Starting up your own hotel business is definitely going to be capital intensive, but on the whole can be a highly viable business idea, this post will help you with the ideas that is going to assist you in the long run
The hospitality industry is waxing stronger and stronger by the day. Every day, foreigners, as well as local migrants and business people, travel from place to place, and the best way to keep them at home away from home is to lodge in hotels while running around to achieve the purpose of their visit. The facilities provided by some hotels could range from a basic bed and storage wardrobe to luxury features such as en-suite bathroom, mini parlors and so on. Thus, there are different categories of hotels, including the 5 star, 4 star, 3 star hotels. Example of a 5 star hotel is le Meridian hotel in Uyo Akwa Ibom state Nigeria.
How profitable is the business
Hotel business is very profitable in a country like Nigeria where we have a lot of heavy spenders. In Nigeria, people love flexing and merriment and running your own hotel is a great avenue to tap from this source of revenue.
Take for instance that you have a hotel with about 10 rooms. If you charge a minimum of N4000 per night, this means that if you can engage all your rooms daily, you will be making at least N4000×10= N40,000 every day, excluding revenue you make from drinks and food. And so every month you can pull up to N120,000 minimum in revenue.
Challenges facing hotel businesses in Nigeria
Here are some of the challenges faced by hotel operators in Nigeria;
- Increasing competition
- Hygiene and cleanliness. A lot of hotel guests would happily give up on luxury and even technology such as wifi access than stay in a dirty hotel.
- Poor housekeeping
- Bad customer service. Every hotel guest expects good customer service, but today’s hotel operators must exceed expectations by being more than just good.
These are things you should look out for when setting up your hotel business in Nigeria. You should be able to meet these challenges and also the expectations of your customers.
How do hotels generate revenue and profit?
Basically, hotels generate revenues and profits from renting out their rooms. However, other key sources of revenue to consider are food and alcohol sales, renting conference and meeting rooms.
Steps to start up your own hotel business
Follow these steps to start your hotel business in Nigeria.
- Determine the type of hotel you would like to start( e.g how many rooms, luxury vs. Affordable etc)
- Determine the ideal location for your hotel
- Determine whether you will build your hotel from scratch or renovate an existing structure
- Speak with contractors and others who will be involved in building / renovating your hotel to determine costs
- Get necessary permits and licenses
- Develop your hotel business plan that details your strategy, budgets and financial projections
- Present your plan to investors/lenders to raise the required funding
- Register your hotel name with the Corporate Affairs Commission (CAC)
- Build/renovate your hotel
- Recruit and train your hotel staff
- Purchase the required systems e.g accounting software etc.
- Launch your pre-opening hotel marketing plan
- Open your hotel to the public
- Register your hotel name: To start up, you need to go register your hotel name with the Corporate Affairs Commission of Nigeria (CAC) in their website
You will be asked to choose two names just in case one if they has already been incorporated. Pick out elegant and attractive names when deciding on the perfect name for your business. Having your business name registered with the CAC isn’t very difficult. Click here to see how you go about the registration processes
- Deciding on a perfect location: Don’t know if I’ve already mentioned this; but a good location is everything. This has traditionally been the most important critical factor for success. Your ideal location should be in an environment where your competitors are not fulfilling all customer needs. However, in a neighborhood that has heavy competition from existing hotels, success may not be that easy to achieve. It is advisable to situate your hotel in a place that is easily accessible such as by the roadside etc. So if possible you should think of buying a property along a busy road network in a good area.
- Source for capital: Whether you are buying an existing hotel or building one from scratch, or renovate a building into a hotel. You will need millions of naira to invest. Assuming you don’t have this money, you will need to seek bank loans, grants, and/or angel investments for your startup. And this where your business plan comes in handy.
- Have a business plan: A simple, clear and well-written hotel business plan is necessary not only for the smooth running of your business but for you to convince any investor or lender that you have the ability to pull the business through, especially detailing all the necessary plans and strategies. No serious investor will be attracted by an apparent lack of planning on your part. Get a winning, detailed and effective business plan written for your hotel business in Nigeria that can attract good quality investors or for any other purpose.
- Building your hotel: To commence with your building project, you have to carefully plan and execute the structure in a way that will present your hotel in the kind of brand you want it to represent. Tastefully furnish and decorate your hotel rooms. Make it comfy and homey. Use good quality furnishing and equipment to build and establish your hotel.
- Recruit the very best: ensure that you hire and train quality staff. Having efficient staff can be the difference between your hotel’s success and failure. It is one of the most important aspects of setting up your hotel. You need to hire the following group of people
- Room service
- Laundry men
- Cashiers and
- An experienced hotel manager
If you do not have any training or prior experience in the hospitality industry, it is better to hire a trained professional to manage the business on your behalf while you oversee.
Promoting your hotel: Be proactive about promoting your business. Take active steps to implement all the marketing strategies outlined in your business plan to ensure the success and profitability of your business