You would like to invest in a business? Hotels are good assets. Here we explain how much it costs to open and run a hotel.
You can do it
People will never stop going on vacations. Running a hotel is a demanding, but very rewarding. Apart from meeting new people an building their dream escapes, you also create a better world. At the same time, you don’t need any special skills are knowledge of how to be a good host and make your visitors satisfied. This is why they say that the hotel business is more simple and profitable than retail. Less expenses, more freedom, plenty of feedback.
Still, the most important question of our customers is, what are the costs of running a hotel? It really depends on many things. Starting from the condition of your building, maintenance costs, ending with marketing input and output. Just don’t forget to go through all these questions when you put down a business plan, with our help or alone.
Go through this list
- Mortgage. If you have one either on the building or on the business, your expenses multiply by the monthly payment to the bank. Same goes for the rental fee if the hotel is not owner but rented.
- Examine the condition of the building. Is it completely refurbished? Does it require major work? Changing of pipes, heating? Does it have any leaking, problems with walls and roof?
If any of your answers is yes, beware that you will need additional money to put into refurbishing.
However, if you find a good construction company, your costs will be reduce with reasonable materials and work expenses. Furniture can also be bought on a wide second hand market, segunda mano. You can often find a lot of unused furniture for discounts up to 80% from the price of new.
However, make sure to save up to 25% of monthly income for emergency reparations. Before you reach a stable income, you should have minimum €10.000 in savings for the same purposes.
- Do you need any permissions or licences?
Remember that in Spain, for instance, getting permissions is a great deal. It is not quickly done. You need to apply to the local town hall, ayuntamiento, for any minor or major change in the existing architectural plan or work permissions. We assume that once you decided to run a hotel in Spain, you already have a business visa or residency with work permit, as well as a set autonomo, self-employed status. If not, count in up to €3000 to fix the legal documents, depending on your country of origin. We remind that in most times you are eligible for a E.U. residency if you have proof of sufficient money savings and intention to invest in business in Spain.
- Are you planning to run special services such as SPAs, fitness, touring, transfer services? How much staff are you planning to have? That’s contributing to your monthly expenses as vehicles and equipment, specialist and staff salaries.
- Will you have a restaurant? Normally hotel owners calculate their budgets apart from the restaurant budgets. That is made for reasons of different guest flows for the hotel and restaurant. While the bookings are made in advance and through online systems and calls, a restaurant can attract a lot of occasional guests, if you are lucky. And professional.
- How will you manage the bookings? Running the website, social networks and any other way of online marketing will form your monthly budgets. If you use platforms like booking.com or tripadvisor.com, you pay a fee every time a booking is made through the agent. Are you planing to advertise in local newspapers? Post flyers in restaurants? Keep 8-10% of your monthly income reserved for marketing.
- How many months will you be open? Some hotels close for low season since the costs of running are higher than the possible income. Things work more simple for guest houses run by an owner, as there you can regulate your opening weeks according to the prebookings.
Business plans differ
Remember that you can run a successful business with minimum investment if you pick a profitable location and a flexible business plan. Check our other articles to chose the best location and purposes of your business.