to the ceiling, and a maximum of 12 beds per room. Sanitary facilities are usually located outside the room.

Zlotisto-bezhevaya-spalnya-disayn.jpg Project Tender visualization of a room

4. Determine a Budget and Funding Sources

Evaluate the costs of opening and operating a hotel. Explore funding opportunities such as investors, bank loans, and grants.

Here are a few steps that can help determine the budget and funding sources for your hotel:

  • Project cost estimation: It is essential to identify all expenses associated with opening the hotel. This list should include costs for construction, equipment, furniture, staff, marketing, insurance, and other expenses.

  • Market valuation: The next step is to assess the expected market value of your hotel. This can be done by studying the hotel services market and conducting competitor research.

  • Finding funding sources: There are several ways to secure funding for your hotel. This can include personal capital, bank loans, attracting investments, or government support programs.

  • Developing a financial plan: The financial plan should include an assessment of costs and revenue forecasts for the hotel, as well as determining the investment payback period. It should also be prepared to address potential unforeseen expenses.

  • Considering various options: It is necessary to consider different budget and funding source options to find the optimal fit for your hotel. Additionally, potential risks and issues that may arise in the process should be taken into account.

5. Obtain all Required Permits and Licenses

Contact local authorities to obtain permits for hotel construction and operation, as well as other necessary licenses and certificates. The hotel opening permit is issued by local self-government bodies and government authorities in accordance with the country's legislation where the hotel will be located. The specific authorities responsible for issuing the hotel opening permit may vary depending on the location and size of the hotel.

Typically, the following permits and licenses are required to open a hotel:

  • Building construction or renovation permit for the building that will be used as a hotel. It is issued by a local government authority or a municipal body responsible for construction.

  • Hotel operating license. In most countries, a special license is required to start operating in the hotel industry. It is issued by the relevant government agency after verifying the hotel's conditions, its staff, and safety measures.

  • Land use permit for hotel construction. This permit is issued by local self-government bodies or government authorities responsible for land use.

  • Permit for employing foreign workers, if necessary. In some countries, obtaining the appropriate permit is required to hire foreign workers.

  • Permit for the installation and operation of equipment, including security systems, air conditioning, heating and ventilation, elevators, and other systems.

6. Hire a Professional Team

Recruit qualified staff to work in the hotel, such as administrators, housekeepers, waiters, chefs, etc. Look for candidates with professional skills and experience in the hotel industry or related fields such as restaurant business, tourism, and hospitality. It is also important that candidates have the necessary professional skills for their specific roles, such as computer proficiency for administrators or cocktail-making experience for bartenders.

When selecting candidates, consider the following:

  • Personal qualities: Hotel staff should be friendly, polite, and sociable to ensure comfortable guest interactions. It is also desirable to choose candidates who can work effectively in a team, have high personal hygiene standards, and a sense of responsibility for their work.

  • Language proficiency: It is particularly important for hotel staff to have a good level of English proficiency as it is an international language, and many hotel guests may be foreigners. Additionally, knowledge of other languages can be an additional advantage when selecting personnel.

  • Trainability: Good staff is always willing to learn and improve their skills. When selecting candidates, pay attention to their willingness and desire to learn and develop within their profession.

  • Employment and qualification: It is equally important for all employees to have official employment status and the necessary qualifications to work in the hotel.

  • Utilize the services of professional recruiters in the Horeca industry to help you find the right candidates for your hotel team.

7. Develop a Marketing Strategy

Create a comprehensive marketing strategy to promote your hotel and attract guests. A well-executed marketing plan can increase brand awareness, generate bookings, and drive revenue.

Here are some steps to develop an effective marketing strategy for your hotel:

  • Define your target audience: Identify the specific demographic and psychographic characteristics of your target guests. This will help tailor your marketing messages and channels to reach the right audience.

  • Conduct market research: Gain insights into the hotel industry, market trends, customer preferences, and competitor analysis. This research will guide your marketing decisions and help you differentiate your hotel from the competition.

  • Build a strong online presence: In today's digital age, it's crucial to have a robust online presence. Create a visually appealing and user-friendly website that showcases your hotel's features, amenities, and unique selling points. Implement search engine optimization (SEO) techniques to improve your website's visibility in search engine results.

  • Utilize social media: Establish profiles on popular social media platforms like Facebook, Instagram, and Twitter. Regularly post engaging content, such as stunning visuals, informative articles, and special offers, to attract and engage with your target audience. Interact with followers, respond to inquiries promptly, and encourage user-generated content.

  • Implement online booking capabilities: Make it easy for potential guests to book rooms directly through your website. Integrate a secure and user-friendly online booking system that offers real-time availability, pricing, and convenient payment options.

  • Leverage online travel agencies (OTAs): Partner with well-known OTAs like, Expedia, and Airbnb to expand your reach and tap into their customer base. Ensure your hotel's listings on OTAs are accurate, visually appealing, and optimized for maximum visibility.

  • Utilize email marketing: Build an email subscriber list and send regular newsletters or promotional emails to stay connected with past and potential guests. Offer exclusive deals, personalized recommendations, and updates about your hotel's events and offerings.

  • Collaborate with local businesses and influencers: Establish partnerships with local tourist agencies, event organizers, and influential individuals to promote your hotel. Collaborate on special packages, cross-promotion, or influencer campaigns to increase visibility and attract new guests.

  • Monitor and analyze results: Use web analytics tools and booking systems to track the effectiveness of your marketing efforts. Analyze data, such as website traffic, conversion rates, and revenue generated from different marketing channels, to optimize your strategy continuously.

By developing a comprehensive marketing strategy and utilizing various channels and tactics, you can effectively promote your hotel, increase bookings, and create a positive brand image in the hospitality industry.
To develop a marketing strategy, the hotel should first identify its target audience, research competitors, and determine its competitive advantages. Next, you need to develop an action plan and set a budget for marketing activities. This plan may include the strategies mentioned above as well as other measures, such as collaborating with local travel agencies and organizations to attract more guests.

Corridor-hotel-design.jpg Project: Hotel Concept 4

8. Procure Necessary Equipment and Supplies

Acquire all the necessary equipment and supplies, such as furniture, appliances, linens, towels, and other essential items. You'll be surprised how the quality of textiles can influence your customers' loyalty and overall impression of their stay at the hotel. Additionally, high-quality linens and towels can serve as a form of advertising for your hotel. Hotel textiles should be branded with your hotel's logo. Consider creating a souvenir shop within the hotel where you can sell branded items such as towels, robes, slippers, toiletry sets, all tailored to your hotel. Guests who have enjoyed their stay are more likely to purchase something as a memento. Additionally, by visibly displaying the hotel amenities for sale and their prices, guests are less likely to steal them.

The quality of textiles encompasses not only the material they are made of but also characteristics such as softness, density, and durability. When selecting textiles for your hotel, it is important to consider their performance features, such as resistance to wear and tear and frequent laundering, so that they can withstand extended use without losing their original appearance and quality.

Towels for hotels should have medium density, typically ranging from 400 to 600 gsm. Towels that are too thin will wear out quickly, while excessively heavy towels may be inconvenient to use and take a long time to dry after laundering.

Develop a hotel management system. Create a management system that allows for efficient management of the hotel. This system can include room reservation functions, order management, inventory control, etc., or you can opt for a ready-made system.

There are numerous hotel management systems available that help automate and streamline various processes in a hotel:

  • PMS (Property Management System): This software manages operational processes in the hotel, such as room reservations, guest check-ins, invoicing, inventory management, etc.
  • CRS (Central Reservation System): This system collects and processes data on room reservations from various sales channels, such as online booking platforms and travel agencies.
  • POS (Point of Sale): This system manages sales within the hotel, including restaurants, bars, souvenir shops, and other facilities.
  • RMS (Revenue Management System): This system helps optimize room prices based on demand and other factors, such as seasonality and competition.
  • CRM (Customer Relationship Management): This system manages customer relationships, allowing the hotel to better understand and meet guest needs.
  • Channel Manager: This system allows for the management of hotel sales channels, including online booking platforms, travel agencies, and other partners.
  • Housekeeping Management System: This system helps manage housekeeping tasks and room cleaning.

9. Ensure Guest and Staff Safety

Ensure the safety of guests and hotel staff by installing surveillance systems, security measures, and fire protection. If guests do not feel safe and secure, they will be reluctant to stay at the hotel and are less likely to recommend it to others. When choosing security systems, consider the hotel's specific characteristics, size, and number of guests. It is essential to select systems that comply with local legal requirements and safety standards.

10. Open the Hotel and Start Attracting Guests

Open your hotel and start working.

Offer attractive conditions for the first guests to attract more customers. These may include:

  • Accommodation discounts: New guests can receive significant discounts on their hotel stay for a specific period of time.
  • Free services: Guests can enjoy complimentary breakfast, free Wi-Fi, free parking, and other services as part of a special offer for first-time customers.
  • Bonuses and privileges: First guests may earn bonus points or receive free nights for future stays if they book a room for a certain period.
  • Free tours and entertainment: Guests can receive complimentary tickets to local attractions or entertainment as part of a special promotion.
  • Gifts and souvenirs: New guests can receive free gifts and souvenirs such as t-shirts, magnets, and more.

Starting a hotel business from scratch requires significant investment and effort, but with careful preparation and an effective business plan, your hotel can become a successful and profitable venture.

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