3 tips when buying a hotel business
While the terms of the UK’s exit from the EU have yet to be settled, government ministers are already making plans for the economy post-Brexit.
In fact, ministers recently announced its intention to develop an ambitious industrial strategy sector deal to boost tourism into the UK, with this having been identified as a potentially lucrative revenue source outside of the European Union.
With this in mind, now may be the ideal time to consider entering this marketplace and investing in a brand new hotel business. If this is a path that you choose to follow, here are some of the key considerations to keep in mind.
1. Location, Location, Location
Location is perhaps the single most important consideration when buying a hotel or bed-and-breakfast outlet, as this will impact everything from the cost of procuring a building to your pricing and the overall level of demand.
Ultimately, it’s crucial that you’re able to achieve a desirable balance as an aspiring hotel owner, as while prime locations in London may benefit from significant demand this will carry a premium that can seriously squeeze profit margins.
In contrast, less central or busy locations may reduce the cost of buying a hotel in the first place, without necessarily generating the necessary demand or revenue.
As a result, you’ll need to make an informed decision based on your budget and preferred locations, while also considering the financial expectations that you have for your business going forward.
2. Consider the Legal Challenges
As with any business, opening a hotel will create a number of legal challenges and compliance issues that need to be met head on.
There’s certainly a number of laws in the hospitality industry, for example, including those that pertain to the presentation of food information including nutrition, composition and published advertising claims.
You’ll also have to comply with numerous regulations relating to the accommodation that you provide, with all hotels required to comply with fire safety legislation and hygiene standards.
Beyond this, the structure that you buy and develop will also provide legal challenges, as it must meet all existing building regulations once any modifications have been completed and it’s ready to open.
The failure to comply with these requirements could ultimately cause the temporary closure of your hotel, incurring significant financial costs in the process.
3. Don’t Forget to Undertake Competitive Analysis
The hotel sector is a competitive marketplace, and this is unlikely to change given the government’s ambitious growth plans for this industry.
As a result, it’s important that any aspiring entrepreneur in the industry undertakes detailed competitor analysis, with a particular focus on brands that operate within your local area.
This serves two purposes. Firstly, it offers you an insight into local market trends and demand, which in turn can inform your pricing strategy and the way in which you decorate the interior.
Secondly, detailed competitor analysis will also help you to draw inspiration from your rivals, especially in terms of marketing and promotions.
If you’re able to identify a particular competitor who has undertaken a successful marketing campaign, for example, you can explore this in further detail and use this to inform your future promotions.