Economists predict revenue generated by the hotel and resort industry in 2021 to equal $1.22 trillion. Such predictions leave a wealth of opportunity for those interested in starting a business in the hospitality industry. Opening a hotel business in Canada, the United States, or anywhere else in the world can present tremendous challenges for people, particularly those new to hotel ownership. Many people interested in opening a hotel will find that a franchising opportunity offers them the best possible scenario for making their dream come true.
It is important for those interested in getting started in the industry to understand how to select the franchise opportunity that will work best for them. The more you learn about setting up your business, the best possible chances you have for success.
Why Should I Select a Hotel Franchise Opportunity?
Working with franchisees in the hotel industry can offer aspiring hotel owners many benefits. Franchising allows you to tap into an existing hotel brand and reputation. When you go with a hotel chain that already has a loyal following of customers, then you will find advertising and getting your first customers comes significantly easier. The hotel company will help you promote your hotel with their brand advertisements and promotions, bringing customers right to your door.
Franchising can also help to simplify the entire process for you. Opening a hotel requires employing many different services to help shape the culture and style of your hotel. Some people will want to go the luxury route, including a full service spa and fancy rooms. Others target business travelers wanting comfortable but basic amenities. Still, others want to welcome families and focus on creating a family-friendly experience. Working with a franchise helps eliminate many of the competing questions and decisions and provides you with guidelines that allow you to start building a successful business. Franchisees often guide prices and services.
What Are Some of the Major Hotel Franchise Opportunities That I Should Consider?
As you start to investigate your hotel franchise opportunities, you will find a variety of options to consider. Each franchise option has a unique brand that they communicate and amenities and services they typically include. As you choose your new franchise partner, you want to consider whether you want to offer a midscale hotel, an economy lodging experience, or a more luxurious stay. As you consider your preferred hotel brand, investigate which of these franchisors align most closely with the experience that you would like to offer your hotel guests. Some of the names that you will likely encounter in your research include:
- Motel 6
- Hilton, including Hampton Inn
- Intercontinental Hotels Group (IHG), including Hotel Indigo, Holiday Inn, Holiday Inn Express, Crowne Plaza, Staybridge Suites, Regent
- Choice Hotels, including Quality Inn and Clarion
- Hyatt including Park Hyatt, Thompson Hotels
- Wyndham Hotels, including Super 8, La Quinta, Ramada, Days Inn, Travelodge, Esplendor Boutique Hotels, Baymont Hotels
- Marriott International, including Sheraton
Hotel owners know that the brand name they select will play a vital role in the future success of their hotel chain. It influences the first opinion that new potential customers have of your business. With thorough research, you will understand what each hotel has to offer its clients and how well that aligns with your target audience.
How Do I Decide Which Hotel Franchise Is Right for Me?
Before you make your initial investment in the franchise, you will have to sit down with your research and determine which franchise you would like to approach about forming a partnership. To determine which franchise is suited to you, it can be helpful to bring together some essential information.
- What is the target customer of this particular hotel brand?
- How does this align with your goals and your audience in a given city?
- How much does the brand charge as a franchise fee?
- How is the franchise structured? What freedom and flexibility do you have? How does this align with your business ownership style?
- How much will you owe the hotel brand from your total revenue?
As you consider the answers to these questions, it can be helpful to also look at other information, including:
- The types of hotels already in the area you want to target.
- The types of travelers who come to the region, such as families, business professionals, tourists, vacationers
- The region's typical price point
As you bring together this research and information, you will find it easier to begin narrowing down your franchise options to the one that will fit you best.
Steps to Starting a Hotel Franchise
As you begin to plan your hotel, you will want to carefully go through each step so that you feel fully prepared. The franchise you want to work with will want to know that you have a plan to make the hotel a success. You will need to show them that you have the business sense and understanding to make you a good partner.
Select a Location
When you want to begin a new hotel, determining your ideal real estate plays an important first step. The location you select for your franchise business will impact the type of clientele you attract. For example, a hotel near main roads and the airport will work well for travelers just passing through but does not offer much for tourists. If you want to bring in vacationers, you want a location where your guest rooms offer impressive views of attractions in the area.
Scout out potential real estate locations in your area, including any existing hotels you could buy, and formulate an understanding of how the locations align with your target audience and the hotel brand.
Create a Business Plan
Once you have a proposed location and searched the area to help you better understand the brands and types of hotels you want to target, you want to create a business plan to outline your ideas. Your business plan should compile the research you have about your target audience in the proposed city, what makes your location a good fit, and what makes you an excellent partner for the franchisor.
Different franchises will have different application processes, so you will need to carefully review their requirements to understand what you need to include in your plan and overall application.
Work With a Lawyer and Iron Out the Contract Arrangement
Once you begin to move forward with a particular hotel franchise, they will give you their Franchise Disclosure Document (FDD). This document outlines how the franchise relationship will work, what you can expect to receive, and what you will owe throughout the agreement. The franchise agreement will include details about your franchise fee, the services you will offer, the room rates, the training you will receive, and their expectations of you as a hotel owner.
Given the importance of this step and the intricate legalities involved, working with a lawyer to review this information tends to work best. They can help you make sure you fully understand your responsibilities and obligations, as well as the help offered by the franchise. They can help you make sure the terms work for you while providing the support you need as you grow your business.
Go Through Any Necessary Training
After you, your lawyer, and the franchisor have agreed to the terms of the relationship; you will need to move forward with any necessary training. Training can help you learn the brand intimately to present a consistent image at your upcoming hotel.
Take the opportunity to ask questions about the brand's policies and how the brand interacts with its customers. This information will help your hotel with confidence.
Hire Your First Employee and Welcome Your First Guest
As the time draws near for your hotel to open, you will need to take those first steps to hire your first employee and then welcome your first guests. As you prepare to hire your first employee, keep in mind the franchise brand guidelines to help you navigate your selection. Look for those who understand your dream for the new hotel and can help you achieve your goals.
On opening day, when your first guest comes in, welcome them, and begin to build the hotel of your dreams.
Keep Track of Your Hotel Finances With Skynova
As you open your hotel franchise, you will find that accounting plays a significant role in your success. Hotel owners have several expenses to keep track of, ranging from employee salaries to the cost of replacing the room towels. You also want to have the capacity to track the ROI of different areas of your business. For example, knowing if your hotel restaurant or spa brings money into the business or ends up costing your business, in the long run, will guide your investment decisions.
Fortunately, Skynova was designed for business owners like you. The straightforward setup and simple layout allow you to quickly track your expenses, save receipts, and see the overall financial picture of your hotel. When it comes to paying taxes, presenting your progress and revenue to the franchisor, or considering investment opportunities for your hotel, you will be ready with an excellent financial picture.
Notice to the Reader
The content within this article is a general guide regarding hotel franchises and may not apply to your specific situation. Always consult with a professional accountant to ensure you're meeting accounting standards.