After many years of accumulating, my wife and I have a good amount of capital, I am planning to build a hotel, motel, but I don’t know. Should I run a hotel business?? With this plan, I also consulted many people, most of whom support my decision, but my wife seems to be worried and not very supportive of my idea.
Hero, Yen Bai
“A capital of four words” is a phrase that is often said when referring to hotel business. Therefore, this industry is becoming popular in recent years because of the “huge” profits. However, the hotel business also brings certain inadequacies in the construction process and complicated procedures as well as many consequences in the business process, causing many investors a headache in choosing whether to invest in the hotel or not. hotel business or not.
With your question, Sapo would like to give you some criteria to help you have a better overview, hope that after reading it you will be able to answer yourself the question: Should the hotel business be or not?
Hotel business requires a lot of capital and perseverance
Capital for venue rental
Hotels often have to be built in beautiful locations with convenient traffic so that customers can easily recognize and travel easily during use. Investing in locations in beautiful locations always requires a huge amount of money to rent or buy premises.
Investors need to consider carefully because the hotel business is a long-term and expensive investment while changing the location is almost impossible. Because of the above requirements, the hotel business always has to spend a large amount of money in deciding to rent a place, especially in key areas such as famous tourist areas or big city centers.
Should I run a hotel business?
Cost of building infrastructure
As soon as the location has been decided, the construction cost should be paid attention to by the investor. Ensuring the availability of materials and maintaining the project as well as the quality must be ensured. This investment also needs to be carefully checked to avoid inadequacies in construction to ensure the long-term quality of the hotel.
Hotel maintenance costs
After the construction is completed, the investor must continue to spend a large amount of money to maintain the operation of the hotel. The first period of the hotel will always be the time when there are no guests, making the income for the investor uncertain while they still have to spend a large amount of money every month such as paying staff salaries, electricity and water bills. gas, phone…
Getting the minimum monthly client count takes a long time after it’s up and running. Therefore, when doing business in the hotel, it is necessary to be persistent in recovering capital. There are many investors who cannot continue the hotel business after a while because there is no longer enough capital to pay for the monthly expenses.
Long payback period, high interest rate
To be able to build a hotel, investors may have to borrow a large amount from the bank and bear a huge amount of interest every month. Besides, the profit earned each month is very small compared to the amount they spend, which can cause great pressure for investors.
Is the business location really suitable?
Should you run a hotel or motel business?
Which areas are suitable?
Choosing a location for construction is always a difficult problem because it requires careful and meticulous research by market researchers before deciding on a location to rent business premises.
Often locations such as famous tourist areas or crowded cities, areas with many activities such as conferences, weddings, large events to have a certain number of customers. After choosing a business area, it is necessary to survey the market there, does it need a hotel located there?
Maybe the location is a place for short trips, small events that don’t require a stay or they are not willing to pay for a hotel stay instead they can stay at a budget motel.
In addition, investors should analyze the development trend of that location, will the hotel industry develop in the near future? The opportunities that the hotel business there receives as well as the challenges it brings.
The competitive situation there
Does the location that the investor is aiming for already have many hotels there? Is your hotel capable of competing with other hotels? Will your hotel choose the strategy of a leader or a follower? If you can’t afford to compete there, you should consider whether to build in that location.
Inadequacies in the hotel business
Procedures and papers in applying for a hotel business license
The licensing stage of the hotel business is also a difficult problem if there is a lack of practical knowledge. Applying for a license in the relevant departments will take a lot of time and effort because this is a sensitive business. Will the business area make it difficult to get documents?
Therefore, when deciding to run a hotel business, it is necessary to carefully understand the procedures to avoid trouble in the business process.
Management problems
The hotel business has always been a difficult type to manage. Investors always have to ask many questions such as: how many people are needed to manage enough rooms? What do you need from a manager? Are their qualities good, honest and know how to treat employees and customers? How do investors know the number of visitors coming in and out every day as well as how to know that the manager is not cutting back in collecting money…
In addition, many customers after staying, they cannot afford to pay when they check out, how should the manager handle it? Therefore, the selection of managers always needs to be careful.
Room and price issues
In the hotel market now, there are many types from 0 stars to 5 stars, so the choice of equipment in the room always needs to be considered (high-end, intermediate or affordable)? In the process of using guests, causing damage to the room, how will it be handled? In addition, the price of each room is so reasonable, should it be based on the cost or the competitor to calculate the price, should the price change according to the season, the holiday season or not?
Social evils
An “everlasting” situation that many hotels face is the situation where social evils (prostitution, drugs, gambling) find their way into the privacy of each hotel room.
Every time these incidents happen at a hotel, not only the owner is fined, but the hotel owner will also be involved. The level will be administrative fines, revocation of permits, or closure of the establishment, depending on the ability of the hotel owner to “manage”. Not only that, this can also lose the image that the hotel is trying to build.
After the problems that investors have to research carefully as well as the inadequacies of the hotel business that you will encounter. The business decision needs to be considered, raised up and down, so you need to evaluate your strengths, weaknesses, opportunities and challenges that you face to choose whether to start a hotel business or not. ?
Good luck!
