How to Start a Hotel Business With No Money - Here's How

Across the world, billions of people think about starting their businesses, and only a tiny portion actually do.

The hotel industry is already dominated by companies with billions of dollars (and every other currency) at their fingertips to spend in every city and tourist-loved area. So it takes someone with ambition and passion to even consider getting involved with limited resources.

Here's the best news you'll hear all day: it can be done. You can learn how to start a hotel business. People have started in the hospitality industry with next to nothing and have gone on to have great success. So we've compiled a list of things you can do to reach the stage of having your own hotel business.

The first step is reading the rest of this article.

Understand what resources you can use

Resourcefulness is a key attribute for any entrepreneur in any industry, not just hospitality. To maximize profit, an entrepreneur must use all resources well. And when one person might feel that they don't have anything, another might go out and find something they can use to reach a goal.

In such competitive industries, a new business needs to compete. So even before thinking about potential avenues to build capital, the first thing to consider is what possible resources you have at your disposal. You might start with some big, significant resources, but even smaller sources of utility might make the difference when working in such fine margins.

What resources do you have available when planning to open your own hotel?

To begin with, here is a list of many potential resources you might already have available to you and how you can use them to help grow your hotel business ideas into a full-blown business plan.

Real estate

Though you may not have any capital, if you own your own home, are already renting a home, or have access to a building, could it prove useful in this venture? There are several ways that housing might prove useful if you're lucky enough to be in one of the below situations:

• If you own your own home. Depending on how long you've been paying your mortgage, you might have a lot of capital stored in your building that can be used to help your startup. When putting your business plan together, there's every chance you'll find you need more money, and remortgaging can help you reach your target figure to help you get started. While this may not be something to do, if your plan is solid, you should be able to make that money back a few years after opening.
• If your home has extra space. If you live in a large enough building, converting space into lodging you can rent out could provide you with the opportunity to start building a little capital to help with your investment while learning a little about the tourism market. Airbnb has become a major player in the market, and while very different from other kinds of hotels, it is not a bad place to start and can help make good money to then allow you to climb the hospitality ladder.
• If you are not tied to one location. The hospitality industry is omnipresent, and learning about the market involves a lot of travel and research. Suppose you're in the position to either rent out your home or stop renting yourself. In that case, you might be able to begin traveling to find the best spots to open a new hotel and begin researching more seriously in preparation for your own hotel.

While you may not think of your housing situation as a resource, it's an area of your life you may be able to make changes that help you in your endeavor.

Personal skills and experience

It's important when running on limited resources to fully assess everything at your disposal. It can also be motivating to know that even though there are so many things you don't have that you need, there are also many things to help you move forward.

Your skills and experience are resources. They can be used to achieve goals; without them, you would feel very lost. They can also be developed and expanded, and before doing anything else, if there are skills you feel you need, it is worth seeing what you can do to obtain them.

These skills may include many things gained from previous work in hotels. How many different parts of a hotel have you witnessed or worked in? What parts of hotel operations do you have knowledge of?

Knowing what you don't know is a fantastic start, as you might begin by reading about hotel operations to expand your knowledge base. Alternatively, you might contact hotels, especially if you know people already there, to see if you can gain knowledge of how they do business.

If you're struggling to appreciate what skills and experience you have that will be useful, look at this (non-exhaustive) list and see which fields you have confidence in:

• Customer service, language, foreign language, negotiation, diplomatic, and other social skills.
• Administrative, accounting, budgeting, and other financial skills.
• Managerial, team-building, teamworking, and similar professional skills.
• Cooking, baking, hygiene and safety, bartending, and other restaurant skills.
• Woodworking, DIY, electronics, computing and POS system experience, and other practical skills.
• Interior design, gardening, art and music, and other aesthetic skills.

Hotels require some of the above, and prior knowledge in these fields will save the business time and money during setup and after opening.

Friends and family

When opening a business, many people rely on other people's personal skills and expertise for advice, resources, and abilities. The skills of the people around you can be as useful as the skills you have yourself.

It may be you have friends or family members with experience in financial planning that can help you expand your own skill set or that works as a gardener and can help tastefully lay out some plants and flowers around your site as you open.

No matter what they are, when on a limited budget, it's important to explore every avenue available to you, and friends that are willing to help out in the early stages can save you significant amounts of money. This opportunity cannot be overlooked.

The Internet

As a source of knowledge, the internet is more reliable than your local library, accessible from your pocket, and informed on the most niche of subjects. If you're beginning right from the start, it's worthwhile noting that you can learn everything you need through this seemingly infinite resource.

Through the internet, you can:

• Read the experiences of other hoteliers that started from the very beginning, discovering what pitfalls they fell into so you can avoid them and learn what they wish they did differently.
• Conduct market research to learn about popular tourist areas, habits, and preferences both locally and on a broader scale.
• Build your brand on social media and run a free marketing campaign to make others aware of your business even before you open, telling your hotel's story right from the start and gaining a following online.
• Register on Google Business. Google Business is a free resource that allows potential guests to search your hotel, find your location on Google Maps, find your phone number, leave a review (once you open), and find links to your other web platforms. It also offers free business resources that could prove useful in a variety of areas.

Conduct market research around the hospitality industry

A hotel business would usually be a huge investment. When working on a low budget, you'll be investing an even greater portion of your time and resources into making this work. This means, as with any other business, it's vital to do your research before jumping in to ensure you make the best decisions from the beginning until opening day and beyond.

One of the most important aspects of a successful hotel is understanding the market that it will be operating. Without proper market research, you may find yourself opening a hotel that doesn't attract guests or makes little profit.

Fortunately, there are a number of ways to conduct market research so that you have a clear idea of who your target customer is, what they want from their hotel stay, and how best to serve them.

Survey your competition

Wherever you set up your new hotel, there will be an existing hotel (or likely a number of them) that you will be competing with for your slice of the market. However, competition will vary from place to place.

For instance, in areas with high levels of competition, there may be a dozen hotels guests can choose from, with a number of 3-star, 4-star, and 5-star hotels as well as Airbnbs. However, in other areas, there may be very little competition.

In your chosen region, even if there are nearby competitors, you'll need to find ways to stand out. Doing so with a small budget may mean undercutting the competition on price, as you'll have no clear way to provide the best service and luxury with your startup resources.

However, there's more than one way of standing out. Hotel concepts vary wildly, and researching what other hotels have already done is a fantastic way to figure out ways you can create a special guest experience.

Analyze hotel trends

Just like any other business in the hotel and hospitality industry, hotel owners must stay up-to-date on the latest trends in order to make informed decisions that will lead to successful operations. Hotel owners need to be aware of what's happening across the entire hotel industry as a whole, to ensure they can keep their hotels aligned with guest expectations, and this process begins with market research.

Understanding hotel trends allows you to plan for potential scenarios that could impact your hotel's performance. Additionally, learning about the way the market develops and the factors that lead to success and failure can help you recognize the micro and macroeconomic factors that influence hotel performance. It is crucial to spot these early to help you fine-tune your business plan as if there is a limiting factor, such as your proximity to key tourist areas or businesses that limit your custom from workplace travel.

As a starting point, analyzing hotel trends might mean following the latest hotel and hospitality industry news through online media or subscriptions to a trade magazine. These will include stories and articles written by experts, analysts, guests, and more.

To go further, you'll need to study what technology, procedures, and policies are currently in the industry (as well as licenses and laws surrounding a limited liability company hotel). This means learning about hospitality POS (point of sale) and PMS (property management systems), which are crucial to the smooth functioning of the business. You can do this by reading articles on the subjects such as this one from Epos Now on how to run a hotel business successfully.

Hotel technology helps you track your hotel's performance, including the profits you're getting from the products and services you're providing, so you know which areas of trade to focus on. They will therefore play a central role in your continued research after opening.

Finally, social media networks are another invaluable source of information when analyzing hotel trends since they provide direct insights into what customers want from their hotel experience today. Hotels can keep track of popular topics being discussed online and use those insights when deciding how best to serve those needs going forward.

Define your target market

Once you're aware of the local and wider markets, you'll be able to finalize which parts of the market you'll try to make your own. A low-budget hotel opening may mean creating a plan to begin as a cheap 3-star hotel before using profits to develop and move your target market from budget travelers to those looking for comfortable city escapes in boutique hotels.

The important thing about this step is understanding who it is you'll aim to appeal to the most. Knowing this will help you create a marketing plan, and you'll need this to pitch to capital investment and potential business partners as you create your plan.

Finalize your research findings

Once informed about the industry, the local potential and competition, and your available resources, you're beginning to create a picture of how your hotel business might begin to take shape.

The important thing to consider at this point is organization. As you continue to move forward, the number of shifting factors will only rise, and structuring the information and formative ideas in an accessible way is valuable.

Create your hotel business plan

A hotel business plan should offer greater detail on all necessary elements of the operation, stating the hotel's objectives and strategies for success, with financial planning for each part. The goal of creating a hotel business plan is to prepare to secure financing and help guide your hotel's management as plans are implemented.

Your business plan should include the following:

• An executive summary.
• Operations overview.
• Your market analysis (as described above).
• Competitor analysis.
• Financial planning.

Executive summary

The Executive Summary is an overview of the hotel business plan and should include information about your hotel's concept, management policies, a five-year-plan and mission statement. It should also describe how much money you need to open and run the hotel and where that budget will be allocated within the business.

Operations overview

The Operations Overview section explains how you will manage day-to-day operations at the hotel, such as staffing levels, food service options, and housekeeping protocols. It should also include details about front desk practices such as check-in/check-out procedures as well as safety protocols for guests and staff members.

Competitor analysis

The competitor analysis looks at other hotels in your area that could affect your occupancy rate or pricing for rooms or services offered by your hotel. You can conduct online research or visit nearby hotels to get a better sense of what kind of competition you may be up against in terms of prices, amenities offered, etc., so you can create competitive strategies tailored specifically to your own hotel's needs if necessary.

Financial planning

Finally, financial plans outline projected expenses incurred while setting up and running the hotel. You can also include revenue projections based on historical data from similar businesses in the area or estimated figures based on assumptions made during initial research.

Your data can gain weight from customer surveys conducted during the Market Analysis portion of the business plan creation process. This portion will also detail potential sources of capital needed to launch the hotel successfully, including bank loans, investor financing, partnerships, etc. Investors will then know where funds are coming from when reviewing your business plan before investing money into it.

Speak with venture capital firms and other potential investors

Once you begin meeting with potential investors, such as banks, investment companies, or any other kind of partner, your business plan will be indispensable material you can use to demonstrate the viability of your hotel.

Your financial plan can include funding from investors, which can help you find any funds you cannot invest in yourself. This is perfectly common among independent hotels. While this may mean your investors become partial owners of the hotel (though not necessarily), in the majority of cases will not inhibit your ability to run your business autonomously.

It's important to recognize you will not have angel investors that help you with financing without expecting a return on investment. There are government grants that tend to come with fewer strings, so looking into any potential grants is worth the time it takes.

In most cases, you'll need to approach venture capitalists and investment firms with your business plan and negotiate terms both sides are happy with.

Opening your own hotel business: the run-up to opening day

If you're able to create a business plan that has enough detail that you can see your way forward and it wins you investors, then you can begin to move forward.

This means creating the rooms your guests will stay in and decorating communal spaces, including a lobby and dining spaces. It means purchasing hotel licenses, registering as a business, beginning marketing, and setting an open date.

One advantage of the hotel and hospitality industry is that new businesses can begin engaging with customers before you open the doors. You might be months away from the opening day, but you can begin taking bookings in preparation for that date.

Remembering to create social media profiles and post the hotel's journey is important, as preparing to open without making bookings could see your hotel see heavy losses in those crucial early months.

Staffing

It's likely your enterprise will be small-scale to begin with. If you have a small budget to work with, depending on the amount of investment you acquire, you may only have a small handful of rooms.

If this is the case, one of the ways to protect against quiet periods would be to keep the smallest staff possible and do more of the work yourself. If you can clean rooms, prepare food, and greet guests, with only a few people to help, your business expenses may be limited to areas such as inventory, licensing, and maintenance.

However, this makes the few hires you make even more essential, as they will need to be relied on heavily when you are unavailable. As such, taking time to clearly outline staff roles within the business will be a key part of the early process.

Almost ready to open? Make sure you set up your Epos Now POS system

You could run a boutique hotel, motel, or hotel chain. No matter your business, hotels everywhere depend on a world-class POS system to provide world-class hospitality. As a reliable booking platform with speedy transaction software, detailed business reporting, and innumerable business software integrations, Epos Now POS can help you get the best out of your business, even on a budget.

Epos Now's dedicated hotel systems integrate with reputable PMS software like Caterbook and sophisticated web-builders like WordPress so that you can streamline your operations and manage them all in one place. With over 50,000 businesses benefiting from Epos Now technology, choose a POS you can be sure to rely on:

• Create a full business suite on a solid POS foundation with integrated payment processing services, online integration, and multiple site options, so your system grows with your business.
• Choose from hundreds of apps and integrable partner programs to run accounting, marketing, and other back-of-house functions in a way that suits you.
• Manage your business stress-free with cloud technology that gives you instant access to the latest business data from anywhere in the world!
• Purchase all the hospitality hardware and software and receive expert advice and support around the clock to get the best out of your business

To find out more about Epos Now solutions, submit your details below and speak to a member of our expert team.