Five questions to ask before getting into the hotel biz

Exec says hotelier needs huge capital and patience in the hotel business

Merril Yu cited five questions to assess one’s readiness in getting into the hotel and resort business:

1.Why would I want to do it?

“You should ask yourself if you want to put up a hotel just because your ego says so, or do you want to profit from it, or just because it’s what everyone is getting into?” Yu said.

The hotel business requires huge capital and those who invest in one must be serious in doing business.

2. Where will my hotel rise?

Just like in any other business venture, the hotel’s location must be a primary consideration. Location will determine the hotel’s concept, structure and design.

“Do I have the location or will I still be looking for a location?” Yu said, adding that the hotel business is very much about location.

3. Who are the people traveling to the hotel site now?

“What will your market be? Does the area have a market already or are you going to make a market for yourself?” Yu said.

Other hotels cater to the market that already exists while some hotels create their own. A business hotel caters to the traveling businessman while a resort hotel targets guests who are seeking rest and recreation. [See tips on mining the expat market here]

4. Will my hotel cater to the people going to the area?

“The question seems similar to number three, but this one should show whether the hotel design and concept will be coherent to the market in the area,” Yu said.

A hotel may cater to various markets, depending on the season or day of the week.

For example, Makati City is dotted with businessmen’s hotels that also target weekend visitors.

An aspiring hotelier should ensure that his hotel's design will appeal to various clients.

5. Do I have the money, resources, and conviction to stay?

“Running a hotel is not easy, maintaining one is not cheap either. The hotel business is not for those who want to earn immediately. It is capital-intensive with a long payback period,” Yu said, adding that the return of investment for a small hotel usually takes between four years and six years.

Read article at Entrepreneur