Business Overview

A hotel can be any commercial building that charges money to travelers who need a room to stay. This can be anything from a standard multi-unit building to luxury stand-alone villas. As airline prices drop and the economy improves, corporate and personal travel continues to increase. The hotel industry generated just under $200 billion in revenue in 2016.

Who is this business right for?

This business is good for someone who enjoys the hospitality business. Those who run hotels have to be adept at catering to a number of different needs, so an owner will need to be flexible when it comes to how they respond to different travelers and consistent when it comes to delivering unparalleled customer service. From business travelers to young families, each guest will have their own priorities when it comes to where they stay.

What happens during a typical day at a hotel business?

Hotel owners may have to deal with a range of responsibilities in their day-to-day job, including the following tasks:

  • Hiring/scheduling/managing staff
  • Negotiating room rates for different days
  • Completing paperwork and administration duties
  • Handling financial obligations/investors
  • Completing ongoing education regarding the hotel market

What is the target market?

The target market can be anyone looking for a room for the night — whether a traveler is coming from across the world or across the street. However, all hotel owners will develop their own target demographic based on their amenities and location. Luxury travelers will not want to stay at the same hotel as a mid-level executive who is in town for a conference.

How does a hotel business make money?

Hotel owners make money based on the profits of the hotel, meaning they'll need to work out how much they want to make a year before setting their room rates to account for their salary. They usually pay themselves a standard amount per year and then invest the rest of their profits into the property.

What is the growth potential for a hotel business?

There has been a lot of talk about how the hotel business is being hurt by websites like Airbnb. The amenities and service tend to be more intimate at private homes or property, which can be appealing for people who who are sick of the corporate structure or lack of empathy on the part of hotel employees. However, the growth potential for hotels can still be substantial for a number of reason.

There are still plenty of travelers out there who would prefer to stay at a hotel, especially considering that there is a certain level of hesitation for many people when it comes to staying with strangers. In addition, websites like Airbnb are likely to become more heavily regulated in the next few years which may make it more difficult for travelers to take advantage of the lower rates.