Purchasing any business is risky but if you’re mindful of certain factors, you will make a profit-making deal.
Remember, there is plenty of room for growth in the hotel industry. If you put eggs in the right baskets, you will be able to create a brand in society.
So, here are a few factors that you must check before closing the deal.
1. Give importance to location and services
Location is the most important influencing factor in the hotel business. A good location will ensure an excellent revenue stream for your business.
Hotels are mainly located in famous tourist destinations, important cities, and culture-rich areas. The reason behind this is a constant demand in the market.
But if you are thinking about buying an offsite property then make sure it has a famous brand name and an established target audience.
There are ways to find out if the location is good enough. Search on the internet for other hotels in that part. As long as you find plenty of hotels then be sure that the location is great but there will be competition.
In case there are not enough hotels in that area, avoid buying the hotel. For tourists, a hotel should feel like a home away from home. So, you should know what types of services are available and what you need to add. To get more insights on the necessary services, analyze other hotels in the same area and compare them.
2. Look into the accounts
You must not acquire a hotel that is not making profits for the past three to four years. The reason behind this is if it was in loss, the chances are after the handover it will still be in loss. You will need some time to upgrade the hotel and without profit, you can’t make important changes in the business.
Further, check the number of tourists in different seasons and total visitors per month. The number of days visitors stay on average and what kind of room they seek will also give you a fair idea about the numbers.
3. Consider taking an expert advice
If you’re doing this for the first time, you must seek expert advice because let’s say it’s not an everyday affair.
Firstly, you should talk to a lawyer to avoid any legal problems or issues with contracts. My friend residing in Australia recently closed a deal with the help of Gold Coast lawyers and the entire process was a cakewalk for her.
Further, you should also talk to architects, surveyors, and valuers to ensure the building has proper structural features, and earthing, and is adept in other technical matters.
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4. Get yourself ready for sleepless nights
Like any other business, the hotel business is also not an easy one. You need to be prepared for uncertain events. There will be a lot of strangers knocking at your doors every day and you need to keep each of them happy. Any bad guest experience can impact the brand image and reputation of the hotel.
Also, you have to keep housekeeping and maintenance in order. You can appoint a general manager to handle daily issues. Make sure to conduct a thorough hiring and training process to appoint efficient and responsible staff. Their mistakes will always be your responsibility.
It is a lot to take but this is the truth of the hotel industry. Do adequate research before signing any agreement.
5. Keep an exit plan ready
As I said earlier, the hotel business can be very tiring and require a lot of work. It is sensible to make profits and leave the industry within 3-5 years. Keep a strategy ready for the exit plan. Consult an accountant to know more about reselling `hotels.
You have to take a big loan to take over the business so it must generate high ROIs for you. Otherwise, you will be stuck forever in the business or you have to sell it at a lower price.
Over to you…
The hotel industry can give you a larger-than-life experience if you make smart choices. It is going to be hectic but you will also enjoy the luxurious environment. Most of the hotels have owner’s residences so owners can establish work-life balance easily.