Owning and operating a hotel can be challenging work, but it can also be rewarding. Besides needing plenty of money, there is the long-term investment of time. It may take up to three years to seal the deal. Perhaps the easiest way to get started in the lodging industry is to buy a franchised hotel–Marriott, Hilton, and Choice brands to name a few. Hotel franchises have the added bonus of a familiar name, but franchise hotel owners also have to balance running a great hotel with following the parent company’s requirements. How do you determine what brand or franchise is right for you? Consider starting with a hotel chain’s economy brand (i.e., Courtyard Marriott) and then moving on to upscale (i.e., Renaissance) and luxury brands (i.e., JW Marriott).
The National Association of Black Hotel Owners, Operators and Developers convened a group of industry insiders from various major hotel chains. Here’s what they had to say about the four key elements to becoming a first-time hotel owner:
Key 1: Educating Yourself. Each hotel is so unique that both pros and novices alike must do extensive research and preparation before diving into a deal. Read the franchisor’s disclosure document. Review each hotel franchise’s strategy for growth and long-term plans. Find out about the support and training provided by the hotel franchise. Get to know the type of operating system each franchisor uses.
Many franchisors hold Discovery Days for potential franchisees to give them an opportunity to find out more about the franchise in an informal, no-obligation setting. During a Discovery Day, which is usually held at the corporate headquarters, the company explains the operation of the business, the product or service it provides, the training and support systems, and the financial investment. In addition, you should talk to other hotel owners about their experience to get the lay of the land.
Key 2: Securing Funding. Buying a hotel franchise requires adequate financing to support both the initial franchise startup fees as well as the initial operating costs for the hotel. Reports show that many new hotel franchises fail due to the failure of the new owner in allotting sufficient money to get the business running.
You can elect to buy an existing hotel and re-brand it under a new franchise or you can build a new hotel, says Julius W. Robinson, vice president, franchising and operations, Fairfield Inn & Suites, Marriott International. Buying an existing hotel building will save you money. But there may be challenges to the current location that you will need to consider, such as demographics, operating costs, and taxes, before making your purchase.