Buying a business: Hotels
|Who is it suited to?||Research and regulations|
|How much does it cost?||How much can I earn?|
|Tips for success|
What is it and who is it suited to?
Having gone through highs and lows in the last ten years, including a recession that crippled many hoteliers, hospitality is an ever-changing industry.
There are more than 55,000 hotels – from bed and breakfasts (B&Bs) to large chains – in the country. The hospitality industry employs approximately 1.5 million people, making it one of the largest employers in Britain.
“With approximately 5,000 hotels changing hands in 1999 and the number of international travellers expected to double in 15-20 years, hotel buying and profit in the industry can only increase,” says Miles Quest, from the British Hospitality Association.
There are four main types of hotel that you can choose from:
- Resort hotelsThese are the most popular but success often depends on seasonal factors and the weather. But this is a good starting point for first-time buyers as they tend to be small enough to run with a minimum staff.
- London hotelsThese are the most expensive to buy but can offer enormous rewards. They attract business all year round. There is good variety of hotels from large chains to B&B’s and “rooming operations” or “bed factories”, where a room for the night is all that the customer requires. These are purely for the brave.
- Provincial town hotelsThese are the hardest for inexperienced hoteliers as many have built up good reputations based upon their restaurant. If you posses little or no catering knowledge it may be best to steer clear.
- Country hotelsIf you are in the market for “a little place in the country”, make sure you aren’t wearing rose-tinted spectacles. The success of country hotels is built upon long-standing reputations and much of the revenue is based on food and drink. They can also be poorly located, lack the appropriate staff, run down and in need of essential repairs.
Who is it suited to?
The industry is open to people from all walks of life. Potential owners range from professionals looking to purchase a fully-fledged hotel to semi-retired couples looking to open a small guest house in a picturesque location.
“One of the most important characteristics you will need is immense and long lasting patience to deal with the daily running of a business. It is also essential to have a liking and willingness to understand and get on with people. Ask yourself whether people like meeting you,” says Miles Quest.
“Then there comes the need to work extremely long hours as you are on duty day and night. Life can be very claustrophobic, particularly when there is a family involved. But even with a family you need to be socially active and keep up appearances.”
Although you don’t need direct experience or running a hotel, general business experience will help. David Blythe, associate director at business agents Christie’s and Co in Manchester believes this to be the case: “Purchasers do not need any specific experience, however banks and lending institutions do look favourably upon those applicants who have got background or relevant experience. There is no specific requirement, however, any qualifications relating to health and safety or environmental health, for example, is an advantage.”
So while there is a lot a hotel owner has to learn and cope with – you are you own boss, you can call the premises home, can see the value appreciate by building a good reputation and, at the same time, make money.
But don’t forget that this is a business not a hobby. “Some people buy a hotel for the wrong reasons. For example, people who are thinking about retirement believe they can simply buy a country hotel and relax but they don’t consider the true consequences of the constant hard work that needs to be put in,” says Quest.