Key 3: Building A Team. The first step requires equity and dealer partnerships. “Look to provide a 20% to 30% equity investment,â€ says Brian Parker, regional vice president, franchise development and emerging markets, Choice Hotels International. If the point of entry for a franchise hotel brand is $5 million to $6 million, how then do you raise around $1 million for that deal? “You can get a pool of investors to come up with the money,â€ he suggests.
Once you have equity partners you need to have skilled operators and hotel managers. Some management teams can be retained to manage daily hotel operations, or the hotel can be self-managed by you–the owner. You can get an approved management company through the franchise brand, Robinson says. Compare various companies. Just be sure to include a termination clause for poor performance in your paperwork, he adds.
Key 4:Â Knowing Fundamentals. What operational experience is needed? You obviously will need to focus on revenue generation, cash flow management, and getting heads on beds. But always remember that service reigns supreme, says Margie Blankenship, president of Miss-Holly Enterprises. That is the first and primary rule of lodging and hospitality.
Hotel owners have to anticipate guest needs, ensure that guest rooms are well maintained, and manage staff effectively. At the same time, hotel owners have the opportunity to meet new people and interact with guests from a variety of locations. So, hotel owners draw in guests who expect a certain quality at that location.
You should be prepared to benchmark you hotel to see how well you hold up to other hotels within your location, size, and brand, notes Evans Charles, managing member, Frontier Development and Hospitality Group. One resource is the Smith Travel Research (STAR) Report.
Also viable are customer surveys and reviews, especially online sites like Trip Advisor, says Robinson.
As a hotel owner, you can’t hide under the sheets from bad service.