A hotel chain is two or more hotels existing under a single brand. The service levels can vary across the properties. Operation of such a hotel chain can be an extremely lucrative business. But, do remember that having two or more properties “related” to each other can be tricky and has its own opportunities and challenges. There are typically two ways to invest in a hotel chain:
- Hotel Franchise
- Independent hotel
Let’s explore each option in greater depth.
Hotel Chain by Hotel Franchise
- A lot of existing hotel chains allow companies, real estate holders, investors and even individuals to start a hotel chain under the name of their brand. For that, one has to choose the franchise of the hotel and can get into talks with them about the business.
- Initially, an application would need to be filled in, followed by proof of financial and personal data including income and bank statements. The exact documentation and process will vary with different holding groups. After a few weeks, the information will be processed and the company will inform the franchisee about its decision.
- If approval is received, the bearer has to contact the national or even a local institution to get the costs for the start-up. Do note that it is easier to get funding for a franchise than for an independent hotel chain.
- Once the finance is sorted, the franchise owner will ask for the location you want, based on the market research or they will guide you to the perfect location. Once you operate the hotel, you have to take care of the renovation costs and workforce hiring. All the guidelines for their brand must be implemented right from the first phase.
Independent Hotel Chains
- In this form of investment, that is the Independent Hotel Chain, one can directly invest for the brand. You will need to conduct extensive market research to identify the feasibility of the hotel in a particular area. This can be done through surveys, traffic and population count, identifying if it is a tourist hotspot or not, or hiring a research firm. The last option is recommended to reduce the risks.
- The right location for the hotel depends on the type of hotel you wish to expand. For instance, luxury waterfront accommodation or hotels are more feasible in tourist hotspots, where affluent guests reside and that has access to local attractions easily. Budget hotels must be concentrated more near the local airport area. The hotels focused on businesses or politics-related visitors must be closer to the business districts and other commercial/personal amenities.
- Once the location is chosen, the architecture of the hotel is vital since it will affect how the guests perceive the brand. For instance, more luxury features have to be used in a luxury hotel than a budget hotel. That doesn’t mean that you can’t offer luxury hotel packages – like that place in Hobart. For that reason, you might want to hire a local design firm or a contractor for an initial consultation. Before choosing such people to work with, ensure that they have the necessary experience! They must have the skills and must present you with all the details according to the bid. Do not compromise on quality for less money.
So, these are the steps to invest in a hotel chain. Ensure that all the steps are followed in a careful manner before putting in any huge sum of money.